Author: johnredwood

Since President Trump got into office again many on  the left in the UK have claimed he has undue influence over the UK, and spend their time condemning what he does. They need to understand that past US Administrations have all sought to influence UK policy, and the Biden Administration was particularly influential. President Trump has not interfered in many areas where he could. He has not condemned the idiotic surrender of the Chagos base to a friend of China. He has not sought to block the siting and expansion of the Chinese Embassy in London, though UK US intelligence security is a joint concern. He has not sought to use tariffs or other sanctions to get the UK to onshore more of our industry and produce more of our own energy, though both are crucial to being able to make an important contribution to NATO.

All the time we had President Biden in the White House I declined to criticise and was keen for our country to do the best deal with him we could.

Biden’s team were anti Brexit, pro the Republic of Ireland and pro the EU. They interfered extensively in the negotiations over the treatment of Northern Ireland and over what was to become the Windsor Framework. They sought to divide the pro Brexit Conservative MPs from the DUP, and to marginalise both in the discussions over the future realti0onship. The US stance wrongly argued that the Good Friday Agreement would be damaged if the UK did not adopt the EU scheme for controlling Northern Ireland trade and business laws. This was self evidently wrong but became the prevailing orthodoxy in much of the official UK government. US influence helped secure a great deal for the EU at our expense.

President Biden put in two new Vice  Chairs at the Fed and engineered major changes of approach and policy at that institution. Ironically the remodelled Fed duly printed too much money and allowed an inflation which did big damage to the Democrat cause. This had knock on effects to the UK with the Bank of England deciding to make a similar mistake.

President Biden pulled bis troops out of Afghanistan overnight without warning his allies or seeking our agreement. This left UK troops exposed and gave the UK government a major problem to rescue our forces. It also led to the needless loss of the country to the Taliban.

President Biden mis spoke about Ukraine, saying a limited Russian acquisition of territory might be alright, giving Putin a clear indication the US would not respond strongly to any invasion.

President Trump has made clear he wants an end to net zero policies which weaken the west, but has not used the same pressures and methods that the Biden team used to secure the Windsor Framework. He has just given advice to the UK to look to its energy self sufficiency.

Where President Biden refused a Trade Agreement with the UK President Trump gave the UK the first and softest deal on tariffs. President Trump was right to push NATO and the UK to spend more on our own defence, and he is right to want peace in both Gaza and Ukraine.

According to MI 5 and the Deputy National Security Adviser China regularly spies and tests out our systems. China dislikes UK naval vessels using international waters near Taiwan . Successive Ministers have expressed concerns about China, whilst successive governments have decided on a policy of having diplomatic relations with China and promoting mutual trade and investment.They have stressed they have the difficult conversations over human rights, Taiwan and threats whilst  developing trade.  Action was taken to remove China from sensitive areas like nuclear and digital communications.

 

This has now flared up over the issue of planned prosecutions of two people for spying for China. The decision to drop the cases over the issue of whether China is a threat has not been clarified. What changed? Why say the last government did not regard it as a threat when advice from that time  made clear they did as they gathered the evidence for the  cases  to go to court.

So what should the government do? Does trading with a country mean you cannot say anything bad about its government? When the issue is the governments attitude to China how can Ministers stand aside  and blame someone else? What should we do about China’s huge trade surplus  with us?

 

 

Fortunately it has not been too cold in the last few days. Nonetheless the UK has been relying for three quarters of its electricity on burning gas and wood, with imports helping out. Solar  and wind have been producing very little. How much worse it will be if we have a cold dark windless period during the winter when we will be very dependent on  imports  at a time when the rest of Europe could also be short of power.

Mr Miliband still has no answers on how we keep the lights on when renewables let us down if imports are scarce. He keeps telling us more  wind capacity is the answer, but it is not when the wind drops.

He also keeps telling us more  wind and solar will bring prices down. That is not true. He is offering guaranteed prices  for many new renewables  well above current average prices. He refuses to take into account the extra cost of needing stand by gas generation  for windless days.He is not allowing for the cost of battery or hydro storage schemes or putting enough of them in.

The government is at last talking about getting electricity prices down. There will be no thanks if they shuffle costs off our electricity bill onto our gas bill, and few thanks if they take renewables  costs off the  power bill and put it on the tax bill.

What they need to do is to take carbon taxes off gas to make gas fired electricity cheaper, and only back renewable projects which do offer cheaper power . Getting more of our own gas out would help, as we now have unused pipe  and platform capacity waiting for some gas making new sources much cheaper to exploit.

The original black hole estimated around £20 bn was blamed on the previous government, though more than half of it was higher public sector pay awards  made by the new government. This  was more  than covered by large tax rises in the first budget where we were told this would be  a one  off tax raising budget to get the finances into prudent shape.

Instead the Chancellor boosted spending greatly, Give aways to Mauritius with Chagos,to France who accompany  Channel migrants into our waters instead of stopping the boats, to record numbers of illegals arriving here, to a surge in mental  health disability benefits, to a huge increase in NHS spending with   no productivity requirements, to an further increase in the civil service and more net zero projects, for paying the losses by British Steel and the Bank of England.

Now we hear the Chancellor wishes to claim her economic problems arise from Brexit. Nonsense. Anyway Brexit happened well before the election so it  is not a new issue.

The truth is the black hoke would be much bigger  were we still in the EU. They levy up to 1.4% of GNI or ££42 bn on the UK. The average member state  pays 1% or £30 bn for Uk. We would also be paying away £4 bn of  customs dues and £1 bn of plastics tax to the EU if we were back in.

So the black hole  would be £35 bn to £47 bn bigger spending  on our terms of membership. Instead of blaming the EU she should be grateful we are saved  such a big set of payments.

I am fed up with hearing the lie our GDP is down 4% owing to Brexit. It isn’t. The dodgy OBR forecast said a loss of 0.25% a year for 15 years from our growth rate, which was also wrong. This was based on forecasts of a loss of trade. We now know our trade post Brexit is well up thanks to a surge  in services which are the majority of our exports.

The Remain campaign latched  on to a flimsy fifteen year forecast put out by the OBR of the possible impact  of Brexit. They said our trade with the EU would contract, so our productivity would  decline by 0.25% a year for 15 years because of this. It would mean a lower overall increase  in productivity of 4% fifteen years out, as productivity overall would continue to increase.

This has now become the simple lie, retailed by Ministers of the government and Remain/Rejoin commentators that we have lost 4% of GDP from Brexit! There is of course no sign of our GDP falling 4% from leaving the EU and that is  not what the forecast said.

Forecasting for  fifteen years is a bizarre over reach, given the OBR’s usual inability  even to forecast current year revenues and the deficit accurately. I would not try to offer a single figure forecast for GDP  15 years hence.

We do now know the results of the Brexit vote over nearly nine years. Far from our trade contracting, it has boomed. Our exports of services, the largest part of our  total exports have boomed. Exports overall are well up in real terms . There is no sign of the export hit the OBR forecast.

It is true the weakest part of our growing  exports is goods to the EU.That is  because the big items included oil, gas, refined oil products and petrol and diesel cars. All of these are being deliberately cut back by bans and high energy costs and taxes as part of the net zero policy.

Meanwhile the OBR in its review of its productivity forecast has confessed service exports have done so much better than they assumed without formally revising the forecast. Why?

The truth is the UK has a productivity problem   with its collapse  in the public sector  after covid which results from bad management. The government is busily forcing closure of some of our most productive capital intensive activities in its drive  to stop fossil use.

These have nothing to do with Brexit, so stop the lie about a 4%Brexit  hit to GDP which never happened.

 

The government sounds as if it thinks it can do the same again as last year. Now it has a report of a large black hole or bigger deficit to tackle it can put up taxes on the rich.

It won an election saying it would keep taxes down, apart from VAT on school fees. It put  them up by £40 bn last year saying it was a one off to get rid of an exaggerated  inherited black hole. It gave a revised promise of  one and done for tax raising budgets.

At the same time it put up spending by £70 bn, creating its own new black hole. It pencilled  in £5.5 bn of cuts which its MPs refused to vote for, making things worse.

Now it is allowing the same confidence busting  conversations about which taxes to raise to dominate the media in the long run up to the budget. All the discussion is about surrogate wealth taxes as if they were not numerous enough and high enough already.  She does seem to have got it that more general business and jobs taxes are counter productive. That may not stretch to the gambling and banking industry.

She should note that CGT revenues have been falling for 2 years thanks to her changes and Hunt’s.

She should worry that cash receipts from spirits duty are down this year following her big hike.

She should see the queue of rich people and young talent leaving the country , reducing future savings and higher income tax receipts.

She should confess her tax on jobs slowed growth and put up unemployment.

She should work out what was the true net gain from VAT on school fees after allowing for costs of extra state school pupils. Why has the number of teachers gone down when state schools were promised more from the extra  VAT.

Maybe she should have the courage to  tell her colleagues No more Tax. We are at the point where in many cases a tax rise will deliver less money.

 

You would think getting the UK public sector back to 2019 levels three years after the end of covid lockdowns and disruption would be easy. After all the public sector knew how to work at that level 6 years ago. There has been plenty of Ministerial enthusiasm and instruction to do that, under the last government and this one. The UK private sector is back above 2019 levels, showing recovery is more than possible. The public sector instead of struggling to get back to 2019 levels should be aiming to be at least 5% higher than then to allow for missed  improvements in subsequent years.

Instead officials have offered to get the government overhead down by 2029, after spending  more in the meantime. The central government overhead is in the budget at £14.08bn this year, rising to £16.23 bn next (up 14%) , down to £14.89 bn in 2027-8, still 4% above this year. That is all because they have put in an extra budget line called a Transformation fund, with an eye popping £2 bn next year on technology and a further £1bn the following year. The pay off for this extra spend is only fully apparent in 2029-30 after the election when we see a better reduction in the costs of the overhead.

It may well be that spending more on bought in AI can enhance quality and raise productivity. This should be on top of getting back to 2019 levels of productivity based on pre AI technology. We should not have to spend £3.25bn to reclaim those losses, but should expect much more of a gain from such spending. After £250 m this year  it is a suspiciously round £2bn next year as a budget. What projects are assumed? Why are these costs said to be one offs? Isn’t most AI a service provided by large US corporations where there will be running costs all the time you use it?

What questions did Ministers ask about this budget line? How much of it is truly capital and how much service contracts that may continue? How much of it can be done in house? What action is being taken to secure the old tech productivity  recoveries before adding in new AI gains?

The truth of course is the poor productivity reflects recruiting too many people to do the same work and recruiting people to do work that is not strictly necessary to providing a good service. Some of us work from home when we are more productive there, but do all those who spend days away from the office achieve as much or more than when they came in? Is there proper supervision of homeworking?

To raise productivity and to keep the overhead under control means fewer people and smarter working. I am amazed they are still recruiting and adding to numbers. The first easy thing to do is to impose a complete ban on recruiting more from outside, other than where a good specialist case can be made to a Minister, excluding trained medics, teachers and  uniformed personnel. I see no need for expensive and unpleasant compulsory redundancies but plenty of scope to manage down and amalgamate some of the jobs  as people leave or as they can be persuaded to move within the service.

Instead the government blames Brexit and Nigel Farage for their productivity failings. That’s a great way for Labour to lose more votes, as people are not that stupid.

Margaret Thatcher is 100 years young. He memory lives on. Many of the battles she fought need refighting today. Her vision of individual liberty under the rule of impartial law is much needed again. Her belief that lower taxes bring faster growth and more revenue should be adopted by the current government to the nation’s benefit.  Her views that  people should be given a hand up not a hand out, and that if you can work you should take a job not benefits is said to be the belief of the current government as well. The differences are over the ability to implement it.  She held that  the first duty of the state is to protect its citizens against crime from within and military threat from without. This is something  the current government needs to work on.

I was only 21 when I was elected a County Councillor and first met Cabinet Minister Keith Joseph, 33 years older than me, as we were both fellows of All Souls College Oxford. I developed an active dialogue with him. This led to me advising him and the Shadow Cabinet from 1975 on public spending and the economy, and to working in my spare time for  Margaret Thatcher via the Centre for Policy Studies which she and Keith had set up. In  her middle period as Prime Minister I was her Chief Policy Adviser in Downing Street . I usually had  a weekly one to one for half an hour to discuss the agenda and forward look. I  spent many hours in conversation with her over every government issue as one of her speech writers and Policy Adviser. She devoted so much time to the big speeches so they became sessions  to influence and develop policy for the future and to get her to consider criticisms and problems with what the government was doing.

She liked new ideas if they were well backed up with evidence, and she looked for people who could turn her general wishes into working policy that would carry the message to every corner of the kingdom. She liked a good argument and could come across as forbidding or tough as she wanted to win any discussion she was in. If the purpose  of a meeting we had arranged for her was to reassure or persuade  the individual invited in we had to guide her to her other style, which could be charming and was based on a deep concern for the individuals she met or needed to help. She would sometimes in meetings deeply involved with other issues ask us to take immediate action to relieve someone’s suffering or see what the UK government could do given  news of some disaster. She wrote many individual notes to people she knew who had family or personal problems.

For the rest of her life I refrained from talking or writing about her, whilst occasionally arranging dinners or meetings involving her. I have always sought to live in the present focused on the future, as the world moved on from the Trade Union and privatisation battles of the 1980s. In the last couple of years I have found myself in demand to tell a new generation what she was like and how she carried the torch for Conservatism, which I am now happy to do.

Her great strengths were her wish to get to the truth, the wish to base policy on plenty of data and clear analysis, and her willingness to do what was right even if it did not poll well. She took a long time to make up her mind on an issue, testing out on others whatever  had been recommended  to see if  it made sense and might work. She was very reluctant to change her mind once she had gone public, seeing U turns as weakness.

She made big changes to  her views in government. Her first two years were too dependent on Treasury and Bank orthodoxy to the cost of the country’s economy. She switched to the policies we had hammered out in opposition. She moved from been an enthusiastic European in the 1970s to being sceptical as she came to understand the power grab and the dangers of the Euro. She adopted the wider ownership, share and business  owning democracy ideas I took to her, having thought the larger privatisations would prove impossible when I had first discussed them with her in Opposition days.

She always put defence and public safety first. She never wavered in support for a free at the point of need NHS with regular increases in money whilst favouring tax relief so people could choose to go private if they wished. She helped the US win the cold war, she led the liberation of the Falkland Islands from the Argentine invaders, she conquered inflation, ushered in many good years of growth, and championed home ownership and savings for the many.

She was brought down by Cabinet Ministers insisting on putting the UK into the European Exchange Rate Mechanism system which was bound to wreck the economy. She agreed  with my analysis, but told me she was forced into acceptance with a promise from the plotters that we could get out again if it did misfire. The truth came to hit her successor John Major, keen architect of the UK going in the European  monetary system. When  the UK was forced out there was the predictable enormous cost to jobs, growth, inflation and to taxpayers . The  country made big losses from its foreign exchange interventions required by the scheme.  We had lost a great Prime Minister for no good reason.

There is more enthusiasm to talk about Opposition party policies than I have this early before an election when parties are or should be researching and developing their positions. People have written in with criticisms of Conservative net zero policy so I set out here in a neutral way what three Opposition parties think about this.

Reform has a page on their website. It says they would impose £10 bn of taxes on renewable energy to recoup the £10 bn of subsidy . It says they would get £30 bn of cuts in spending from NZ without specifying where.

It says they will licence more extraction of oil and gas from the North Sea. They will allow one or two onshore new trial wells with compensation.

Nigel Farage has made clear he does not believe in man made climate change.

Not on the website it has been reported they would cut energy bills by £1000, more than the average bill. It has not been explained how.

Conservatives have said they will repeal the Climate Change Act and abolish all the targets.

They will issues licences to drill for all the oil and gas available in the North Sea.

They will stop pressing people to buy heat pumps and battery cars, leaving it to the market to design affordable popular products.

They will abolish carbon taxes on power generation

They will cut subsidies for wind farms. They will cut average bills by £165.

They are against using thousands of acres  for wind and solar farms.

The Lib Dems have just revised their net zero policy, delaying hitting net zero to 2050 from the election pledge of 2045.

They back no fossil fuel generation by 2030

They back small modular  reactors, as do Labour, Conservative and Reform

They claim that changing  electricity pricing and building  more renewables will halve bills over ten years. As new renewables cost more than current power this looks impossible.

The government bans new oil and gas, claims to be 90% carbon free from UK based power generation by 2030 ( down from 100% in Manifesto),is banning new petrol cars from 2030, and pushing heat pumps and battery cars.

 

 

The PM rushed to pay the bills at Scunthorpe to keep the last two UK blast furnaces working when the Chinese owners moved to close them. They said they were losing £700,000 a day. Taxpayers are now paying, but the government so far refuses to publish a plan for loss reduction there or even to tell us how much it is costing. We also know the government’s net zero plan requires the steel industry to close all coal burning blast furnaces and put in electric arc steel recycling plants instead.

The government pledged to keep all the blast furnace jobs, though electric  arc works require much less labour. In the middle of this muddle the EU has decided to impose a 25% tariff on UK steel exports despite the tariff free Brexit Agreement and  the PM ‘s re set to get friendlier relations.

The EU sells us more steel than we sell them, so the PM could at the very least  immediately threaten high steel tariffs in return. He could work urgently  with the UK industry to substitute UK steel for imported EU steel. He could take back our fish which he has foolishly offered to give away for 12 years for the re set. He could  decline  free movement for younger people  which the EU wants.

He must do something if he has any sincere wish  to save our industry, cut the losses at Scunthorpe and avoid looking even weaker in his relations with an aggressive and unfriendly  EU. They often used to damage our  industries when we were members. Outside the EU we can retaliate.