So they lied again. There is no agreed deal or Grexit this morning, after all that briefing about the crucial summit and the final decision. No wonder fewer now believe them. How can you run a currency and a banking system when the authorities are so visibly unable to deliver what they promise? It’s time they asked themselves some more fundamental questions.
Is there any level of youth unemployment that might make the Euro area change policy? Apparently a majority of young people out of work in some countries is fine.
Is there any level of general unemployment that could cause a change of heart? Unemployment of 25% is acceptable in southern countries to the Euro leaders.
Is there any degree of disruption of banks that is too high a price to pay? The Cypriot banks were closed down and offered limited withdrawal for weeks, and now the Greeks have had two weeks with no functioning banks. Is this satisfactory in a first world currency system?
Is there any limit to how much money people and companies can lose by depositing euros in a Euro area regulated bank? In Cyprus larger depositors lost half their money. In Greece depositors have been unable to withdraw their money for two weeks.
Is there any limit to the inequalities around the zone? Is it acceptable that benefit levels and wages are so much lower in the east and south than they are in the north?
Is there any limit to how large the German surplus has become? How can the zone function properly when its largest area amasses an ever larger surplus earned by exporting to the rest, but is unwilling to recycle the money?
Is there any concern amongst the zone’s leadership that it is throttling democracy? What is the point of a Greek referendum or an Italian or Spanish election, when economic policy is dictated from Brussels whatever voters might want?
Author: johnredwood
Extend and pretend day?
If the Euro area decides after all to lend Greece another 53 Billion euros that they can’t pay back, we need to ask what was the crisis for? Why close the banks, undermine asset values, put Greek people into more misery and cut the output and tax revenues of the Greek economy? Why seek to change the Greek government and then lose a referendum when the Greeks called the Euro area’s bluff? And if Greece agrees to the austerity it rejected, why did they put themselves through the pain and cuts of the last few weeks, when they could have volunteered for austerity earlier to release more cash?
Extend more loans and pretend that you will get your money back has been acting as a policy for years. It has become a lazy habit which the markets and the borrowers like. Once again as Homer nods Mrs Merkel looks the other way. The aim may be to defer the continuing Greek crisis for 3 years to her successor.It will then be even more difficult and costly to resolve.
If by any chance Germany this time stands up for honest money and says No to those who want to give Greece a loan which will one day become a gift, then the remodelling of the Euro can begin. Fewer members with decent finances would be a more sensible proposition, doing less damage to the economies locked into it.
It is unlikely the cost of a further bail out for 3 years will be as little as Euro 53 billion. Some forecasts say there will be extra money from the IMF on top. They also need to factor in the costs of bringing the Greek banks back to life. I can’t see how they will get away with less than an extra Euro 100 billion to reopen, strengthen and make liquid the banks and offer Greece some spending money for the next three years. Then there would be presumably at least Euro 100 bn of debt cancellation or easier terms to a similar value on top of that.
If Germany is wavering and thinking of giving in again to Greek demands, at least they should offer far less money for a shorter time period, and expect to see progress on the Greek reforms before they offer yet more money and a longer period of support.The problem is, the medicine Germany thinks the Greeks need is still the opposite of what the Greeks believe they need. The underlying tensions remain. It is difficult to see how sacking more public sector employees can work unless the private sector economy has the cash, credit and exchange rate to allow it to grow and create more jobs than the public sector destroys.
The Greek economy must be weaker now than when the rows began earlier this year, making recovery more difficult. Kicking cans down the road is more problematic if the people kicking want to go in opposite directions.
Jam busting – let’s have safer junctions and better flows of traffic
ROAD ISSUES FOR WOKINGHAM BOROUGH
EAST/WEST ROUTES
The main traffic flows in our area are east/west. There are three main routes, the A329M/A3290, A329, and the national M4 . The A327 in conjunction with the B3349 also provides a Wokingham to Reading east/west link around Arborfield/Shinfield. To the north of my constituency lies the A4 and to the south the A 30 and the M3. The A4 has reduced capacity following de trunking and the imposition of traffic calming measures. Both the A 30 and the A 4 have short sections of dual capacity with pinch points elsewhere. There is insufficient capacity on all these roads individually and in combination.
The government has announced plans to increase capacity on the M4 by one third, but local roads also need extra capacity.
The A327 will benefit from the Shinfield and Arborfield by passes. It also needs flood prevention measures to the east of Shinfield, and resolution of the delays caused by aggressive traffic lights on the south Reading section.
The A 329 blocks regularly thanks to light controlled junctions in Wokingham and Winnersh. A Winnersh by pass might tackle the Winnersh issue but we need to see whether there is a sensible route. Shorter term and cheaper options are a roundabout at the Broad Street junction in Wokingham and remodelling of the Winnersh junction with changes to phasings of lights with traffic sensors. The double light sets for the foodstore and the junction create considerable difficulties and delays.
The A329M will need more capacity in each direction and better access from the Winnersh Triangle entry in due course. Immediately the traffic lights should be withdrawn from the two approach roundabouts to the motorway at the Winnersh exit and from the Winnersh Triangle approach roundabout or the lights made peak time only.
NORTH/SOUTH ROUTES
North South traffic is lighter than East/west, but road capacity is far too small for current volumes. The main obstacles are the river and two East/west railway lines with inadequate bridges. There are two principal routes, the A 321 from the M3 in the south to Henley via Wokingham, and the A 327 from Eversley to Reading via Shinfield. The B3030 route from Arborfield to Hurst where it links with the A 321 is also an important north/south corridor.
The river crossing at Sonning has just a one way at a time bridge with one mile queues as a regular peak feature.There is little that can be done about this given the nature of the bridge and setting. The back bridges and approach road from the north could be improved further by Oxfordshire which would help.
The two way bridge at Henley is backed by a light controlled junction, which creates two mile tail backs during the long rowing/festival periods, and one mile tail backs at normal peaks. The route of the minor road intercepting the A 321 by the riverside in Henley and the traffic lights are a bigger cause of the jams than the bridge itself. Wokingham has long supported a 3rd crossing but neighbouring Councils remain opposed.
People wishing to go north on the national highway network from the Wokingham constituency are more likely to use national roads, by heading east on the M4 to use the bridges on the A 404(M) over the river and railway, or heading west to the A 34 trunk which also has good bridges over river and railway. Both these routes can entail substantial detours and place additional strain on the east/west national highway for what are south/north journeys.
The railway crossing at the Finchampstead Road does not permit two way traffic flows with large vehicles and is now scheduled for improvement. One rail bridge crossing in Wokingham is insufficient and an additional one is scheduled. The rail crossing in Winnersh does flow. The three sets of barrier controlled level crossings in the Wokingham area are major impediments to traffic flow and are potentially dangerous, so additional bridge routes that take most of the flow are necessary.
Twyford is a major north/south bottleneck on the A321, including parking on the main highway to pick and put down passengers for the station. This is outside my constituency.
Cycle lanes and routes should be segregated from these main roads. London has experienced an alarming increase in cycling deaths with cycle lanes and more cycle use of main roads without physical separation from traffic. The Council should identify footpaths and pavements that could be converted, and verges and alternative routes that could provide safer segregated capacity for bikes.
Productivity is primarily a public sector problem
Over Labour’s long years in power from 1997 to 2010 the public sector received plenty of spending to help it on its way. This was all called investment, and some of the money did indeed go into investment. Despite this there was no productivity growth at all in this large part of the UK economy. The government needs to turn its prime attention to boosting public sector productivity. It needs to work with its own staff – and the employees of the all the Councils and quangos – to help them work smarter and achieve more for less cost. That is what productivity is all about. That is what the UK manufacturing sector has been doing well year after year.
The problem with the lack of public sector productivity gains is not just that it reduces the performance of the whole by depressing the average, but the poor performance of the public sector in crucial areas like transport does damage to the private sector as it tries to become more productive.
The national and local highways authorities do not make getting to your destination in your vehicle their priority. Councils seem to take a delight in shutting the roads to vehicles as often as possible. They persist in allowing the placement of pipes and cables under main roads, so every repair or improvement requires digging up the road. Many Councils seek to take roadspace away from general vehicles for priority routes for buses or cycles, instead of supplying additional safe capacity for special users. Roads are closed for long periods after an accident or incident, and long after anyone injured has rightly been given priority and rescued. Councils phase lights badly, holding up traffic on the main routes in favour of minor routes or pedestrian crossing when there is no-one wishing to use the green phase and no sensor to realise this. Councils put in far too many sets of traffic lights, deliberately creating traffic jam traps that never flow.
Meanwhile the nationalised railway, Network Rail, gobbles huge sums of money and delivers very little new or better. Large sums go on changing from diesel to electric, when what is needed is more capacity and more reliable and intelligent signals. The nationalised railway impedes development of its substantial property estate, demands ransom payments from Councils and others that wish to bridge the railway line or make other improvements near rail routes, fails to think about total journey times and the difficulty of getting to many stations and parking there, and leaves parts of its estate in poor condition.
The government’s productivity drive should have short and long term programmes to deal with these major blockages to our economy. For our local roads we need
1, Roundabouts to replace traffic lights at difficult junctions
2. More traffic sensors on traffic lights
3. More left and right turning lanes at junctions to improve flows
4. More bypasses
5.Fewer permissions for road closures
6.All replacement pipes and cables to be placed under pavements or verges with easier repair access
7.More bridges over railway lines and rivers, as a shortage of bridge capacity is often the single main cause of peak congestion into and out of main towns and cities
8. Cycle routes provided safely away from main A roads
What we need for our nationalised railway will the subject of a future post.
Mrs Merkel’s dilemma over Greece
Mrs Merkel seems to be at war with herself. Euro Merkel knows she has to do what it takes to keep the Euro together, and to advance her European dream of a German led united Euro area – or EU as she would prefer. German Merkel knows that more and more of her fellow countrymen and women, and members of her own party, have lost patience with Greece and do not want a Euro more of Germany’s money to be lent, given or pledged to Greece.
Mrs Merkel also probably has enough self knowledge of both Germany’s considerable power in the EU, and the constraints on being seen to use that power too openly. Were Germany to lead a public ousting of Greece from the Euro, there would be bad press about brutal Germany cutting loose weaker countries because Germany had no sympathy with poorer countries nor any wish to share burdens and riches within the Eurozone. Were Germany to give ground and lead yet another bail out of Greece, but insist on austerity policies, there would be those who spoke and wrote about an authoritarian and dogmatic Germany forcing others to do as Germany instructed. Neither is a welcome thought capable of uniting a happy Eurozone.
So Mrs Merkel dithers. She tells us all where there is a will there is a way. If only Greece can behave better they might be accommodated. This is rather like saying if Greece had elected a CDU government there would not be a problem. At the same time she seeks to reassure her restive German friends and Parliament that this time there will be no easy terms bail out for a Greece which has failed to conform to past loan terms and to work properly through agreed programmes.
The tragedy for the Euro area is no-one around the table seems capable of leading the zone to a decision. That is why we have had weeks of damaging bad press for the zone, weeks of lending Greece more money from the ECB who assisted whilst the politicians delayed, and now two weeks of banks closed, no additional liquidity, and an air of great crisis. The ECB was made to carry the Euro from January and has now lent a total of Euro 89 billion to Greek banks, only to see them close and be unable to pay out people’s money when requested.
The preparatory work for Sunday’s meeting can run over once again all the old detail about what Greece might cut from its state budgets and which tax revenue it might be able to raise, but this is now looking very dated. The economic have deteriorated markedly thanks to the dithering of this year. Greece is starved of cash. Tax revenues have fallen. Output has suffered from the lack of confidence and now from the bank closures. Agreeing a modest three year loan and some changes to the state budget is not about to trigger a decent recovery and set Greece on the path to financial independence within the Eurozone. It might kick the can down the road one more time, only to create a bigger and more expensive problem some months later.
The first fix the assembled leaders need to arrange whether Greece leaves or stays within the zone is a fix for the banks. That will now be costly, given the damage inflicted on them. The banks may well need extra capital, as well as substantial additional liquidity. They remain the responsibility of the ECB and the wider Eurozone unless and until Greece leaves the Euro and has her own independent Central Bank. We are probably talking tens of billions here.
The second fix is for the Greek economy. Whilst I do not agree with all of Syriza’s policies, they are right to say the EU/IMF package has failed so far to get Greece growing, but growth has to be the priority. How do you get cash to flow and sensible new credit to be extended in a part of a currency zone that is as damaged and stressed by its single currency’s rules and massive German surplus?
The third and largest requirement is to fix the politics. The Euro bosses decided to take on the Greek government, aiming either to change their policies or to change the government. Instead the Greek people backed their government. What is the Euro area’s answer to a democratic government that simply does not accept Euro area rules? Lecturing them on their duties as borrowers has not worked. Either the Euro area has to have the full powers it needs to overrule a member state’s government, or it has to sit down and talk to whoever is elected and try to accommodate them. The last few weeks have seen a largely impotent Euroland clumsily interfering in Greek politics and losing. On Sunday they have to show they have learned from this bitter experience and can find a way to improve the position. If they decide they cannot lose face and lend Greece more, they need to help Greece organise an orderly transition to the drachma. That has to start with the ECB standing behind the Greek banks so they can open again.
Real public spending rises again
Yesterday’s budget papers confirmed that real public current spending has been rising. On page 65 of the OBR Report they confirm that real government consumption increased by 1% per annum 2010-14. This is interesting as when I argued that there would be real rises in current spending on the cash figures most said that was wrong and the official forecasts talked of cuts.
2015-20 is forecast to show further real growth in government consumption. General government consumption is to grow in real terms every year between now and 2010, as is real government capital spending apart from minus 0.1% in 2016.
The OBR Report summarises the impact of the budget well. It says that departmental government spending will be £83 billion higher than in the March plan. The tax rises in the budget will increase revenues by £47 billion over the Parliament (dividend tax, insurance tax, pension tax and vehicle excise duty), to be offset by cuts in Income Tax and Corporation tax worth £24.6bn. Borrowing will be higher in 2016-17 to 2018-19 by £16.7bn.
Budget offers more spending and more tax revenue
The Budget reshapes the financial story of the 2015-20 Parliament. Instead of planning a £60 billion a year increase in cash spending by 2019-20 the Budget lifts this to an extra £69 billion, similar to the increase over the last Parliament. Instead of keeping current public spending under very strict control in the middle years, this Budget increases 2016-17 spending by £15 billion and 2017-18 current spending by £25 billion compared to the March plans. The detail of which departments benefit will be given in the autumn.
So how is this all paid for? Revenues are now more buoyant, and the latest forecasts think this will continue. With no further increases in the main taxes the aim is to raise £168 billion more in tax in 2019-20 than the government collected in 2014-15. That is £11 billion more than forecast in March. The government still eliminates the deficit by 2019-20 on these estimates. The following year, 2020-21 is also shown for the first time. The plan is to have £40 billion of extra spending that year, paid for by a rise in tax receipts of £42 billion.
These augmented figures for spending mean the NHS and schools can receive the extra money they need, and the Defence budget is now offered increases to meet the NATO 2% of GDP commitment. The economic forecasts point to satisfactory growth for the next few years, with inflation and interest rates trending up a little but staying relatively low. Productivity is also shown rising.
The budget measures include more road investment, more apprenticeships, better education and training, a new national living wage, lower corporation tax rates and a new system of taxing dividends.
English votes for English issues
The government has set out its proposals and will debate and vote on them on July 15th. I promised to speak for England and to seek ways in which English matters can be settled by English MPs. These changes to the way the Commons will consider English laws, English budgets and English taxes are a good start which I will support next Wednesday.
Mr Redwood’s interventions during the debate on English Votes on English Laws, 7 July 2015
John Redwood (Wokingham) (Con): Why did the Labour party ignore the needs and voices of England when it first created lopsided devolution, and why has it come up with absolutely no ideas to meet the requirements and needs of England in 18 years of lopsided and unfair devolution?
Ms Angela Eagle (Wallasey) (Lab): I would not have given way to the right hon. Gentleman had I realised that he has only just come into the Chamber and has missed the rest of the debate. The answer to his question was given earlier when he was not attending.
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John Redwood: Is it not a good sign that we have had the Scottish Parliament for some years now and there have been no great issues about deciding what is a Scottish matter? If it is possible to know what is a Scottish matter, it must be equally easy to know what is an English matter.
Mr Charles Walker (Broxbourne) (Con): My right hon. Friend makes a good point that I am sure will be appreciated by both sides of the House—as he is appreciated by both sides of the House.
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John Redwood: Will the hon. Gentleman confirm that his party has had a policy of not voting on English issues, and that it has been able to identify the issues not to vote on?
Pete Wishart (Perth and North Perthshire) (SNP): That is exactly the point that I was coming to. There are ways of dealing with it. I suggested a solution in the form of federalism, but I did not sense any warmth towards that proposal from the Government Benches, so let us try another way. The right hon. Gentleman is right: we do not vote on English-only legislation. What we do is this. Every time a Bill is introduced, we scour it for the Scottish interest. We look for the Barnett consequential issues, and we establish whether it will have an impact on Scotland. If it will not have that impact, we leave it alone. We stay well away: of course we do. With all due respect to my English friends, I have better things to do than scour legislation about policing arrangements in Plymouth when I am looking after the people of Perth and North Perthshire.
As the right hon. Gentleman says, if there is no Scottish interest, we take no interest ourselves. How about building on that? How about saying. “This is a voluntary arrangement that seems to work reasonably well; why do we not continue to pursue it?” There may be issues on which the Leader of the House and I do not entirely agree, but surely we could try to resolve them by means of a voluntary arrangement, without creating two classes of Member of Parliament in the House of Commons. Why should that not be a solution?
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John Redwood: Is not the asymmetry in the new proposals still against England, not against Scotland? The Scottish Parliament can vote any law it likes within its powers, whereas English MPs will not be able to do that in this Parliament.
Mr Jacob Rees-Mogg (North East Somerset) (Con): That is of the greatest importance. The English must recognise that if we want the Union to maintain, we must not require exact parity. The United Kingdom is 85% English, and the English demanding exact parity is the way to destroy the Union. The English, in this context, have to be generous. It is important that we remember that; otherwise we destroy the Union that we are seeking to protect. That is why Standing Orders are important—they can be reversed. If the Opposition Members had a majority, whatever form of coalition it took, they could suspend Standing Orders on a single vote to proceed with the business they want—[Interruption.] The hon. Member for Rhondda (Chris Bryant) is shaking his finger at me and getting frightfully exercised, but we see Standing Orders suspended on a regular basis. Standing Orders have been suspended to rush through Bills in a single day, and they are suspended almost weekly on minor matters so that deferred Divisions do not take place. Standing Orders are not constitutional holy writ; they are a mild way of making an alteration.
Mr Redwood’s question during the debate on Britain and International Security, 2 July 2015
John Redwood (Wokingham) (Con): If we have a Daesh terrorist plotting murders in the United Kingdom, we arrest them, prosecute them, and put them in prison. If that same terrorist goes to Iraq, we try to hunt them down and kill them and blow up the building they are living in. How does that help create a rule of law or democratic pressures in Iraq? Is not the most important thing to try to impose a rule of law and diplomacy and work away to get some solution?
The Secretary of State for Defence (Michael Fallon): I recognise my right hon. Friend’s view, which he has honourably held for a long time and advocated very eloquently in the debate two years ago. However, I am afraid that the people we are dealing with—ISIL—do not respect the rule of law, do not respect our system of prosecution, and do not respect international boundaries. Everything we are doing in Iraq is at the request of, and with the authority of, the legitimate Government of Iraq, and any action that we are supporting in Syria is in aid of our operations to assist the Government of Iraq.