Author: johnredwood

It is true that the Bank of England, the Fed and the ECB have the independent power to set the base rate or short term interest rate. I do not deny that or even propose taking it away. That is not the same  as these central banks being independent of the state and government policy.

The Central Banks have Governors chosen and appointed by governments and Parliaments. The Governors have to report to elected assemblies and answer questions and criticisms. They rely on state taxes  should they not have enough revenue to pay their costs. They have to work with government or accept government policy on important matters like the issue of government debt, the management of their bond portfolios, and their attitudes towards the actions of commercial banks.

The governments/Parliaments can change the rules, alter the aims, change the budgets and personnel of these Central Banks any time they like. In the UK there have been major changes. Gordon Brown who gave the Bank the power to set base rates at the same time took away their powers to issue government debt and to regulate commercial banks, making the changes a net reduction in their independent actions. The successor Coalition government changed the framework again with major changes to commercial  bank regulation. President Biden on taking office appointed several new Board members at the Fed including  the two powerful Vice Chairs  to change their policies as he was entitled to do, with two leaving the Fed ahead of their retirement date.

The main monetary policy these three Central Banks followed up to 2022 was money printing or Quantitative easing. In the UK every pound of that had to be approved by the government, who underwrote the Bank against any losses. In the last three years all 3 Banks have been pursuing Quantitative tightening. The UK government has been paying huge bills to the Bank to cover their large losses on bonds they have been selling. The ECB has not been selling bonds, presumably because their owners will not pay the losses. The Fed which like the other two overdid the QT had to pump large sums into the markets to prevent a collapse of regional banks. No government can afford to ignore Central Bank actions which help create a fast inflation by creating too much money, or create a recession by tightening too much.

The wrong belief that these Banks are “independent” other than over the base rate means much media and commentary refuses to ask why these 3 allowed or created a large inflation. It means they escape proper scrutiny of what they did wrong and how in the future they could use their power to set the base rate to promote faster growth and lower inflation. They all have to work with their governments.

Some in the Trade Unions are alarmed by the spate  of closures and job losses we are experiencing. 90% of farms have delayed or cancelled investment. 8 pubs a week are closing. 2 refineries are shutting down. 2 olefins petro chem plants are at risk. Half our steel industry only avoids closure with taxpayers paying the bills to keep it alive. 2 ceramics factories have shut this year.

The car industry is at a record low of output and under government orders  to close all factories making diesel and petrol cars by 2030. Government plans  to close  all our oil and gas production are proceeding well with a  ban on most new investment. We are importing more and more of our electricity as government fails to expand the grid and renewables  fast enough to replace closing fossil fuel plants. All but one of our existing nuclear power stations will close by 2030.

Government should listen to the wise Trade Union  voices arguing against this rapid de industrialisation and idiotic reliance on imports. They should also listen to the farmers and the hospitality industry who are suffering badly from the last budget.

There are many good reasons to discontinue current UK net zero policies. I have concentrate on the following for some years now:

1They are de industrialising the UK, losing us jobs, investment and prosperity

2 They are undermining tax revenues we need, sending the  tax payments abroad to the suppliers of the energy and goods. Banning UK oil and gas loses us billions in tax which we pay instead to Qatar and the US

3 They are undermining national security, making us import dependent for energy, steel, petrochemicals and other essentials.

4.They are contradictory in their own terms. Importing more boosts world CO 2.

5. Battery cars and heat pumps  running on gas fired electricity from the grid does not cut CO 2. It cuts living standards burdening households with big bills to acquire and run these items.

Some of you wish to argue that net zero is a scam, human  CO 2 does not warm the planet, or UK CO 2 is too small to make much difference, or human CO 2 is only one influence on climate which might be offset by others including water vapour and natural CO 2.  I have given space to these opinions but still think the easiest way to stop the bad policies is to advance views 1-5 which climate activists find difficult to answer.

I wrote an article for the Telegraph showing how the government target to decarbonise our electricity system by 2030 was looking more and more unlikely. I pointed out that on their own numbers the government needs £44 bn a year for six years of investment in renewables and extra grid. Over the last year a number of leading  green energy shares have been poor performers. Hornsea  4 a 3.2 GW wind farm planned  for off the Yorkshire coast has been put off. Most of the investment needed has to come from the private sector given the state of the public finances.

Most of the readers comments were very critical of net zero policy and saw the  dangers and implausibility. One complained I had only just worked this out! Strange when I was  against the 2009 Climate Change Act and refused to vote for it, and went on to write various articles and short books in recent years explaining why consumers will not buy into heat pumps and battery cars on the scale envisaged.

Most interesting in the current government plan is how little extra  electricity they propose for 2030. If their other plans for a large expansion of heat pumps and battery cars took off as they wish they would need a very large increase in power output.  In this respect their plans  seem more realistic .

The pace of deindustrialisation is the main way they are getting UK CO 2 down, relying on imports which boost world CO 2 whilst reducing ours. Inviting in large numbers of extra people is incompatible with faster reduction of UK CO 2 but that does not seem to bother them.

Conservatives believe in freedom. We believe in free speech, free elections, and  free enterprise. We believe in the talents of individuals, the benefits of the small battalions and free institutions, in the power of the family and the importance of traditions and learning passed down the generations.  We wish to see a prosperous country with wealth and ownership widely spread, a well defended country safe from war and threats, and a civil society with sufficient common bonds and culture.

         Conservatives support  limits placed on freedoms for the greater good. We expect a strong rule of law. Free enterprise does not extend to  theft and fraud. Freedom to do things should not stretch to  harming your neighbour or advancing by violence.

        Conservatives do not want to blindly follow the past, welcoming positive change from the ideas and actions of enterprising individuals and institutions. Traditions and the past should be respected and drawn upon but not become restrictive bonds preventing something better. Conservatives wish to be the “dwarves on the shoulders of the giants”, seeing further because we climb higher, inheriting past wisdom and knowledge.

        Conservatives welcome strong families and see them as their own welfare societies, transferring wealth and skills between generations and accepting most of the responsibility for bringing up children and caring for the elderly. The state has a welfare  role when families break down or when the demands are too great on  family members.

        Conservatives understand that whilst most individuals have plenty of capacity to do good and to advance themselves and those close to them, there is in some a criminal tendency to harm and  evil which needs controlling by clear laws and punishments.

         Conservatives believe in equality of opportunity, offering a hand up in preference to a hand out. We want to help people on their individual  journeys, and accept that those who achieve more and contribute more may earn more and save more.

          We believe in lower tax rates to protect incentives. We tax the rich who have the money by setting rates that they will stay to pay. We believe in the power of choice for individuals, and the power of competition  to prevent monopoly abuse. We believe most goods and services are best delivered by free enterprise, whilst supporting free healthcare and education for all. The state defends and protects us with uniformed personnel and a monopoly of authorised  force.

         Conservatives oppose most revolutions for their violence and extremism. Conservatives believe in evolutionary change. There is no perfect state or utopian society that can be created because  mankind has criminals as well as saints. Imposing too many solutions from government leads to the abuse of power and to the distress of freedom loving citizens.  One of the least perfectible of human institutions is government itself, which needs to be watched, checked and controlled to avoid tyranny.

       Conservatives love the countryside and the vernacular and varied styles of our urban architecture. We conserve the best. We value fresh air and clean water. We treat animals well, recognising their needs as they live alongside us or with us.

          Conservatives believe in democratic government with choice between parties and philosophies at elections. We believe that Opposition is an important part of democratic government, to prevent a tyranny of the majority and to represent the views of legitimate minorities.

          Conservatives believe in their countries, seeing the nation state as the means to create a voluntary common culture, shared experiences and team loyalty in friendly competition with other states.

          Conservatives are sceptical about drives to international and global government and to rule by an elite or bureaucratic class. There is no global democracy so global government is never government by the people or of the people. Conservatives oppose the imposition  of bad international law. It is wrong to weaponise treaties, stretching their meaning  well beyond their original intent. Over  mighty quangos where power has gone to their heads regulate too much and govern badly. International quangos can be particularly remote and haughty.

           Conservatives oppose extremism. We see National Socialism and Communism as two evil creeds of the last century that resulted in mass murders, dreadful wars and the suppression of freedoms which we should strive to prevent in the future.

            Conservatives believe in the pursuit of happiness, with ownership and prosperity for the many. Freedom is usually the best means to achieve our aims. It should be moderated by a just and necessary rule of law to protect us and  our precious freedoms

Instead of wasting time and money going round their areas taking down Union and England flags, Councils should  respond to the public mood. They all must own a few Union and England flags, so run them up the Town Hall flag poles. Show us you want to be on our side. Stop complaining about law abiding tax paying people who pay the Council  wages and who are proud of our country.

So instead of smashing more gangs, Labour in its first year smashed fewer than the previous government. Instead of cutting numbers of illegal migrants, they broke the Tony Blair all time record for new arrivals.

They have been processing asylum applications faster, with half being granted permission to stay. They have created a bigger queue of appeals as lawyers think they have made bad decisions. Half of those rejected then get permission based on a court overturning the original decision. With a 3 in 4 chance of an illegal migrant ending up with the right to stay no wonder they keep on coming. The availability of a hotel or flat, benefits and other gifts add to the allure of the UK for the migrant.

The government behaves as if it does not have a huge majority. It could at any time require Parliament to meet to change the law to stop this abuse. Even a Labour MP is now calling for overturning international laws used to stop us controlling our borders. The government could take up the Conservative draft legislation which Labour recently voted  down when the Conservatives put it to Parliament.

This is a national crisis. We cannot afford £5 bn a year on asylum seeker costs. We want our hotels back for their proper use.  We need Cabinet and Parliament back next week  to say Enough is Enough and to act to smash the gangs as promised.

Why did the government refuse  the recent addition to our law, the measure to say an illegal arrival cannot then claim asylum?  Why repeal the use of a safe country for deportations? Why not instruct our authorities to interview all illegal arrivals under caution to find out who they paid for their trip, who drove the boat, how they  out about the service, which bank accounts were used etc? Why not do more mystery shopping to find the gangs?

I have read some really bad ideas in recent days of what Rachel Reeves could do to help fill in the big black hole she has dug.

The latest is to levy CGT on homes sold for more than £1.5 m. That rumour is a good way to get some more well off people to leave the country before the next budget, taking the money from selling their home before the tax. We already have far too many wealthy and high income people leaving, hitting future tax revenues.

Such CGT would also lead many people to stay in their larger homes and adapt them to old age rather than paying the tax when they downsize. Any extra CGT would be in part offset by less  Stamp Duty and less business and income tax as the volume of house transactions fell off.

There is the idea of cancelling Stamp Duty and imposing an annual levy on the buyer of the house, indexed to inflation. This would lead to a big loss of revenue in the early years as the government would lose all Stamp Duty on buying a home and levy only a fraction of the duty each year on the new owner . I cant see the Treasury buying that. The original proposal was based on not raising more revenue overall even over the longer term.

There is the idea of higher Council tax. Angela Rayner is pressing  ahead with taking more  grant away from areas with dearer properties to give more to poorer areas anyway. This amounts to another tax rise on more prosperous families and areas.There are limits to how much Council Tax people can and will pay.

There is then the idea of introducing new bands for more expensive  properties to levy a higher rate. It would be difficult to do that without a general  revaluation as establishing modern values for some dearer properties would invite challenges about other properties whose historic Council Tax valuations have been shifted by markets since I introduced the  tax   as Local Government Minister. At the very best  all existing higher band properties would need valuing to decide which to promote to the new dearer bands.

All previous governments, Labour, Coalition and Conservative vetoed ideas of a revaluation as being very disruptive and unpopular. Will this government go to war again with people who have worked hard, aspired, and bought themselves a decent house?  Will this government want to hike Council tax enough to force low income pensioners to sell up a home that has gone up in value since they bought it? A lot of people  are house rich and income poor. It should not be a crime.

The government which has a passion to submit to harmful international court opinions is surprisingly angry with an actual judgement from a UK court. This contradictory approach is even more bizarre when the court is seeking to accelerate the government’s own stated policy of ending use of hotels as migrant hostels. Can anyone explain this as it seems to mean the government wants to be on the unpopular side all the time?