Author: johnredwood

I was pleased to read in the week-end press that the Conservative Manifesto is likely to include a better right to buy offer for people renting from Housing Associations. We have been talking about this for sometime in  the Parliamentary party with Ministers.

I am also pleased that the more radical idea of gifting the properties to tenants who have paid rent and behaved well for a specified time period has been vetoed. It would seem to be very unfair on all those who have saved and struggled to buy a home in the normal way, or on those who have to rent from the private sector because they have not qualified for Housing Association property, that they have to help pay for free homes for those who do rent from the state.

There will be the usual left wing protests against this policy, as there were against Council house sales in the 1980s. They are already out and about saying it is quite wrong because it means fewer social homes for people to rent. It means nothing of the sort. The day after the purchase has gone through the same people are living in the same home. The home is not destroyed or made empty. It is still the family home. The only thing that has changed is the state has some of its money back from the sale, so it can reduce its debts or build a new property with the money.

The impact on state finances is usually positive. The new owner takes over the costs of maintaining and repairing the property from the Housing Association. The Housing Association saves costs and has a receipt which it can use for other purposes.

If you share a country with others, you sign up to sharing burdens and risks. It also means you sign up to sharing successes and riches.

In Europe today some of the separatist movements are from parts of countries that are richer than the rest. They get fed up with sharing their success with others. Thus many in Catalonia in Spain, Padania in Northern Italy and Flanders in Belgium think they would better off without the poorer parts of their countries which they have to help finance.

The case of Scotland is a bit different. Scotland is not the pre-eminent richest part of the UK. London is. However, Scotland feels rich thanks to the presence of oil reserves. Much of the debate about Scottish independence entailed the two sides throwing around different calculations of tax revenues, income per head and general prosperity depending on how much of the oil was regarded as Scotland’s, and how bullish you were about future levels of extraction and future oil prices.

The case of Greece is similar. Germany and other richer parts of the Euro Union do not  want to accept full burden and risk sharing with Greece in the way West Germany does with East Germany or Northern Italy does with southern Italy. Germany says  No to propping up Greek banks, to sending  Greece more money to pay benefit bills or for local authority programmes.

The Scottish case has served as a great reminder of why risk sharing and burden sharing can help. Scotland now has to accept that volumes of oil extracted will be well down on peak levels, and at least for the time being prices well down on Nationalist expectations last autumn. If Scotland were on her own that would mean big spending cuts. Inside the UK the loss of revenue is manageable, and it will be covered from elsewhere.

It reminds us that to be a successful union most in the union have to accept the idea that success is shared and risks are underwritten throughout the whole union. Because many parts of the Euro area are not ready top accept that, the area will remain crisis ridden and unhappy.

One of the ironies of the Greek predicament is that thanks to the previous Greek government the state deficit there reached low levels, beneath the EU ceiling and considerably better than some of the countries judging the Greek response. Unfortunately for Greece the election of a higher spending government coincides with the need to repay debts and to recognise that a low deficit was reached only after the most massive build up of debt which is now difficult to afford.

In the Eurozone France, Portugal and Spain are unable to get their state deficits down to the 3% maximum permitted, though they are more  hawkish over what to do about Greece. Germany has eliminated her deficit, just as many wish she would spend and borrow more to reduce her surplus and provide some stimulus to other parts of the zone.

The so called negotiations are bizarre. Greece says she does not want any more debt and wishes to make her own decisions about social and economic policy. The troika, renamed the “institutions”, remind Greece that she is borrowing more and needs  permission to do that under the Euro scheme. The price of more borrowing, to repay old debts and pay local bills, must be that Greece accepts the reform agenda of the Eurozone. Greece responds that she will not follow Euro austerity policies, labour market reforms and the rest which Syriza sees as damaging to the Greek chances of growing again.

The European Central Bank wishes to stop Greek commercial banks buying Greek government bonds and demanding financing from the ECB to help them do so and to pay for the deposits that are being withdrawn. The institutions want the ECB to go on  financing Greece – or allowing Greece to finance herself by selling more Treasury bills – whilst they see if they can broker an agreement.

The troika briefs that they can live with Greece leaving the Euro if she will not  accept the old medicine of the zone and the loan agreements. Few believe them. The Greek government briefs that they do not need new loans and are planning to do only what they want to do, which is mainly to spend more. Few believe them.

The truth is the two sides are locked in an acrimonious marriage where neither seem to believe in divorce. Both think they need each other, whilst disliking each other and telling the outside world they are just fine leading their own lives and having separate bedrooms.

How much longer can this go on? How much more damage will this scheme do? All the time the two sides bicker, half of all Greek young people remain out of work. None of it is a great advert for people to take a holiday in Athens this summer.

In 1932  total UK public spending was £1 397 million. If you adjust for inflation that is £82 887 million.

So as the UK government this year is spending £737 100 million, what is all this nonsense about returns to the 1930s?

The government has recently published more figures showing the real changes in public spending in recent years. These reveal that real spending has gone up in several large programmes, including health, social security and general public services. It has also risen in international services including overseas aid, EU contributions, science and technology and environmental protection. There have been real cuts in defence, public order, recreation and culture, and enterprise and economic development. Overall general government consumption went up by 1.5% in 2014, and is going up by another 0.8% this year,  in real terms ,  according to the Budget Red Book. General government investment rose by 7.3% last year and by another 2.3% this year in real terms. Real household disposable income rose by 1.4% last year and is forecast to rise by 3.7% this year.

One of the difficult areas to research is what has happened to local authority grants and spending. Many Councils argue they have faced large cuts. The figures are difficult to deduce because in 2013-14 the government reclassified large sums, with the localisation of business rates and of Council tax benefit. In a recent  government publication it shows the pattern of so called Local Government Resource AME as £284 m in 2009-10, rising to £11,123 million in 2013-14, whereas Resource DEL fell from £26.805 billion in 2009-10 to £16.281 billion in 2013-14. If we add the two together the sums rose from £27.089 bn in 2009-10 to £27.5bn in 2013-14, a modest rise which also needs to be adjusted for any changes in responsibilities. There was also at the same time some redistribution of grants undertaken to give a bit more relatively to Councils that received very little central grant.

The 2015 Budget Red Book has a figure for locally financed current expenditure. This rose from £33 bn in 2013-14, to £35.8bn in 2-14-15, and is forecast to rise to £37.6bn in 2015-16. These are cash figures and are not adjusted for any change in responsibilities. Locally financed capital spending is constant at £7bn a year for the three years. The good news is public satisfaction with Council services has not fallen during this period, despite many Councils stating they have faced cuts in their grants and budgets.

Some green policies   really do destroy jobs, plunge people into fuel poverty and make our lives difficult. A recent report says that the UK should make its carbon dioxide targets even more taxing, to allow for all the CO2 emitted in places like China when making items to export to us.

So let’s get this straight. The UK has lost a lot of industrial capacity, in no small measure because Green energy policies have driven up our price of energy and helped make us uncompetitive with lower energy cost countries. This at least allowed us to hit CO2 targets a bit more easily, as we no longer use all that energy to make things. Under international rules each country accounts for the CO2 it generates. If a country decides to gain industrial market share, it has to do more to cut CO2 emissions elsewhere in its society if it is going to be part of the international agreements on these matters. If a country decides on deindustrialisation as one way to hit CO2 targets, that works under current accounting rules.

Some of us have gone hoarse warning that pushing up UK and EU energy prices will simply shift CO2 generating activities from us to parts of the world who do not share this concern. Now that has come to pass, it is amazing that we are being told it is our fault and we need to penalise ourselves further. If we do so, then we will lose even more industry, and doubtless be told that we need to tighten further to allow for more imports.

When interviewed on the radio, a proponent of this  approach said he wanted people to change their behaviours. He gave two examples. People should not expect to own their own car, but should use public transport or hire and share cars when needed. He also thought that  we should run household appliances like fridges for many more years than we currently do, with more repairs. He seemed to think this would save a lot of energy, reducing the amount expended on making new machines. It would also mean running older less fuel efficient equipment for longer, whilst  destroying the jobs of appliance and car makers. More reliance on public transport can raise the amount of CO2 and other emissions , depending on bus and train utilisation  rates, age of the trains and buses, and on the way they are driven.

We also hear the good news that there are no US tornadoes in March, a most unusual outcome. The climate change forecasters who have told us to expect more extreme weather, have now amended this forecast to less frequent extreme weather but more extreme extreme weather. Maybe that covers the good news this March. It just goes to show how difficult forecasting is.

Personally I want the UK to have a stronger industrial base, not a smaller one, and want people to afford enough energy to have decent lives. The idea that we need more wind energy, which in turn means we will need more back up energy for when the wind is not  blowing does  not sound to me to be very green  let alone cost efficient.