Author: johnredwood

Once we take back control of our money and laws we can review the incidence and level of VAT. It becomes a UK tax on 29 March next year, after years of it being an EU imposition.

I have set out before my wishes. Surely most can agree we should abolish VAT on green products. We wish to encourage people to have more draught excluder and insulation, and to have better controls on their heating systems, yet the EU charges them top rate VAT on it all. Lets simply abolish it.

I would also like to see us abolish VAT on domestic fuels. Fuel is expensive, and hits those on lower incomes particularly hard. Successive governments say they want to tackle fuel poverty. The best contribution they could make would be to remove the tax on fuel.

We should also abolish VAT on female hygiene products.

These changes would create some loss of tax revenue, but are easily accommodated within the savings of £39bn if we leave without giving the EU a present. I set out the costings of all this in the Brexit budget I offered as an illustration of the scope prior to the referendum.

The latest figures for borrowing show a further reduction in additional borrowing in the first quarter of the new financial year, as forecast here. Tax revenues are well up on a year ago, by more than the rise in spending, so additional borrowing falls again.

The authorities just need to be careful lest they slow the economy too much. Then they will find the deficit stops falling, as tax revenues are sensitive to the rate of growth. As expected, the combined fiscal and monetary tightening is slowing the economy, at a time when other advanced countries are offering more stimulatory policies.

I have never supported two referendums on whether to Leave or Stay within the EU, contrary to some misleading stories.

Years ago before the Conservative party agreed a simple Remain/Stay referendum there was a proposal to ask the people if they wanted to renegotiate our relationship, to be followed by an In/Out referendum. In the end the government  held a renegotiation without bothering with a referendum to approve such a renegotiation.

Every day government sends out pension money and benefits to people who have died.  It then employs other staff to work out where there has happened, and to seek to reclaim it from relatives of the deceased. This process takes time and effort, and is not always successful. It is also upsetting to family members to receive communications about overpayments to their dead loved ones. There is a double cost in the money they do not get back and in the costs of the recovery, and a cashflow cost from all the erroneous payments made. I ask the Treasury to look at how to improve and save money.

More to the point this waste and cost could be easily saved. Most people who die in the UK are elderly UK citizens. They must be well known to the UK state, as they die under the supervision of an NHS hospital doctor in an NHS hospital, or under the eye of an NHS GP. In order to get the free NHS care the elderly person has to be well known to the UK authorities, with medical card, National Insurance number, and registered with a local surgery with name , address and these identifier details.  More importantly, the supervising doctor has to make out a medical certificate identifying the person and establishing date, time, place and cause of death.  This document could be used to inform the rest of government of the death and cease all payments from close to the time of death.

It is true that NHS hospitals often delay producing the Death Certificate for a few days for no good reason. Why not ask the senior medical person on duty when the person dies to produce the certificate before going off shift, as surely it is easiest to write out an accurate certificate whilst the memory on the ward is still fresh as to the time and circumstance of death. This can be promptly checked and reviewed by another unrelated doctor at the hospital.

The state, however, delays matters further by requiring a relative of the deceased to pick up the medical certificate and to take it to a Registrar of Deaths to create a second death certificate. This can delay matters longer, as Registrars are not available at week-ends or in the evenings. The relative has to go in person to  meet the registrar, and often there is a week’s delay or more before the first available  appointment can be secured. The relative is requested to take the birth certificate, marriage certificate, NHS card, NI number, tax reference, full name and address of the person as if the state does not know any of this from the medical death certificate and its own records. Still, however, when the formal Death Certificate is issued, the government may  go on paying the deceased.

Individuals are further encouraged to register with Tell Us Once. The irony of this is  not lost, when it is clearly tell us at least twice and turns out to be an invitation to tell them many more times. This entails putting onto another computer many of the details given to the Registrar, and saying what the relative knows about the deceased’s relations with the state. After doing this, payments are still often made to the deceased!

This is a bad system that imposes plenty of stress and hassle on the grieving relative, and fails to use the amply supplied information to  stop the flow of money promptly and cleanly. Surely in an age of computers which can talk to each other the state could stop paying pensions and benefits to the dead?

The traditional parties like the Christian Democrats and Social democrats in most continental countries, and Labour and Conservative in the UK, have a history of changing leaders and changing policies whenever their popularity falls or their electoral success is threatened. That is the nature of democratic politics. Parties that want to govern have to please enough people enough of the time.

So what is bizarre is the way the EU holds them in thrall, in the case of the continental parties to the point of self destruction. Undue support for the austerity policies of the Euro has swept aside the traditional parties of Greece, Italy and France, throwing up new parties that have taken over government. In both Spain and Germany the two old giant parties  have been deeply wounded by the their adherence to the EU/Euro scheme.

The UK parties have been less damaged because self preservation – and a lot of pressure from a few of us in Parliament – kept them out of signing up to the Euro. At the last election the promise both made to take us out of the EU took support for Labour and Conservative back up to a combined high 83%. It is not surprising to see Conservative support now  falling with the PM trying to persuade people of her delayed and partial exit  in tge Chequers proposals. Many Conservative voters from 2017 feel let down, as they voted for a party that would get on with Brexit.

Mrs May needs to remember just how much damage too much EU has done to the Conservative party before. Mr Heath who took us into the EEC lost in 1974, the first election that followed that fateful decision. It was not just the EEC that cost him, but Labour offered a renegotiation and a referendum  which proved more popular, as people thought Mr Heath had done a bad deal. Sir John Major sacrificed his party and did huge damage to the UK economy by insisting on joining the Exchange Rate Mechanism. This duly plunged us into high inflation followed by recession, as I predicted at the time. This in turn meant the Conservatives spent the next 18 years from the 1997 election without a majority in Parliament, with 13 years in opposition with few seats, paying the price for the economic incompetence too much EU delivered. The false explanation that he lost in 1997 owing to disagreements about the EU can be easily rebutted by looking at the opinion poll graphs. The Conservatives lost support heavily as soon as the economic damage of the ERM was revealed, and never regained it – nor lost more – during the rows that followed.

As forecast here, Stamp Duty receipts are now lower than before Mr Osborne’s big increases in the rate of Stamp Duty on second homes, and dearer properties.

Other tax receipts will also have fallen from the sharp reduction in transactions that has resulted. It means less income and corporation tax from estate agents, removal firms, and home improvement businesses that do well out of people moving.

So why not cut the rates to raise more revenue?

It is difficult to see why some in government are so keen for us to complete negotiating a Withdrawal Agreement. The one the EU has in mind is a one sided grab of powers and money. Some in government seem to think we need another 21 months in limbo, technically out of the EU but in practice bound into it by a new Withdrawal Treaty on more penal terms than our current membership. What is they can agree after March 2019 that they have been unable to agree in the 2 years nine months from the vote until next March? Why not just get on with it with March 2019 as the deadline?

Mr Raab has tried to inject some negotiating counter into the proceedings by saying there needs to be a Future Relationship Agreement to justify this very generous Withdrawal Agreement for the EU. The problem is the UK civil service seem to accept that the Future Relationship Agreement will be a flimsy Head of Terms, effectively little more than an invitation to another 21 months of probably unfriendly and fruitless negotiations. Meanwhile the EU is understandably keen to get the UK to sign the Withdrawal Agreement in solemn Treaty form, so we are bound in and have to make the payments.

I have seen nothing so far on offer from the EU by way of a future relationship that justifies paying them another £39bn after we have left. Canada did not pay them for their FTA, so why do we need to pay them for something similar, if that turns out to be their best offer in the end? Nor do I like the idea that any future partnership would take the form of a complex and binding Association Agreement. These are used to impose EU rules and practices on states that would like to become members in due course.

The more I look at the UK economy and public services, the more important it seems to me that we have that money back soon. Then we can pull off what is needed for greater prosperity – tax cuts, spending increases and a fall in deficit.

Over a year ago the Bank of England decided to tighten money policy considerably. It removed all the special credit lines for commercial banks designed to encourage lending. It issued stricter guidance over car loans, mortgages and consumer credit. It went on to raise interest rates from 0.25% to 0.5%. It achieved its aim, with money growth halving to just 3.5% from the 7% level in 2016. The car market duly fell sharply, and the top end of the property market was damaged, primarily owing to tax rises, but assisted by the credit tightening. Money and credit still look too tight to provide the backdrop for decent expansion.

Yesterday they decided to go further, by increasing interest rates to 0.75% and introducing the concept of an Equilibrium rate of interest considerably higher than today’s rate to guide markets towards expecting more monetary tightening. It is difficult to see why from the  numbers being reported. Growth has slowed. There is no surge in inflationary pressures. Banks are better capitalised. On the Bank’s own forecasts the UK economy grows more slowly than it used to with no inflationary problems ahead. They themselves concede that if they kept interest rates at the new level of 0.75% instead of raising them further prior to 2020,  output would be higher, unemployment lower, and inflation only 0.2% higher than on their preferred course of slow growth and more tightening by that date.

The Equilibrium rate is an unhelpful abstraction or distraction from the day job of keeping inflation under control whilst promoting better growth. The Bank accepts that the so called Equilibrium rate “cannot be directly observed” – a polite way of saying it does not in any normal sense exist. They accept that “there is a wide degree of uncertainty around the estimated level” of the real equilibrium rate. By choosing a range of 0% to 1% real they are trying to get markets to accept more tightening, but then they back off a bit by leaving the timescale imprecise.

Inflation is being kept down by the open nature of the UK economy. A large inward migration is keeping wages down, whilst massive imports of goods and services are keeping general prices down. The Bank forecasts those features to continue. They are aided in this by internet competition, and by the emergence of big discounters in a range of markets. The Governor himself gave a good lecture some time ago which I commented on effectively debunking the main part of the MPC’s analysis. Their theory is  that they can measure capacity, and that we are  now close to capacity. They therefore expect inflation to rise as we hit capacity.  As the Governor pointed out, in an open global economy like the UK you can always import anything you need which domestic output cannot  provide. So why is the MPC still praying in aid the idea that we will soon have exceeded capacity, and therefore need to be reined in?  How do you measure capacity reliably these days, when the internet and changing consumer fashions and transforming what we need and the supply to meet demand? The Bank is doing us no favours by being too pessimistic about the outlook and then taking action to ensure a disappointing outcome.

A week or two ago the media was full of stories of an exceptional heat wave that would take temperatures to new records.  We were told that we should expect drought and intense heat. A few days on and temperatures  slumped, with plenty of rain over the weekend. There has been little news reporting of the change of weather, and  no pieces apologising for getting the forecasts wrong about new records  by last week end. If as expected temperatures pick up again and there is no more rain we might hear about that.

I thought at the time of the forecasts  that the weather was more like the weather in dry hot summers I remember in the past, so I looked up some of the figures. According to the Met Office 30 year numbers the average summer temperature has been 14.3 C and the average rainfall 241 mm. Every summer in the last ten years save 2013 has been wetter than the 30 year average,  with 2011, 2012 and 2015 cooler than the average. 1976 was clearly much drier and hotter than recent years, as were some summers prior to that.

After the recent hot spell the highest temperature records for 1976, 42 years ago, remain intact. 2003 also recorded a high temperature for Faversham in 2003 which some say was slightly higher than 1976 for England.

Many things influence the weather, making it difficult to come up with a reliable model which accurately predicts what might happen next. Wind speed and direction changes, water vapour content in the air alters, cloud cover is  very variable, solar activity alters in intensity, the jet stream moves around.  Short term weather forecasting has got better because the experts have greater visibility of clouds on their way to us, and can calculate from wind speed and direction what is likely to happen. As any sailor can tell you, however, the wind is very  variable minute by minute. altering the course and pace of clouds across our landscape. It is even more difficult making a long term forecast when the clouds which will dictate so much have yet to be formed.

I guess much of the latest round of Project Fear, now in its extreme phase, comes from EU sources. They are clearly worried that we might just leave without making them a large payment and without staying in their system for another 21 months. They seem to be  trying to shock UK public opinion into buyer’s remorse on Brexit. Their efforts are silly.

Doubtless some of the most ardent Remain MPs and peers, many of them on the Opposition benches, seek to play up any negatives the EU might throw them as they seek to disrupt the country and its government over Brexit. The latest scare stories do not merit the attention they get in some newspapers and in some of the media. A cursory questioning of any of these  stories would show it is without substance.

Let’s take the latest scares that we will run out of drugs and food. How could that possibly happen? Continental suppliers want to sell us their goods after March 29th 2019, as they do now. The EU does not have the power to ban them selling to us. We will control all the ports for the receipt of these goods, so we will decide what checks and payments will be required. We can appoint whatever people and deploy whatever technology we want to ensure smooth running of the import process under WTO rules. Why would we want to introduce new checks and taxes that make it difficult to import things we want?  I was glad to see that No 10 has at last  briefed that there are no stand by plans for the army to move food, as food will of course continue to roll in on ships and trucks as it does today. Our non EU imports come in smoothly at the moment showing we know how to do it, even with tariffs where the EU requires them.

Or lets examine  the stupid idea that France and Germany will ground all their plans that currently fly to the UK in order to stop our planes flying to their airports. They are not going to want to cut themselves off from the UK market, from London and the large international hub at Heathrow, and their airlines will not want to have to cancel all the tickets they  are selling for flights after March 29th 2019. The EU does not have the power to stop planes flying between member states. What would they say to the Spanish co owners of BA if they wanted to damage  BA, the main UK airline? How would they put up a case in court when an airline sued them for attempted damage to its business?

Then there is the wrong  notion that EU citizens living in the UK and UK citizens living in the EU would be at risk of removal. The UK has made clear it is  not going to ask people legally settled here under EU rules to leave, and I expect the rest of the EU to behave in the same manner towards UK people living on the continent. Advanced democratic countries obey international law, which does not permit mass deportations. Nor I am glad to say have I ever heard a mainstream UK or EU politician advocate anything so unpleasant.

During the referendum campaign when I was speaking to a public meeting in my own area, the Remain spokesman was a civilised former senior civil servant. He delivered a mild version of Project Fear about the job losses, recession, falls in house prices and the rest that his side forecast for the winter immediately after the vote. We  now know that was all wrong. The public reaction in a mixed audience was fascinating. They laughed at the silliness of Project Fear.