John Redwood's Diary
Incisive and topical campaigns and commentary on today's issues and tomorrow's problems. Promoted by John Redwood 152 Grosvenor Road SW1V 3JL

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“Phew! What a scorcher”

The tabloid headline of my youth at the top of this article  used to  be rolled out when we had hot days. We used Fahrenheit then, a more sensitive and large scale way of judging the temperature. We all knew during summer that 70 degrees was pleasant day, 80 was a warm day and 90 was a hot day. As temperatures sometimes soared into the high 90s that was a too hot day. Nonetheless those with money opted to go to the south of Europe in search of the 100 degree fix for a holiday , equipped with sun tan lotion and often then a passion to lie out in the very hot sun. Today we call  those temperatures  21.2 Celsius, 26.67, 32.22 and 37.77 which are more  difficult to remember and not so clear in the message they send. Maybe we need to unite around 20,25,30 and 35 as benchmarks of how

Cobra on hot days

Interesting that the government has at last spotted we are having some hot days. Curious that they chose now to make this an emergency issue to warrant a meeting of their COBRA Committee. That is meant to meet as soon as a new disaster hits, not weeks after a problem has emerged.

You would have thought the priority meeting should have been how to stop the new mega dinghies, the jumbo inflatables now hitting the Channel. That surely is an emergency, given the large numbers of lives at risk, the passivity of the French and the need to stop the flow. There is new evidence that we are now facing much larger boats who stop to pick up hundreds of people along the French coast before they come to English waters.

What should the “Summer days” Cobra do? Government does need to respond to the possible water shortage and has been meeting to try to do so, and to the stresses on our electricity and rail systems. Here is a short agenda:

  1. Stop many  categories of new migrants like those seeking low skilled jobs coming by legal routes to the UK. We do not have enough water, power, NHS capacity for our current population, so why keep increasing numbers?
  2. Press ahead with the 9 new reservoirs that are being considered. The government should drive through the licences and planning permissions rapidly to ward off future water shortages and to catch up with all the extra people invited in in recent years with no new reservoirs being built.
  3. Tell the owners to get the Beckton desalination plant working and use it to reduce draw down from reservoirs for London supply

 

 

Mr Burnham needs to learn how to govern

When Mr Burnham says he understands people do not want the early release of two criminals serving time for their part in the death of a policeman he seeks to be popular. That’s no bad thing in a leader  to pick up the public mood about an issue, and if it is well based as this is, to support it. What is wrong is to do so without a clue about what he can do about it as PM.

We have seen him dither and delay. The Justice Department presumably under the supervision or surveillance of the Justice Secretary had determined they needed to undertake early release of a large number of prisoners. They have  been closing so many old prisons so they had almost entirely eliminated any gains from  the 14,000 new prison places Conservative Ministers had got them to undertake. Under the Starmer government too, as 3000 new prison places from the Conservative plan became available other places were shut, cancelling the wins. The PM allowed this policy to go forward. The policy  entailed the early release of the two connected to PC Harper’s murder and some in the grooming gangs.

When the PM got round to understanding how unpopular the Justice Department policy was  he asked for a rethink. On August 4th a new policy was announced, saying that the early releases would not now include rape, serious child sex and grooming offences. This did deal with some of the  public anger over grooming gangs but the public was still unhappy. Those who assisted the murder of PC Harper were still eligible for release. So Mr Burnham gave up defending this second improved policy and asked for another rethink. At last yesterday the PM has called for his Justice Secretary to present a new policy to Parliament in early September to free the necessary places without early release of categories of dangerous and nasty criminals the public want locked up for longer.

Why? Surely any person who becomes PM should know that before you blunder into a public policy statement you sit down with colleagues and the Head of the relevant Department and hammer it out. You look at the bad aspects and you require a better answer if the policy fails to achieve your aims. Instead we have a PM so in love with his own work on social media that he says what he thinks the public want to hear without engaging government or making sure he can deliver.

Why did the Justice Secretary behave like this? Is he not in charge of his Department? Can’t he get the Department to do what he or the PM wants? Does he accept two public changes of his policy by the PM and the obvious implication that the PM thinks he has let him and the public down, and has failed to do the homework to sort out prison places. If a PM has to get a colleague to try harder it should be done in private, not in public. From the Justice Secretary’s point of view it must be a nightmare working for Mr Burnham if every time he agrees a government policy he then goes back on his agreement and asks for a rethink.

If Mr Burnham is serious about the cost of living he needs to ditch the EU re set

Mr Burnham inherits a ruinous half completed EU re set negotiation. If he is serious about raising living standards and listening to voters, he should pull out of the talks. The Manifesto was right to say the government would keep us out of the single market, the customs union and freedom of movement. The likely deal breaks all these promises. So far there is no news that it can deliver the very modest aims of easing the restrictions on touring musicians or obtaining mutual recognition of professional qualifications also in the Manifesto.
As Mr Burnham departs on his listening journey he will find welcome support for his idea that the cost of living is voters’ main preoccupation. Family budgets are too squeezed and living standards have at best stagnated. People want improvement.
He will also discover that the second big preoccupation is to him the less welcome strong feeling that illegal migration  is an expensive pressure on housing, utility supplies and communities. People do not just object to seeing illegal arrivals put up in good hotels that the communities would rather use for travelling business people, tourists,  local events,  weddings and special occasions. They also object if the illegal arrivals  are given priority for social housing, or convert family homes into Houses of  Multiple Occupation. People object to the whole idea that their home areas have to change to house people who should not be here at all. People want stronger border control, not a new way of housing the results of weak borders.  He will also hear if he listens that opening up safe routes so the illegals can all become legal is not what people have in mind either.
The leaked plans for re set will worsen the cost of living pressures. Joining  the EU carbon emissions trading scheme means imposing a higher tax on energy intensive goods which we will have to pay. Imposing a carbon border tax (CBAM) on imports from outside the EU will mean dearer energy intensive products which we rely on. The give away of 12 more years of large amounts of our fish for nothing in return means we cannot rebuild our home fishing industry and have a better supply of local fish.
The proposed SPS Agreement on food trade will mean the imposition of a large number of unwanted rules on the many small UK companies and producers who do not export to the EU. This will involve them in extra costs that will help push up prices.
The EU demand that the UK makes a Solidarity payment to secure the deal w8ill come on top of stated charges for rejoining parts of the EU single market for their administration. This should  mean a tax rise for us to pay the extra bills, as the government has run out of room for yet more borrowing.
Rejoining Erasmus to replace Turing for students means a far worse deal for UK taxpayers and students. Students will lose the opportunity to go to non EU universities. Taxpayers will be paying an extra £700 m of tax to meet the bill, which will largely go to EU students coming to the UK. If the Uk concedes domestic discounted student fees for EU students the universities in the UK will have to hike the fees for all students to make up the shortfall, fitting UK young people yet again.
The proposed Youth Opportunity scheme is a version of freedom of movement for all under 30 year olds. There are so many more on the continent than in the UK, and many there want to come to the UK to learn English. Where will the government house them all? Will they qualify for free benefits and free public services? How will those bills be paid?
So here is some good free advice to Mr Burnham. If he is serious about wanting to control the cost of living he needs to control public spending and the costs facing UK business. The current EU re set plans do the opposite. So scrap them.
If he picks up on his travels the anger about weak borders, he needs to close down the talks on more young people getting the right to come here from the EU. The difficulty the EU is having in controlling its own borders reinforces the message from the public that we need stronger controls, not weaker rules. Making illegals legal is not the answer most people want.

Net zero all over again

Yesterday evening I was asked to join a discussion about net zero policies on LBC. The person putting the net zero view wished to mount a personal  attack on me on false grounds rather than dealing with the realities of the damaging policies he and Mayor Kahn are proposing to Mr Burnham. He seemed surprised by my line of argument and unable to cope with it.

In the short time I was given I tried  to summarise my long advanced case that the main UK net zero policies are self harming  and self defeating. I pointed out that most of them lead to more world CO 2, most notably the crazy decision to keep our gas in the ground, replacing it with imported LNG. This generates three to four tines as much CO 2 as using our own piped gas. This came as a shock to my LBC counterpart who then tried to deny the obvious.

I did not have time to point out if I bought a battery car large quantities of CO 2 would be generated abroad in its manufacture to  mine the battery materials and make the battery. More importantly when I plugged it in to recharge most  likely  they would need to burn more gas in a gas power station to meet my extra demand. How does that help? It would be more efficient to burn the fossil fuel directly in the vehicle.

I did point out in the ten years from the Paris climate Treaty there has been a big increase in world CO 2 led by China, India, USA, Russia and Brazil. There is no sign of that trend changing. The UK inflicting self harm  and choosing a self defeating policy makes things worse all round. Why won’t they listen? How many more times do we need to explain the obvious?

 

A peoples’ BBC? My IEA idea

The UK media industry is losing out badly to the towering success of the USA.
The BBC is a great force against change. It  seeks  to freeze UK media in a top down take on what they think we need. Meanwhile the  audience  moves swiftly into an exciting competitive world of downloads, podcasts, on line videos,movies on demand and citizen journalists getting live clips of events as they happen. As a result the UK is slumping in the media rankings. The BBC slumbered and grumbled as Netflix surged from nowhere to have a turnover already six times the UK ‘s state broadcaster. They watched in denial as Amazon Prime and Disney sold subscriptions to their UK viewers who still have to pay the licence fee if they want to watch any live tv.
There are now more than 18 m Netflix users, 15 m Amazon Prime and 10 m Disney watchers in the UK. When asked what people look at  first, 26% say Netflix, 25% BBC and 10% fast rising You tube. This means the revenue, the profits and the investment are surging in the US as the UK state company sees its market share, purchasing clout, ability to attract talent and to win audiences badly squeezed by more fleet of foot and now much more powerful rivals.
The BBC looks to the licence fee for its revenues. More and more people are deciding they can live without live tv, allowing them to watch downloads without paying the tax. The BBC needs  more money to spend on technology, new market outlets and on programmes, only to find Comcast, Amazon, Netflix and Disney generate 30 times as much turnover as the sinking UK challenger. We should be in a panic about this collapse. The BBC is now a minnow  in the world of fast growing US media giants. 30 years ago Netflix and Amazon Prime Videos did not exist. They have already both dwarfed  the BBC.
The BBC has a commercial international company with a pathetically small turnover of £2 bn.This has access to the BBC back book of recordings, but lacks sufficient cut through in the global market .  It should be allowed to raise substantial new share capital from private investors with a Golden share blocking foreign take over. It should spend the money raised on expanding its technical and global reach and adding new content. It should not have recourse to public funds. Currently it receives no cash subsidy and is profitable.
The BBC’s free website service impedes the establishment of competitors who need to charge to cover costs.  This needs to be split between a factual and promotional website about the BBC and its offerings, free to users, and a site setting out BBC journalist and commentator takes on life behind a paywall like its competitors. The BBC domestic service  model says it is advert free, yet it increasingly uses its remaining  home market  power to self promote energetically. A recent generic controversial advert has added to the stream of plugs for individual programmes and promotions of BBC people.
Debate about  the BBC usual revolves  around bias and editorial decisions. Defenders  point to the Charter and to the understanding that government  that automatically  has great influence  over funding and personnel should not use  that influence  to affect comment and coverage of the government. It is true the BBC does give  a hard time to Labour, Conservative and Reform interviewees to demonstrate some fairness over parties. Critics allege deeper long term bias  in the approach to climate change theory and net zero policies , where they have been a fan, to pro government bias over covid lockdowns, and an unwillingness to question the Bank of England  and great quangos  like the Environment  Agency and Ofwat when they get things wrong. There  is a perpetual reluctance to challenge the EU and pro EU soundbites. Coverage of the EU is thin and often uncritical.
My case today is all this political debate caused by the BBC being a state owned and directed broadcaster is getting in the way of growing  and using the UK’s  great cultural  and news gathering potential. It means  many do not look at the worrying loss of UK market share. The licence fee model cripples growth and requires a different approach to cost control and economic riskiness of ventures, as taxpayers rightly expect prudence in how their tv tax money is spent. The licence fee money will diminish  as technology and US success undermines the numbers of people paying it.
Given the political sensitivity we need to examine new models. Offering everyone  a share in a mutual BBC that paid a licence fee could  create a people’s BBC. Licence fee shareholders could be guaranteed to keep at least 51% of the total share capital to protect from foreign takeover.A licence fee shareholder could just have one  share all the time they had a licence, preserving  it as a mutual . Alternatively  there could  be a single  initial  grant with people  free to buy and sell the shares. There could be a block on anyone buying more than say 10%  of the Corporation. The BBC would retain its Charter and  requirement to be impartial.
 It should be set the task to review new sources of revenue  and to have a planned phase out of the licence fee. It could go on to raise new capital  and add new  revenue schemes .It should charge for web access, and could  have  a variety of subscription  and advert based services.
 There would  be a taxpayer grant to cover World  service and related news broadcasting in support of a UK cross party foreign policy which would be pro democracy, free speech and impartial  news.
 Without BBC reform the nation will adopt more and more US services and the Corporation will have to cut and cut again as licence fee income falls.
Sent fro

Who is to blame for the train chaos on thursday and friday?

The government is letting the train operating companies take the hit for delays  and cancellations which were rife on the network over the last two days.  They have to handle the passengers, try to find alternatives for them, and pay them compensation.

This was yet another case when the blame rests elsewhere. Their  trains were working, their crews had turned up. The trains were held up by all signal lights going to red owing to signal failure. Signals and the power for them are firmly under the control of long nationalised Network Rail.

Network Rail can say  the  immediate cause was a ninety second power cut by the electricity supplier. They are meant to be able to handle that with stand by emergency power. That apparently failed.

I heard a nationalised rail apologist on the radio blame inadequate funding and staffing of Network Rail for the chaos. Network Rail was set up under a previous Labour government and has  enjoyed two years of more generous Labour settlements  under this government. Surely something as crucial as back up power for signals,  central to safe running, should have been an affordable priority?

The nationalised railway needs to get more  used to power cuts.With more  renewables on the grid there will be more supply interruptions. Spain was a warning where general power cuts closed down the trains and took out the traffic lights, causing road chaos as well. Travellers do not want to spend hours in a stopped train, which could be even worse in a tunnel.If nationalisation is so wonderful why can’t it run a signalling system to keep the trains running?

Plenty of water but not enough in our taps

Water covers 71% of the planet. The UK gets plenty of rain most of the time, and has still been getting plenty of rain in the North whilst the south is dry. We had a wet winter and watched as the authorities allowed billions of gallons to rush to the seas without storing enough of it in case the summer was as dry as 1976 or 1995.

Worse still the population of the UK has grown by 4  million over the last ten years, mainly migrants needing homes and a water supply. The highly regulated monopoly regional companies  did not put in new reservoirs to meet this extra demand. The Regulator    did not want the extra  cost on bills. In my area the necessary plan to  build a large new reservoir at Abingdon  to handle all the additional demand and new homes was foolishly delayed.

The Havant new reservoir was underway when Labour took over. The government is now taking a leisurely look at another nine projects. Abingdon is back on the list, with an application expected later this year. It is thought it will be well into 2028 before permission is granted to start work.Some think it might complete around 2040.

There needs to be a much greater sense of urgency. Labour promised to speed up the building of infrastructure. More reservoirs, bigger pipes and additional dirty water treatment works are much needed.Why the delay? Why lecture people on using less water when there is so much of it, and you do not destroy it by using it? Why think this  is about the climate when it is mainly about population growth and about an inadequate and ageing infrastructure that needs modernising.

 

 

 

Borrowing more to create assets could backfire

Rachel Reeves was given a lot of extra freedom by officials and the OBR with their new fiscal rules. They built into the new model the ability to offset assets created or acquired by the borrowing, arguing markets would appreciate state capitalism in action. Why not credit government with future revenues from investments made?

The problem is the quality and risk of the investments. Two of the government’s bigger ones, British Steel and the Post Office are absorbing about £500 m a year each instead of generating dividends for taxpayers.The investments in renewable energy require guaranteed prices and subsidies which the government wants to partly shift from bill payers to the Treasury as costs. Carbon capture and storage “ investments” just mean dearer energy.

The government as it desperately seeks new investments  through the National Wealth Fund and Great British Energy is likely to get shares  in the more risky projects the private sector is nervous about. Government will become a shareholder as bail out financier of last resort if the project  goes wrong.

Its money spent on rail will be subsidy, not an investment bringing profits and dividends. HS 2 is the biggest so called investment they blunder on with. There is no likelihood of profits or dividends with no trains running before 2040!

Building 1.5 m homes this Parliament as promised looks impossible. They now need to build 350,000 a year when they are only doing about half that.Council homes cost too much to build for the government to make a big dent in the target by building more of them.

The decision to spend to invest can only work if government reverses the habit of a lifetime and backs winners that can turn a profit. There is no sign of this happening. Borrowing more  on this  pretext will not bring growth or confidence to a flat lining economy suffering from dear energy and high taxes.

The collapsing UK stock listings reflects the damage to the economy from government policy

There are no surprises in the way the UK stock exchange is shrinking. The UK government is to blame. Its net zero bans, its high energy taxes, its rush to nationalisation, its lack of enthusiasm for private capital  and competition, its excessive regulations  and its wish to align  with an EU that is also anti private capital,anti cheap energy and the digital revolution all point to money and deals rushing to the USA away from the UK and EU.

Two of the remaining large quoted UK companies,  BP and Astra Zeneca, are in the news  highlighting the negative impacts of UK policy on them. BP is going to sell out of its North Sea assets as they are hit by high taxes and bans. Astra Zeneca wants to merge with a large US company to dilute its UK interests and make it more of a US major. EU style controls on medical work and the limited list controlled prices model of NHS buying cause tensions with business. These two companies are in the top seven of listings by market value accounting for 14% of the Ftse 100. Were they to cancel their London listings it would be a major blow.

There are many UK companies selling up altogether as shareholders show frustration with UK valuations and taxes. Segro has been a very successful industrial property company. It is accepting a US bid well above the UK market valuation.

As the UK government plunges on with its wish to close down all our oil, gas, high energy using businesses, and cut back our food growing, so we become ever more dependent on imports. To pay for the imports we need to raise foreign currencies. Selling our best businesses to foreigners is the foolish short term way of paying for the imports.

We need to reverse the atrophy of the London Stock Exchange. That needs new UK fund raisings with a government backing free enterprise and private capital. It means reversing bans and penal taxes. I will set out how in future blogs.