Author: johnredwood

Last week I met the Chairman and Chief Executive of the Office of Road and Rail. This body spends £32 million a year of our money on acting as economic and safety regulator of the railways, and acting as a new regulator of the Highways Agency, the government body that runs England’s roads.

I asked them why they had taken no action over Network Rail’s decision to take out foreign currency borrowings which I have warned against before. I asked why they had apparently taken no action over Network Rail’s derivative trading and hedging, nor intervened to stop losses or to complain about them. They reminded me that Network Rail’s finances are now under the control of the Treasury and they will not be making any more foreign currency loans, as if I was unaware of that change. They had no answer on the broader questions, and were taking no action over derivative losses.

They have been agonising over £2m of fines to Network Rail for poor performance. They wish to express their displeasure, but they do not wish to take too much money off a company owned by taxpayers and funded by taxpayers. They clearly have no sense of significant numbers. Network Rail happily lost more than £2m a day every day last year on financial derivatives , so I guess a single £2m fine is neither here nor there to them.

They were also asked about their attitude towards the prolonged closure of the M20 this summer in Operation Stack. They were asked about other options to allow this crucial highway to continue in use. Again they had no helpful answers, and showed no sign of wishing to change things for the better by using their powers.

I came away seeing little value in much of the £32 million spent each year on this body, as it is quite incapable of keeping a major motorway open, and uninterested in stopping major financial losses at Network Rail despite being their economic regulator. I think they said they had to add road regulation to their rail remit to meet EU requirements.Maybe their safety role for rail is better done than the financial regulation.

Two weeks ago Mrs Merkel told the world that Germany would invite in all Syrian refugees who wished to come. Many commentators waxed lyrical about Germany’s generosity. Some in the UK wrote pieces contrasting Germany’s compassion favourably with the UK government’s wish to avoid false hope and encouragement to people to undertake dangerous journeys. Anyone who raised problems with Germany’s approach was in danger of being condemned as heartless.

This week the German approach has suddenly changed. Germany now wishes to place a limit on how many refuges she can take. Germany now wants other EU member states to undertake proper border checks at the EU’s external border, denying economic migrants access. Just in case they do not manage to do this, Germany has placed new border controls at her frontier, against the spirit of the Shengen open borders policy she subscribes to.

Some of us queried at the time how Germany would distinguish between Syrian refugees, refugees from other countries and economic migrants. We asked how she would avoid a very large number of people deciding they wanted to take advantage of Germany’s apparent generosity. We wanted to know how EU law could be changed overnight by a German statement of policy, when EU law seemed to say in most cases Italy or Hungary or Greece had the task of deciding entry into the EU if the migrants turned up there first.

There remain serious problems with Germany’s latest policy statements. How can a quotas system work? What if the refugees allocated to some of the countries have no wish to stay there, but insist on travelling on to another EU country like Germany with more jobs on offer? For how long will Germany suspend her open borders required of her by the Shengen agreement? As Germany is now cancelling trains that come in from Italy, how much impact will this new policy have on the movement of people and goods other than refugees and economic migrants? Above all, does Germany now regret her previous statements.? What does Germany say to a genuine refugees that has been attempting the dangerous journey to the EU, encouraged by Mrs Merkel’s statement? Why is there now a limit on numbers when before there was no limit?

Venezuela currently produces no official inflation or national income and output figures, because the government does not like the truth to emerge about the damage its economic policy is doing. Analysts reckon inflation in Venezuela is well over 100% per annum, with some thinking it is now running at several hundred percent. The bolivar, their currency, has plunged drastically on the black market.

The government has printed large sums to try to keep the economy growing. It is likely output will decline by at least 10% this year.Prices of some essentials have been fixed at low levels to try to help the poor. As a result there are great shortages, and many of the poor cannot get the items they need at all. People have been banned from forming queues outside shops in the streets to try to buy things. There is a military crack down on smuggling, as people seek to buy up scarce products like flour and petrol to smuggle the output to Columbia where prices are closer to world levels. Basics like milk, soap, toilet rolls and bread are often out of stock in the shops. The leader of the Opposition has been in prison.

This year Venezuela may find it impossible to service her foreign currency debts. The country is short of foreign exchange to buy the imports they need in a range of basics for daily life. Venezuela is demonstrating that a combination of controls and overrides of the markets and prices, and printing extra money, leads to a break down in the supply system. The poor suffer as well as everyone else. Far from creating plenty, stimulating the economy and getting people out of poverty, these policies do the exact opposite.

I mention this today, because Mr Corbyn is an admirer of the politics and government of Venezuela. He wrote an article praising it in 2009, and renewed his favourable comments this year. I recommend he looks at the poverty, the scarcity of goods and the difficulties for many people in their everyday lives created by this socialist paradise. Just as the Europhile left need to explain or condemn mass unemployment in Greece, so Mr Corbyn needs to explain or condemn the impact of high borrowing and money printing on Venezuela. Venezuela suffers deep and severe cuts in living standards, from a government which claims to be an opponent of austerity.

Mr Corbyn has defeated a Labour party prepared to make compromises to win elections. Now watch as he goes on to attack middle England. He will condemn success, tax achievement and seek to undermine self reliance.

Mr Corbyn promises to make inequality the main issue. The government should reply by making poverty the main issue.

Mr Corbyn’s policy is to reduce inequality by taxing the rich more. If, for example, he went the whole way and said all income and wealth held by the top ten percent in excess of the rest would be taxed away he would immediately make the UK a much more equal society. He would also make it much poorer.

Many of the rich would go, taking their assets with them. Some of the rich who stayed would work less, cut their income, find legal ways of reducing their wealth, make fewer riskier investments, create fewer jobs. This would in itself cut inequality and make the rich poorer, in line with Mr Corbyn’s aims.

It would also make many lower income people poorer. It would mean fewer jobs in the luxury trades, fewer jobs providing goods and services for the rich and famous. Great footballers, singers, actors would leave the country, and with them would go the demand they create for goods and services. We would all be poorer. It would mean fewer new and successful companies and the career opportunities they offer.

Most people in the UK are not jealous of success. They accept that great entertainers, sports people, entrepreneurs should earn large sums based on their skills, subject to progressive taxation at sensible levels.

Most of us want the state to help tackle poverty. We want inequality to reduce because people on low or no incomes are becoming better off. That is the purpose of the Conservative tax cuts, taking people on low incomes out of Income Tax altogether. That is the purpose of welfare reform, to make work worthwhile. That is the purpose of education reform, to give more people the chance of a good schooling. That is the purpose of pro enterprise policies, encouraging more people to work for themselves or to set up in business and create jobs for others.

Conservatives should answer Mr Corbyn’s politics of jealousy with our politics of aspiration. We need to show we can help lift more people out of low and no incomes, and help more people to own their own homes, businesses, and savings. Conservatives want an inclusive society, where everyone can become an owner, and where the many have the opportunity of a good education and a good job. Mr Corbyn wants a divided society, where the better off are hounded, and everyone ends up worse off.

On November 13th at 4 pm I will be giving a public lecture on why the Euro needs a political union, and the EU plans to do this, in the Old Library of All Souls College High Street Oxford.

This is an advance notice for those interested.

The UK will be more prosperous, more democratic and more influential by leaving the EU – or by accepting a fundamental change to our relationship which takes us out of the centralising treaties.

Leaving will be better for people.
The UK can decide whether to enjoy £300 a year for every family every year as a tax cut, or whether to increase public spending. That’s how much we currently give to the EU to spend elsewhere on the continent.

The UK can guarantee to match all the EU payments to farmers, universities and regional projects out of the money we currently send to the EU and get back.

The UK could pursue a cheaper energy policy, taking people out of fuel poverty and aiding the industrial recovery of the UK.

Leaving the EU will let us be a freer and more democratic country.

The UK will be able to make her own decisions through Parliament as guided and informed by UK voters

The UK will regain control of her own business, environmental, criminal justice, migration and foreign policies amongst others

Once again we will live in a country where Parliament can change any law that needs changing

The UK people will be sovereign again, able to elect people who do their bidding without the interference or prohibition of EU laws.

The BBC will I trust wish to be fair in the long run up to the EU referendum. We know they have a list of questions to ask to assist the stay in campaign, as we hear them regularly on radio and tv. Just to help them I am going to suggest some other questions they need to ask to show balance.

Let’s first take the case of interviews of business leaders. They nearly always ask for comments on the possible damage they think exit might do, but rarely ask about the gains. They could ask

Which countries would you like the UK to negotiate a free trade deal with on exit, as we would be free to do so? (The EU has no deal with the USA, China, India etc)

How much more could you export to markets like the USA, India and China if the UK was free to have its own free trade agreements?

Which EU laws, taxes  and regulations would you like a UK government to amend or repeal for business at home and with countries outside the EU, on exit?

Let’s then take the case of interviews with people from public sector organisations. The BBC is normally keen to see these bodies receive more money from government, as it usually aligns with public service rather than with taxpayers. It could ask all of them

If the UK leaves the EU how would you like the £10 billion we save from no longer having to pay a net contribution to the EU to be spent? Would you prefer it to be added to public sector budgets rather than offered as a tax cut?

If the UK stays in the EU, do you think domestic budgets should be cut as the EU budget grows and demands more UK cash?

Let’s take the case of interviews with representatives of the EU government, and with political parties in favour of staying in on current terms.

They should be asked

Do you agree with the 5 Presidents of the EU that rapid progress now needs to be made with economic, monetary, capital markets, banking and political union?

What should the UK’s relationship be with the Euro area and its emerging political union, given the fact that the UK is not about to join the Euro?

If other interviewees are also going to brought into the EU debate as most business people are they could ask

Which taxes would you most like cut when we no longer have to pay £10 billion a year into the EU?

I noticed this morning, once again the Today programme business section was in full propaganda mode despite Bernard Jenkin’s excellent critique of them on Tuesday. During a piece on the success of Aston Martin and the UK motor industry they had to ask how could Aston and the industry do so well with the uncertainty overhanging them about the UK’s membership of the EU! The interviewee rightly ignored this and talked about the excellence of Aston’s people.

My contribution to Tuesday’s debate on the Energy and climate change levy:

John Redwood (Wokingham) (Con): The two questions that the Committee needs to ask when considering this Government proposal are these. Will it will help or hinder the Government in their central task of making sure we have enough power in this country for our future needs? And will it help or hinder what I hope is also the Government’s task, which is to provide value for money and sensibly priced energy, so that we can tackle fuel poverty and have a plentiful supply of reasonably priced energy to fuel the industrial recovery and the general economic recovery that the Government wish to see? My hon. Friends the Members for Selby and Ainsty (Nigel Adams) and for Brigg and Goole (Andrew Percy) made important contributions, but I would like to see whether there is any scope to bring them a bit closer to the Government’s position.

Alison McGovern (Wirral South) (Lab): The right hon. Gentleman has set out the two objectives that he thinks the Government should have. Is he suggesting that tackling climate change should not be the Government’s objective?

John Redwood: I have made very clear the priorities for myself and my electors. In the situation in which the country finds itself, guaranteeing keeping the lights on and having the power for industry and commerce is a fundamental objective that I take very seriously. I also take seriously the need to ease what Labour used to call “the cost-of-living crisis” to ensure that people have more money to spend for a better lifestyle, so affordable energy is crucial. Those are the priorities I set out for these policies. I think they can be achieved while ensuring that we reduce pollution, which I am very much in favour of. I wish to have sensible environmental policies, but my priorities are security of supply and powering better-paid jobs and more activity, which requires lower energy prices.

Caroline Lucas (Brighton, Pavilion) (Green): rose—

John Redwood: I willingly give way to the hon. Lady, who always wants to price people out of energy.

Caroline Lucas: I think I am grateful to the right hon. Gentleman for giving way. He, like me, would like to see affordable energy, but given that nuclear power is one of the most unaffordable energies and that we are going to lock ourselves into extremely high prices for nuclear into times to come, will he be consistent in his position? If he does not want unaffordable energy, will he also oppose nuclear energy fees?

John Redwood: I have not seen all the figures on what the contract prices might entail, but I entirely agree that I want affordable energy. The advantage of nuclear energy is that it is reliable energy, and the problem with too much wind energy in the system is that it is very unreliable energy. It is therefore very expensive energy because a full range of back-up power is necessary for when the wind is not blowing. That means investing at twice the cost—investing in the wind energy and then in the back-up energy. With nuclear, only one investment needs to be made. The hon. Lady is quite right that it is crucial to get value for money if it is decided to lock into a nuclear contract.

Caroline Flint (Don Valley) (Lab): The right hon. Gentleman may be aware that the interim report of the Competition and Markets Authority pointed out in June that customers on the standard variable tariffs are providing the big six energy companies with an extra £1 billion a year on account of over-charging? If he is concerned about the cost of energy, as I am, does he not agree that it is disgraceful that since that report we have heard nothing from the Government about how they are going to tackle this over-charging of some of the most vulnerable customers paying their electricity and gas bills today?

John Redwood: I have no more time than the right hon. Lady for over-charging vulnerable customers. I, too, look forward to an informed and sensible response to the report she mentioned. I do not think, however, that it is very relevant to the levy and the tax change that we are debating here today. The issue before us is whether this change to the levy will make it more difficult to keep the lights on and more difficult to deliver cheaper energy. I do not think it does, but the Government need to respond to the other crucial issues posed by my hon. Friends the Members for Selby and Ainsty and for Brigg and Goole.

Given that the margins are now extremely tight—in view of the huge reduction in traditional capacity that we have experienced, some people are pessimistic about the next two or three winters—can the Government do more, and do it cheaply and sensibly, at the same time as making the levy change? That should ensure that the great power stations we still have available can be either kept in the system and running to provide more power—preferably base load power, but it may have to be variable power, given how the thing is now run—or at least be kept available on standby. We may have to pay a price for that as part of that guarantee of supply. The three power stations we have heard about from colleagues this evening are part of the possible answer. We need to know that there is a future for traditional stations and that they can be priced into the system while we are in this period of transition, trying to work out what a modern electricity generation system will look like in five or 10 years’ time.

Nigel Adams (Selby and Ainsty) (Con): Will not this change in the levy, which is being made so quickly and with so little much notice—28 days—make things extremely difficult for generators such as Drax, and will not the likelihood of capacity that is safe for us all be greatly reduced over the next couple of years?

John Redwood: My hon. Friend has made a powerful case in defence of Drax. I hope that discussions are taking place between the Government and Drax about how Drax can continue to make a contribution and the Government’s intention—which I will be supporting this evening—can be preserved. I think it entirely possible to change the levy while also coming up with a solution for Drax.

Many people wondered about the advantage of switching from coal to wood, and about whether that was what quite what we wanted to do as part of a so-called decarbonisation strategy. Perhaps there is a better answer, but I return to my original proposition: I want an answer that will keep the lights on and provide the best possible value for money, and I think that there needs to be more discussion between the Energy Department and the big power stations to meet those two aims.

What I liked about the Minister’s opening remarks was his constant stress on the importance of value for money. That must be what drives Government policy. We want the productivity improvements that are now coming through. It is remarkable how, when Labour Members complain about something, that nearly always transforms it for the better. They complained about the cost-of-living crisis, and energy prices collapsed. Then they complained about the lack of productivity growth, and productivity started to take off. We are very grateful to them for those wrong calls, which seem to provide the stimulus that we need in order to create a better world; but if we are to drive productivity forward, providing more and cheaper power is crucial, because many modern processes, particularly in industry, are very energy-intensive.

The danger of some of the policies that have been followed by the European Union and by the last Labour Government is that we price ourselves out of energy-intensive industries—not in a way that spares the planet the carbon dioxide that those processes generate, but in a way that simply drives the businesses to another part of the world. No one should be happy about that. Those who believe that the fundamental priority is cutting carbon dioxide must take a global view; they cannot take a parochial, single-country view. Again, those whose main concern, like mine, is the prosperity and wellbeing of the British people cannot be happy if the decarbonisation policy has worked in one country, but has produced an equal or bigger amount of carbon dioxide somewhere else because the jobs and the industry have simply been transferred. That makes no sense whatsoever.

My hon. Friend the Minister will have my support—and, I am sure, that of many Conservative Members—if this proposal is tested shortly in the Lobbies, but we see it as only one part of a much bigger picture. We believe that if it is to work in removing the anomaly between different types of power and allowing some power from overseas to benefit, we must ensure that other elements of the policy mix are able to deal with the fundamental issues of supply, availability and value for money in the power system.

What the Government must do—and what they are beginning to do in a way that is shocking some Opposition Members—is revisit the huge cat’s cradle of subsidies, environmental tax, environmental tax breaks and rules which are extremely complicated, and which may, indeed, be having perverse consequences. They may be driving carbon dioxide-generating business out of this country while not cutting the global totals; they may be jeopardising our security of supply; they may be making it more difficult to deliver what we wish to do for, in particular, lower-income consumers who find current energy prices very challenging; and they are obviously in danger of undermining important, big, traditional investments in this country that could serve us better for longer if they were not driven out of business by environmental controls emanating from previous Governments and, particularly, from the European Union.

I urge my hon. Friend the Minister to justify the support of our party for this one element by reminding us that it must be part of a bigger picture, and that that bigger picture must be driven by a more rational policy that can deliver both the security of supply and the cheaper energy that the United Kingdom needs.