Author: johnredwood

The UK car sales figures for the first two months of 2021 show a large fall of 87,000 vehicles. The industry is ascribing this to CV 19 and the closure of car showrooms. Doubtless there was a CV 19 effect. There was also an on line market people could use, and we did see a rise in the sales of all types of hybrid and electric vehicles over these two months despite closed showrooms and no demonstration drives. You would think it would be the new types of vehicles which would most need display in physical showrooms and demos to persuade people to buy them. The fall in sales of diesel and petrol cars was 96,000, offset a little by the 9,000 extra sales of hybrids and electric cars. The fact that it was cars we knew well that suffered the sales fall implies there is more to this than the anti pandemic measures.

The industry should worry that more of the fall is about the big structural change required by government to move people away from diesel and petrol vehicles. The combination of high new car taxes and the strong pressures not to buy new petrol and diesel cars is damaging volumes considerably. The UK invested billions to be a great centre for diesel engines and diesel cars and now faces a very sharp and severe contraction in this market. Why doesn’t the industry acknowledge this problem and talk about it more? Should this transition be slowed or eased in some way? Do new car taxes have to stay so high?

One of the issues being debated is the question of how much extra carbon dioxide is generated by a society going for a shorter working life for cars and more frequent replacement by new vehicles, even where the operating performance of the new vehicle is more fuel efficient. High new car taxes allied to anti diesel and anti petrol car policies may perversely persuade more people to prolong the lives of their traditional vehicles and hold back from buying new. If battery electric vehicles are bought more by the rich and urban dwellers who use them for short journeys or as second cars they will not deliver the environmental benefits their advocates seek.

Why is it that so many people claiming to be friends of the car industry spent several years telling us to worry about the impact on sales of a possible 10% EU tariff which did not materialise, but they are now silent about a far bigger collapse in sales than they forecast as a result of various governments’ policies to end the sales of new diesel and petrol cars in a few years time?

Dear Michael,

I see you are asking Telegraph readers for their views on vaccine passports.

Your article seemed to be contradictory. It said we cannot rely on the vaccines to give us 100% protection so we need CV 19 passports. You then say we should rely on vaccines in a different way by only allowing vaccinated people to do certain things and give them a passport. How does this add to the protection, as in either case with or without the certificate we rely on the vaccination?

There is the residual issue of the small minority of adults who will not have the vaccine. Many of these will need to be given exemptions for health reasons or pregnancy, defeating the object you see in the control. If the idea has anything to recommend it it is simply to remove a few people that have no officially accepted reason for not being vaccinated from attending various events who might get the disease. They will presumably be offered the alternative of a test which may or may not be accurate. Given we are talking about a very high vaccine take up rate it seems likely there will anyway be little risk of picking up CV 19 as we will have something approaching herd immunity. In the dreadful event of a mutation that defeats the vaccine the system you recommend of course ceases to work and everyone is back at risk.

As you recognise there are technical issues about the use of apps and the necessary paper or card alternatives, and problems with the reliability of data back up. Some non believers without vaccination will operate to cheat the systems. Do we want to become a society where we will need to carry papers to do simple tasks and enjoy entertainments and sports? It is against all my instincts, born into a history based on the journey to freedom and liberty for all.

Yours

John

An article in the Sunday Telegraph argued this week-end that the most important achievement of Ursula von der Leyen in her first year as Head of the EU Commission has been to force the creation of a UK vaccine industry. In its usual pro EU way the officials of the UK government had been happy to organise vaccine supply and purchasing on a cross EU Basis. The increasingly threatening noises of the EU about vaccine distribution allied to Ministers grasping the need to control production and deliveries here at home in default of free trade with the EU changed this approach. It led to deals where a business agreed to make and pack in the UK to get the launch aid and the orders they needed to make a viable business. That has to become a more generally accepted model in the many other areas where the EU is out to take our business.

I have long been arguing that the UK needs to use its extensive public purchasing intelligently to promote competitive production and supply here at home on a wider front. It’s what the French and Germans have been doing for years. You do not see their Ministers and business leaders travelling around in top end cars made in the UK, or pressing for pipes and interconnectors to buy in UK energy. The economic nationalism of the leading continental countries have long been assisted by EU rules they help design and enact. In sector after sector where the UK had a good position prior to joining the EEC in 1972 we have seen loss of market share and increasing dependence on EU imports as result of their protectionist and nationalist strategies. They have been delivered through a willing EU that has its own reasons to make the UK more dependent on continental goods. We ended up importing energy whilst we are an energy rich country that always used to supply its own needs for coal, electricity and more recently oil. We were largely self sufficient in temperate foods, only to see heavily promoted and subsidised supplies from the Netherlands and elsewhere on the continent displace a significant amount of home production. The EU sent grants to get the UK to grub up orchards at home to rely on imported fruit. Falling short of the provocative idea of integrating defence, the EU moved to encourage and require plenty of joint procurement and the provision of weapons with complex multi country supply chains, limiting our scope to defend ourselves and removing important jobs from home so the wider EU could benefit from the UK’s larger defence budget.

The USA under its new President who adopts a lot of socialist proposals is keen to build Fortress America. The US is not exporting vaccines all the time they need them at home, and is busily building its own expanded vaccine industry on the back of public sector orders. The supply chain initiative I have commented on here is designed to onshore much more industry to the USA after they too have drifted to reliance on huge imports. Biden will use trade policy, tariffs, competition policy, public procurement and public subsidy to recreate more industry and technology in the USA.

Government directed business is not usually a good idea. Nationalised industries usually fall behind in innovation and competitiveness and come to rely more and more on state power to enforce their will and perpetuate an out of date business model. They end up sacking workers and raising prices to pay for inefficiencies. Biden has to avoid taking the USA down the path of too much government intervention at a time when that is the preferred route of the Chinese and of the EU.

The UK now needs to use its potential freedoms out of the EU to find that magic spot which allows the state to buy, source and assist in a positive way whilst ensuring most is done by competitive private sector businesses striving for those contracts and grants by innovating, changing and controlling costs well. The state will of course continue to provide the Free NHS and free schooling.

With advanced country governments spending around half their national incomes you cannot ignore the impact of the state on economic activity. Only if you make intelligent use of that spending power without seeking to control everything can you hope to grow faster. You also need to be aware of just how rigged markets now are in so many important places in the world. The EU above all places regulation and EU champions well above free trade or competitive forces. The winners in terms of greater prosperity and faster growth will be those who allow a larger private sector to survive and thrive, without being naive about the nature of some international methods to gain unfair advantage.

The top down drive to change the way we get around, heat our homes and chose our diets is said to generate lots of green jobs as well as helping the governments that drive it to meet carbon dioxide targets. As they plan this governments need to take into account all the jobs in fossil fuel based businesses that will go. The UK government also needs to understand that whilst windfarms, battery production, electric cars, new heating systems and different foods will all generate jobs, they do not necessarily generate them in any particular country. As this is a top down state led set of policies, it will take state action to call up the technologies, raw materials and production facilities that does produce the green products they favour. The UK needs to see that China, the USA and some others are far advanced with putting in this production. We need to speed the UK’s response. Given the lack of strong popular demand so far for many of the final products it will take some state seedcorn cash or tax breaks and contracts to procure the output needed.

Let us start with the raw materials. There are schemes to extract lithium from rocks in Cornwall. We will need plenty of lithium for a large electric vehicle industry based on batteries. There are plans to put in rare earth processing in the North East. That too needs developing at pace, as these electric technologies all need rare earths, which are currently dangerously concentrated in Chinese hands. It will need large quantities of green hydrogen. That requires more renewable electricity and plants to manufacture and store it.

Then look at capacity. If the UK wants a decent sized car industry to survive it will need factories capable of making say 1.5 million batteries a year. Nothing like that is yet on the drawing boards. It will need to at least double current electricity output to cater for domestic power demand. To reduce meat in diets it will require a large expansion of market gardening to produce a wider range and volume of vegetables and meat substitutes.

Net zero is a hugely demanding target. The government needs more positive action now to bring forth the massive investment and technological developments it requires if they are serious about it. It would be a bad idea to continue on the net zero course thinking we can rely on imports for all the new green products it will take. Above all it needs listening to what people and markets are saying. Government and business have not yet designed and produced popular low carbon products that enough people want and can afford. Until they do so the danger is it will prove easier to force the decline of what we currently have than to produce a success for the new areas governments want. So far the UK has seen a much bigger decline in diesel car and engine output than it has seen a rise in electric car and engine output. Government needs to consider this warning sign.

Janet Hughes of DEFRA gave a scary interview to Farming Today on Thursday 1 April. She spoke as an enthusiast for the new system of farm financial support which she is designing and directing. She did not once mention food growing as important or worthy of support. When asked about food growing she expressed an unsubstantiated hope there would be no fall in food growing as a result yet identified a number of schemes designed to reduce the area given over to food production and a number of favoured ways of farming likely to cut output.

Why wasn’t a Minister giving the interview? Why aren’t Ministers keeping their promises to Parliament to boost food production? UK farming has to compete with many global food producers working in countries that do subsidise farming to achieve more output. I will be taking this up with Ministers.

I am pleased to see the supermarkets replying to my questions on how they can do more to promote UK food and farming. Their own surveys confirm that more U.K. customers want to buy British. The strong support for local businesses and farmers markets underlines this. All can do more. We do not want to wild all our land but to drive more productive agriculture which can also create a beautiful landscape.

There is huge scope to direct grant and subsidy to help farmers raise their productivity extend their growing season through helpful investment.

We live in a very regulated world. Modern governments are very powerful, both in laying down detailed controls over business and in commanding huge spending power. We have just seen how this interplay works with vaccines. As government will be the main buyer of the products they have considerable say over the development and production. Whilst the ideas and production emerges from the private sector, government was involved in setting the challenge, offering seedcorn money and advance contracts. There are many other areas where this model has to be used to get breakthroughs given government importance. Energy today is dominated by government rules and controls, with government organising markets for competing businesses to win contracts to a government specification. It needs to get better at what it specifies and how much power it conjures for our use. Defence is of course dominated by government procurement. Railways now are effectively nationalised.

It is important that we do not allow all this to become an argument for more things to be carried out by fully nationalised industries under government direction of innovation, cost structures and production. The UK tried that for some 30 years after the war and fell further and further behind in coal mining, steel production, car production, shipbuilding and other affected areas. The joy of not for profit became the woes of heavily loss making businesses in need of perpetual taxpayer subsidy, arguing over what to close next and who to sack. The well meant five integrated plant investment in steel struggled from the first and spent years of recriminations over which of the works to shut. The coal industry was a major source of industrial tension over how long to keep open high cost mines. We witnessed a bitter retreat from shipyards around the UK. A nationalised industry often hit customers with high prices and sacked many employees at the same time as it wrestled with poor productivity, poor innovation and better overseas competition. The nationalised telephone system backed an out of date mechanical switching system as the USA leapt ahead with new electronic technologies.

We need to make the case again for competition, choice and profits. Competition drives innovation. Monopoly encourages sloth , resting with what the monopolist already has. Allowing consumers choice keeps companies honest. Above all profits are essential to pay for research and development, to make new investments in products and production, and to help pay for new jobs and growth. Profits made by our larger companies are shared with millions of UK citizens through dividends paid to pension funds and insurance companies that look after people’s savings. The government needs to work with the private sector and liberate it more. We need to ask ourselves why the USA has been so much better than the UK/EU at powering the digital revolution and developing most of the great success stories of the digital age in the free world.

It has been a long time since I last got my hands on a leaked letter or memo from Dame Lucy. After her long service on Brexit issues she appears to be deployed today on outstanding matters from the Withdrawal and Future Trade Agreements in the Cabinet Office. I thought I should share the letter with you.

Dear Mark (I’m not sure who this is but also clearly a senior official)

It is most important at this difficult time when Ministers are understandably preoccupied by the pandemic response that we provide the necessary continuity in other areas. We do have a duty to minimise the change that the upheaval of Brexit could create. We should be pleased that so much of the accumulated law and practice of the EU has been successfully transferred to the UK legal canons. We can be content that Northern Ireland remains partly under EU control as a reminder of the need for compromise with the EU over various matters. It of course entails regular Ministerial contact and negotiation over a range of issues through the Joint Committee. We must also ensure that Ministers are given every opportunity to adopt parallel laws and regulations to the changes going ahead in the EU, to avoid too much drift apart. We should remind Ministers of the desirability of equivalence, and the hard tests the EU is likely to apply to ensure equivalence, which will be much like identical measures. We should be keen to work with the EU on important matters like digital regulation and the green agenda. We as the custodians of continuity in government must preside over and enforce all existing rules and procedures unless and until Cabinet and empowered Ministers insist on change.

I am worried in case the divergence over vaccines leads Ministers to think divergence elsewhere is always likely to be right and better. Ministers may have had a success, but at the price of further deterioration in already difficult relations with the EU. The EU is upset about priority of deliveries to the UK, and has had various worries about the Astra vaccine in particular. We do not wish to see such disputes cross over into sensitive areas like fish, agriculture and energy. We need to remind Ministers of the complex supply chains, the inter dependence and the sensible nature of many EU rules and requirements. I think it is good news that the Treasury is continuing with the Maastricht debt and deficit criteria, and welcome that there is a further five years transition before the UK controls its own fisheries fully. I look to you to assist in portraying the realities of the new relationship to Ministers.

Yours etc

I recently wrote to the main supermarkets about customers being able to buy more locally and UK sourced food. I have received the enclosed responses from Morrisons, Tesco and Asda which they said I could share with you. I am happy to reproduce the other replies if they wish when I receive them. I encourage any UK based food retailer to do a good job selling and promoting UK produced food. They are in alphabetical order. Tesco gave the most rapid response.

Asda
“Thank you for your email regarding British sourcing. As a company established by a group of
Yorkshire dairy farmers, this is an important issue for Asda.
We keep our fish sourcing under review, but due to the need of having to maintain a
sustainable supply, this does sometimes come from overseas. However, we do support small
suppliers, such as Downies of Whitehills Cullen Skink and ScottyBrand Smoked Salmon.
Some of our seafood is UK sourced, including Atlantic Herring, Mackerel and Edible Crab.
We have a dedicated local sourcing team, who enable small suppliers to supply Asda stores,
including the facility to be stocked in a single local store. This covers a wide range of different
products.
As you may be aware, Asda has recently had a change in ownership. With this change, we
have pledged to source 100% British beef, 100% British dairy and increase our sourcing of
bread wheat to 100% British.
You may be interested in the results of a recent customer insight survey we carried out,
where we asked about attitudes to buying British. This showed a divide in attitudes depending
on age, with 56% of 18-34 year old customers saying it is important, rising to 81% of 55+. The
overall importance of buying British was listed as the eighth biggest issue for our customers,
with them viewing recycling, reducing food waste and tackling antisocial behaviour as their
biggest issues.
While this does show differing attitudes towards British sourcing, we are keen to do all we can
to support small British suppliers throughout our stores, and constantly keep sourcing under
review.”

(their survey showed 76% thought buying British was important. )

Morrisons

“Morrisons is committed to buying British and giving our customers a great – and growing – choice of locally sourced food and drink.

We are the nation’s largest fresh food manufacturer and operate our own abattoirs, food manufacturing sites, and produce pack houses. We have recently added to this capacity with the acquisition earlier this month of Falfish, a family-owned processor of sustainably sourced seafood based in Cornwall.

For customers, this acquisition will mean further improvements to the range, quality and availability of fresh fish and shellfish at our in-store counters. Following the deal over 80% of Morrisons fish and shellfish – both in our 497 stores and in our online business – will come from Morrisons wholly-owned seafood operations (Morrisons already owns two seafood processing sites close to the docks in Grimsby).

This deal is a real commitment to the South West fishing industry which we believe will benefit the local economy as well as offering our customers an improved range of freshly caught fish and an investment in our in-store fishmongers.

You also asked about local produce. One of our core priorities is ‘local integration and serving the community’ and we have made positive strides on this in recent years. Prior to the pandemic, our buyers were touring the nation and hosting ‘local foodmaker’ events which offered local producers the opportunity to showcase their products. Through our ‘local foodmaker’ programme we have now surpassed a key milestone of 1,000 new, local products (from 220 local suppliers) which we have sourced from 37 events held across Britain in the last few years. This programme continues although with the onset of Covid we have been forced to hold events online.

Many local food producers are continuing to expand their geographic reach through their relationship with Morrisons and more of our stores have local products on offer. As an example, our store at Lake, Isle of Wight, is one of our most integrated stores so far, stocking locally supplied milk, cheese, cream, coffee, eggs, meat, tomatoes, biscuits and garlic.”

Tesco
“At Tesco, our ambition is to be British agriculture’s most trusted partner, helping to secure a successful future for farming, food and fisheries.

As part of our commitment to a competitive and productive UK agriculture sector, we’ve set up a number of Tesco Sustainable Farming Groups (TSFGs). The Groups, led by our suppliers, farmers and Tesco colleagues, are organised by sector and are central to our work of building long-term relationships with our farmers. We’re also supporting new entrants and young farmers through our Future Farming Foundation, which each year provides 50 young farmers from across the UK and Ireland with guidance, support and training.

In store customers will find that all of our milk is British, sourced from British dairy farmers who are guaranteed a fair price for every pint through our Fair for Farmers Guarantee. We support our dairy farmers through the Tesco Sustainable Dairy Group, which was the first of the TSFGs to be set up in 2007, and now represents the largest group of dairy farmers working with a retailer directly. In addition to this, 100% of our beef, chicken, eggs and cheese is British and Irish. Alongside this we have a dedicated local sourcing team to evaluate and identify locally-sourced products, which are then sold in store – giving customers access to top quality, British products.

Recognising the demand from our customers for homegrown, seasonal produce, we work with trusted growers across the UK to deliver this all year round and include our Best of British Union Jack on packaging to help customers identify fresh fruit and vegetables which are 100 per cent homegrown. We are also using this partnership approach to foster innovation across all sectors, including our Incubator Programme which is helping suppliers to grow their brands and bring new, innovative products to market.”

Waitrose (added on April 1)

“Thank you for your recent email regarding Waitrose’s sourcing of British products in our shops.

It is great to hear that your constituents want to be able to buy more UK produce in their local shops. We know this is something our customers are particularly passionate about. Searches on Waitrose.com for British chicken, beef and vegetables doubled last year and our recent Waitrose & Partners Food and Drink Report 2021 found that 74% of people want to see more food businesses in the UK express their ongoing support for local British producers.

All of our fresh and frozen beef, chicken, pork, eggs and milk are 100% British sourced, and from this Summer all our lamb will be 100% British sourced all year round. Many of Waitrose’s local products are from companies that produce food within a 30 mile radius of a shop. Waitrose has a team of buyers dedicated to seeking out local and regional sources of the best quality food that often cannot be found in other supermarkets.

We have also seen strong growth in demand from our customers for British seafood. Sales of fresh oysters and mussels increased by 74% and 25% year-on-year last year, and searches for ‘seafood’ on Waitrose.com have more than doubled.

In July last year, Waitrose became the first major UK supermarket chain to sell MSC certified British clams and cockles from the Dorset Shellfish Company, one of the leading specialists in the country and a key supplier to some of the top restaurants in the UK. Clam sales were very successful, selling more than double than predicted volumes. We also expanded our fresh British fish range to include five different MSC certified native British fish varieties, including Coley and Whiting. ”