John Redwood's Diary
Incisive and topical campaigns and commentary on today's issues and tomorrow's problems

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Good and bad trade deals

To the BBC and Remain critics a free trade deal with the EU was essential to our economy, whilst a free trade deal with anyone else is a big threat to  our own farms and industries, allowing foreign competitors more of a chance to lift orders  from us.

They never see the contradictory nature of their twin positions. Apparently New Zealand lamb could drive our sheep farmers out of business. No such damage they say is being done by the EU.  They ignore the way German cars, French dairy, Italian textiles, continental steel and others drove many of our companies out of business  when we went to zero tariffs with the ECEC on  joining , let alone the damage the CAP did to farming and the Common Fishing policy did our fishing grounds and industry.

The truth is we rely for our substantial foreign trade on WTO membership which secures most of it with or without top up trade deals. A top up trade deal can be helpful overall, but of course it only helps our business where we are competitive and harms it where we are not. We have a massive deficit with the EU thanks to the asymmetric  way tariffs and barriers were taken off industry where they had an advantage, but kept barriers on service  where we had an advantage.

The other criticism they advance of a deal like the New Zealand one is our trade is relatively small.  This of course contradicts the other criticism that it is seriously harmful. The NZ deal cements  a friendly alliance that matters, but it is also progress to joining the TPP which is large Asian trading area of faster growing economies which we can do more with.


The absurd argument that we have swapped a great deal with the EU for one with smaller counties is silly. We have a tariff free deal and WTO access to all EU markets, no we are adding a bit better deal with places like NZ and Australia, preparatory to joining TPP which the USA may well also join.

Brexit supporters always had a sense of perspective over trade deals, knowing the key was WTO membership for trade access. We left to run our own affairs generally. Membership of the EU single market did considerable damage to industry, agriculture and fishing owing to the asymmetry in its rules. They could fish our waters, for example, but we didnt get rights to Mediterannean fish.

Keeping the lights on and homes warm

Over the next few years we will face a reduction in nuclear power as older stations are closed, well before a new large nuclear power station comes on line. We will experience growing demands for electrical power as more people switch to electric cars and electric heating, and as the economy and the population continues to grow creating more need. There will be a further major increase in wind power, which will cover the days when there is the right level of wind to maximise turbine output without needing to shut them down through too high a wind speed. The question remains, what is the back up plan for days of high demand when the wind does not blow and when solar output is also low?

In the short term the government has brought three coal power plants back on stream to deal with shortages. These have to be kept, and perhaps could be converted to biomass to make them more reliable and popular contributors to our power output. The country relies heavily on its remaining combined cycle gas stations which produce less carbon dioxide than the coal stations per unit of output. It would be a good idea to bring several old retired gas stations back into a state of readiness to be available to produce power when the wind drops. These are matters which our managed system of generation can commission by offering capacity payments to the owners to make the facilities available.

The government should also look at how it can increase domestic gas output. Currently half the gas we use is imported. Some of this is dependent on paying high and wildly fluctuating spot market prices. Some of it is shipped long distance on tankers. If we produced more domestic gas this could pass to users via pipeline and could be purchased under contract at more stable and lower average prices. Immediately the government could allow Shell to progress the Jackdaw field, which can use the existing Shearwater platform and the existing gas and liquids pipes into St Fergus/Cruden Bay for onward distribution by the existing pipe network. This would be a greener method of supplying gas than the imports and provide us with more national resilience in energy provision. The government should review its other options for producing more UK gas as a transition fuel whilst it puts in place much more reliable renewable electricity and better storage for variable wind power.

My intervention during the debate on the Coronavirus Act 2020 (Review of Temporary Provisions) (No. 3)

Sir John Redwood (Wokingham) (Con): A lot of us feel that this legislation should now just lapse, because there has been a material improvement in the situation.

There are other powers should things go wrong, and this House could grant powers in the space of a few hours if there were a new and unpleasant crisis. Why do we have to have these powers hanging over our head when there does not seem to be a need to use them?

The Secretary of State for Health and Social Care (Mr Sajid Javid): What I can tell my right hon. Friend is that there are provisions that we hope to keep in the Act, subject to the House’s will today, which are still necessary.

For example, there are provisions that protect NHS capacity with respect to temporary registration of nurses and other healthcare professionals.

There are similar provisions for the care sector; there are also provisions that provide support packages for those whose jobs may have been hit or who have to take time off work to meet the self-isolation requirements. There are provisions in the Act that I think are still necessary; I will speak about some of them in just a moment.

How do you get to net zero

Yesterday the government launched its strategy for cutting the carbon dioxide output caused by heating buildings. They wish to promote heat pumps, and will offer grants of £5000 to people willing to install these devices who meet their criteria. The details of the scheme will be announced prior to a launch in the spring of next year.
They also reiterated their strategy of banning all new petrol and diesel cars from sale in the UK after 2030, preferring universal adoption of new electric vehicles where people are buying new.

I pointed out that for this strategy to work the UK would need to generate all its electricity by approved green means, as otherwise we would simply burn the fossil fuel in the power stations prior to running homes and cars on electricity. As we are often still relying for 60% of our electricity on fossil fuels when the wind does not blow and there is not much sun that is going to take a major investment in new green capacity that will work when the weather is not helpful to certain renewables.

The Minister in reply did not promise a major expansion of green generation from reliable power sources. He did not comment on the possible shortfall in electrical power if the government is successful in getting widespread adoption of fuel pumps and electric cars. He did say the government sees gas as a transition fuel which clearly will do a lot of the work in generating power and heating buildings for at least this decade. Nor did the Minister answer those who asked when it was going to commission more nuclear power. This is reliable carbon free power, but we face the reduction in the amount of nuclear produced over the rest of this decade as old nuclear power stations are closed. down. This will add to the difficulties of supplying enough green power this decade.

Tomorrow I will set out again more of the ways the government can act now to ensure we have sufficient generating capacity and sufficient access to gas as transition fuel for this decade, whilst they put in place the major investments in reliable green electricity they will need for the next decade and beyond. They need to announce new nuclear, new small nuclear, more biomass more hydro and pump storage and more battery storage and hydrogen conversion for wind energy when the wind does blow well.

The state of the Union

This article is reproduced from Conservative Home where it appeared yesterday:

The Government is strongly in favour of the Union of the UK. So is the Official Opposition. Scotland held a referendum and voted to stay in the Union. At the time all parties agreed it would be a vote for a generation, though the SNP now wobble over the desirability and timing of a much earlier re-run of the vote they lost. The rest of the Union has not campaigned for a vote about their membership. So why is there such nervousness about the subject?

The biggest threat today to the Union comes from the EU. There is a strand of EU thinking that has surfaced in press briefings and the odd comment that says there must be a price to Brexit for the UK, and that price should be the detachment of Northern Ireland from the UK.

The official public line is the EU needs to insist on special governance arrangements in Northern Ireland to avoid goods coming across the border into the Republic from the UK that might not be compliant with EU rules and customs.

To make this difficult the EU chooses to interpret the peace Agreement governing the two communities of Northern Ireland as meaning there should be no border controls, though throughout the UK’s time in the EU there were VAT, Excise and currency controls governing trade between Northern Ireland and the Republic. These were largely handled through electronic means, and away from the physical border.

The UK has offered several ways in which it can make sure non compliant goods do not wander from NI to the Republic without imposing new border posts. Mutual enforcement of the rules would do it, with the UK authorities ensuring there is no passage of non compliant goods.

Electronic manifests for each consignment, to be inspected before arrival by EU officials, would do it. Trusted trader schemes where most firms were trusted to enforce the EU rules and avoid non compliant deliveries would do it. There has always been smuggling across the NI/Republic border, and there has been a long history of co-operation by the authorities on both sides to avoid it becoming excessive and to punish those who still try it. That will continue after the new arrangements.

The fact that the EU has rejected all these sensible proposals implies it does not want to solve the narrow issue of trade. It may be that the immediate objective is to divert large amounts of trade from GB/NI into Republic to NI trade. That is what is happening.

Faced with the EU blockage of simple GB/NI movement of goods in the way we used to enjoy, consumers in NI are being forced to buy from the EU via the Republic instead to get their deliveries on time. The EU is assisting a large diversion of GB/NI trade. This is expressly against the Protocol which rules out such a diversion in Article 16. The UK for that reason alone can legally change things unilaterally to stop this happening.

It may be that it is part of a wider EU plan to ensure more common governance of Northern Ireland with the Republic under EU control. The wish is to impose every regulation and directive on NI that the EU regards as important to its single market.

The remit of the single market is now very large, encompassing everything from environment policy to labour policy, from transport policy to energy policy, alongside the more normal definition concentrating on product standards and trade terms. The EU wishes NI to accept large amounts of EU law with no voice and vote in its making and no right to repeal or amend.

The NI Protocol rightly expresses strong support for the peace process, which is based on the mutual consent of both parties. The EU claims to champion this, yet fails to grasp the fundamental problem with its approach.

Its demand that it can legislate for NI and control many things in NI in the name of preserving the integrity of its single market does not have the consent of the Unionist population. Indeed the EU has united Unionists against its Protocol because they see the EU seeking to split NI off from UK law and NI consumers from GB suppliers, going well beyond its legitimate needs to police its trade.

The Protocol stresses at the beginning “the importance of maintaining the integral place of Northern Ireland in the UK’s internal market”. The EU is doing the opposite. It says “This Protocol respects the essential state functions and territorial integration of the UK”. It does not feel like that to many in NI.

When the UK challenges the EU over its wish to govern Northern Ireland in a different way to the rest of the UK, the EU asks why the UK keeps on going on about sovereignty. If it wishes to show sympathy for Northern Ireland and wish to understand the nature of the problem it needs to grasp that sovereignty as at the heart of the issues long dividing the two communities. The EU’s view of it does not work for the Unionists.

The UK government needs to see off this needless threat to the Union by insisting on UK control of GB/NI trade as is required under the Protocol. People in NI have to be free to have easy access to products available elsewhere in the UK within our internal market.

The EU should take up one of the many generous schemes the UK has put forward to ensure full co-operation to avoid non compliant products passing on from NI to the Republic. Lord Frost needs to move swiftly now, as much damage is being done to the view of the EU amongst the Unionists and much trade is being diverted against the wishes of the public and against the words of the protocol.

Meanwhile in Scotland the SNP say they want an early referendum, but not one yet. Doubtless they are watching opinion polls which still do not show a clear window for majority support to reverse the last referendum result. Many Scottish voters want to get on with their lives without further uncertainty over this issue, and many want to see the SNP make devolution work to deliver a better outcome.

The UK government should not fall for the Gordon Brown line again that a bit more devolution will solve this problem. Brown’s passion for devolution gave the SNP a bigger platform and gave them the opportunity of a referendum on the Union.

Devolution did not end the matter as Brown promised. UK Ministers who are keen to buttress the Union need to show by their deeds and words why the Union is good for all its parts, and need to govern wisely so people join in with their support.

Suggesting more powers for just one part of the UK in response to the campaigns of those who wish to split the UK is a bad idea. Voters wanting Scottish independence will not be won over. They will see it as a weakness by the Union government, and propose a further push to secure full independence.

If it is right for the Scottish Parliament to have more powers, what is the stopping point in powers before you reach independence? How would you draw a stable and defensible line? The way to defend the Union is to stand up for it, and to show how the Union powers are benefitting all its parts.

Time for a better national debate

If the media wants to help us create a stronger and healthier democracy in the U.K. they should mend the ways they handle comment and define news. Of course they should ask tough questions, seek to clarify and examine views and policies. What they often prefer to do is to script one sided and often nonsensical debate between the forces of their international establishment convention seen as true and good, and the armies of those who disagree who then have to be wrongly fact checked, ridiculed, criticised or banned by their thought police.

So we had the one sided Brexit debates when the wildly pessimistic economic forecasts of Remain were accepted as truth whilst Leave was bombarded with false rebuttals and inaccurate allegations. There is the relentless green agenda where anyone who worries about security of supply, price, impact on family budgets, phasing and costs of green investments and other legitimate issues is labelled a denier.

There are the woke debates where anyone who expresses too strong a love of country or our history is told they endorse every sin and crime of the past. The U.K. both old and new is usually run down and blamed for the world’s ills and given little or no credit for all the good we do as a people and through our government.

The bad media seek not only to decide what is news but also to make it. They employ undercover people to trip people up over the rules of behaviour. They only invite MPs on that they do not support if they can caricature their views or push them into consenting to a more extreme statement which then is news. This may in their view justify demanding resignation from office. They often argue with you over what your view is, claiming to know it better than you do because they find your actual view does not fit their baddies versus goodies script.

Planning for winter

It is difficult to fathom why the Treasury would want to base a budget on out of date forecasts or on forecasts they expect to be wrong, yet that is what the press allege. They tell us there is an earlier pre budget cut off date for the forecasts than usual, and that the Treasury accepts the deficit and debt forecasts which have already proved wildly pessimistic this year to date as they did last year. Surely the Treasury should push back hard on the OBR estimates and say they will only treat them seriously if they improve markedly.

It may be that the aim is to follow a tax rise and spending cut policy to slow the economy more to get closer to the poor forecasts. That could work, but why do it when you could have a policy that got you better outcomes on growth and on the deficit.It is clear the tax rises already announced and the Bank of England rate rise threats have slowed the economy badly in recent weeks, alongside the media driven petrol scare and the Lack of wind power.

It appears that there some gas turbine power stations that have been closed that could be brought back into use quite quickly and cheaply. The Business Department should commission them for stand by and back up power for when renewables fail.

The supply issues over petrol and diesel are resolved. The shortages were caused by panic top ups, not an underlying shortage of fuel. The HGV driver shortage will take a bit longer to clear, but training and recruitment numbers are rising. The on line delivery networks have shown the right offers can secure a big expansion of capacity.

The Budget needs to go for growth. An austerity budget now would be a bad idea. Injecting some good control over spending to secure more value for money is also crucial. The Treasury needs to slim Test and Trace and redirect some of the additional £64 bn awarded to the NHS in the last two years to tackling waiting lists and non covid treatments.

Money printing

The Treasury and Bank are still worried that the UK has borrowed too much. They want to slow everything down by forcing through tax rises. They want the Chancellor to follow austerity policies based on setting difficult targets to get the debt down. It’s the same playbook as after the Banking crash, and the same playbook as the EU debt controls, needed if you share a currency with others to stop free riders.

Let me have another go at explaining why we should not  be so worried about UK state debt. The UK state has bought up £875bn of it, so that is no longer a debt. The Treasury pays the Bank interest on it, it is true, but the Bank sends the interest back as a dividend because the Treasury on behalf of taxpayers owns the Bank. I would not regard myself in debt if I owed money to myself.

Normally I would be against a state buying up its own debt by creating money out of thin air to do so.The extraordinary conditions of lockdown when government prevented a large amount of activity meant it was possible to offset some of the damage by creating money. It would normally be very inflationary, and would lead in due course to hyperinflation if persisted with. We have seen Zimbabwe, Venezuela and Argentina do that in recent years, and pre war Germany famously did it. It is a very destructive process, leading to poverty and economic breakdown, forcing people onto barter or foreign currencies to retain some value in their money and labour. I do not recommend the UK  doing any more money creation from here.

The truth the Bank and Treasury need to grasp is they largely got away with mass creation of pounds and buying in of debt. The inflationary consequences are not going to be too great if they stop doing any more now.  The collapse of demand in the economy thanks to lockdown needed an offset which they provided. They did not do as much proportionately as the USA. They are right not to try to do anything like the huge amount Japan has done and got away with over the last couple of decades. Japan has an ageing and declining  population with a high wish to save, so its money creation has not generated any inflation, contrary to usual form. Japan’s state debt is around 250% of GDP now, but the state owns half of it and the other half is financed at around zero interest so it is not a problem.

If the Treasury persist in slowing the economy with tax rises they will end up with a bigger deficit. They need to help energise the rest of the government to promote more UK based activity. The deficits they should worry about more are the balance of payments and trade deficits. Those need us to borrow in foreign currencies we cannot print, or to sell more and more of our companies to foreigners to pay the bills.There will be a bit more inflation in the year ahead thanks to world supply bottlenecks and the labour shortages.

Sir David Amess

David was a long-standing friend and colleague. His senseless murder leaves his family devastated, his friends bereft and his constituents without a dedicated MP. He went to great lengths to help his constituents and to represent his area. He was always kind, hard working and willing to engage with people of wide ranging views. He was a great campaigner and a helpful mentor to new MPs.

His tragic death will not stop MPs talking directly to people or being active in their constituencies. There have been too many murders of MPs during recent decades, when MPs strive to ensure the nation’s disagreements and passions are settled through votes and arguments, not violence.

Ingredients of an industrial strategy

If we want to rebuild industry that we have lost and attract modern industry to make the new materials and products the world is discovering there are some basics government needs to do.

It needs to ensure good transport and communications in industrial locations. As monopoly provider of roads and railway lines it needs to ensure sufficient accessible capacity. It needs to allow or encourage high quality high capacity broadband.

It needs to continue to strive for excellence in school and College education. It needs to work with schools and Colleges over how they help people gain qualifications and interests that can lead on to well paid jobs in industry.

It should pump prime good ideas for new technologies, working with Universities and company labs. It should provide a market for innovations, buying them for use in the public sector. New drugs are a good example, bought into the NHS, or new vehicles bought into the MOD.

It needs to use its planning and licence granting powers well so industry can establish and expand in suitable places and can tap local sources of raw material and energy as appropriate.

It needs to avoid rushing to nationalise. There has been a long history of nationalised industries in the UK under  governments of all persuasions sacking employees, overcharging customers and losing large sums for taxpayers to reimburse.

It needs to avoid imposing unduly complex controls and interventions, which invariably lead to worse outcomes and demands for yet more offsetting interventions.