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The farmers were back in Westminster yesterday, angrier than ever. The family farm tax will drive some out of business and split up farms on the death of the farmer. Just when we need more home grown food the government taxes farms to extinction, with high NI and subsidies for not growing food also doing damage. The mean IHT charge will not raise much money but will pull down some family farms. The PM made a mess of responding to worries about farmers mental health and more possible suicides.

Meanwhile predictably the higher National Insurance duly pushed unemployment  up,now well  up on the inherited level in the summer of 2034.  Conservatives took unemployment down from 7.6% to 4.1 % over14 years, Labour put it up to 5.1% in a year and a half.

The high taxes on energy and energy use are busy closing refineries, petro chem  plants, ceramics works, a fibreglass factory  and many others.

Big wage awards mean public sector pay now goes up far faster than private sector. The squeezed private sector has to lay higher taxes to lay the bigger state wage bills and ballooning benefit bills. No wonder there is no growth, fewer jobs and higher unemployment.

Many of you have said your first priority is to tackle terrorism and violence in the UK rather than worrying about Russia’s actions near its borders. There is a general mood that government needs to do more to prevent violence on our streets and to contain terrorism.

The shocking mass murders of Jews in Australia has reminded us all of the dangers we have experienced here from political and religious extremists sometimes escalating protests to mass  murder. No-one in a free society should go in fear of their lives because of their religion or ethnicity. People living here from another country are not to be blamed for anything the government of their past country does which they cannot influence. We have clear laws against the use of violence, and against incitement to violence, to keep good order.

The claim by some that the PM believes in two tier justice reflects a serious concern that we could witness more unprovoked attacks in public places in the UK, just as we have seen from the pictures of Bondi beach. This government has allowed regular protests by people showing the flag of Hamas, a banned terrorist organisation, and chanting slogans that imply or threaten  death to Jewish people.

I support free speech, and the right to demonstrate. This does not mean we suspend the law against incitement to violence because something is a protest. The government needs to improve Prevent, an anti terrorist initiative. It needs to prevent hate preachers and extremist activists coming into our country. It needs to prosecute home grown inciters to violence.

The true evil lies in the way some young people are groomed and trained for violence and taught that other groups are enemies. The government needs to target the purveyors of hate and violence more, and be vigilant with young people subject to these influences and sent abroad for training in terrorism.

When I studied history at Oxford I was able to specialise in economic history and the history of science and technology. I was also made to study European history alongside what was called English or more accurately UK  history. I was not expected to study American history or Chinese or Japanese history, yet these were then the arrived or coming powers. It was a lop sided syllabus with hints of European superiority and bias in its  design.

I found European history deeply depressing. It was a continuing story of changing borders  and countries endlessly fighting over their identities and for control of sufficient resources to feed and clothe themselves. There were too many great Kings, Emperors and thugs seeking dominion over larger areas of the continent. Economic progress was regularly damaged by marauding armies.  Much blood and treasure was shed to achieve a European Empire that never materialised. In the sixteenth century there also came a wave  of wars over religious reform with the continent split not  just between Roman and Orthodox Christianity , but also between Roman and protestant Christianity.

The twentieth century was disfigured by two ruinous world wars as Germany fought to unite Europe under its control. The early nineteenth century  had seen a destructive world  war to establish a French European Empire, mimicking Spain’s failed attempt in the sixteenth century. The UK did Europe a great service by the big sacrifices to defeat Hitler.

It made me proud to be British as we had in the last 500 years dropped any claim to a European empire, had developed Parliamentary checks on monarchs’ powers and given the world the prosperity machines of the Industrial revolution. The pity was we had been drawn into too many land wars on the continent as we tried to help smaller states resist the barbaric invasions by Spanish, French, German and other forces. We had successfully started  settlements in North America which led  on to the creation of two great free nations, the USA and Canada.  The American rebels were better heirs to English democratic thinking than was George III who lost to them.

The UK today should learn from its past. We succeed when we project naval and air power to protect our islands and keep open seas for trade. We do not by history or inclination wish to be a land power risking armies in a continental  cauldron.The cause of a European empire was not worth all the dead who suffered for it.

The UK needs to do more to secure our own defence in an insecure world. The government needs to improve our defences against incoming missiles and drones,  by constructing a modern Iron dome or shield. Israel, the US and Ukraine have experience we can draw on.

We need to strengthen our surface fleet and our submarine capacity to protect our waters and the infrastructure they contain, and to help NATO keep open international sea lanes. Above all we need to expand our domestic weapons making capabilities and ensure we have title to essential technologies and designs so we could quickly scale up production should need arise.

The  first task which the government still has not done is to draw up a list of capabilities we need to augment or create, with a timetable. Then we can work out a more accurate costing and determine a pattern of spend to speed their  introduction. It is wrong to start with a debate about money before deciding what we need. When we know what we need we can best decide when we can afford it and deliver it.

       I do not think we should plan to fight a war against Russia with land forces on the continent. We do not have anything  like a big enough army and would need far more money and conscription to raise and train one.  800,000 Ukrainians bravely keep a Russian army of 1 million in check. ( there is a range of estimates and guesses but most  agree each army is more  than ten tines the size of the UK ‘s). We have just 75,000 committed to a world wide range of roles.  As the last four years have shown there is no need for the UK to become involved in fighting Russia in Ukraine and no wish by most UK people to do so. The UK condemns the Russian invasion and the war crimes against civilians but has no wish to escalate this into a NATO war. As the US throughout has made clear it does not wish to go to war with Russia so NATO cannot go to war given US dominance in the alliance.Our forces usually operate by close cooperation with US forces and often rely on their cover.

Whilst the West  sees the Ukraine war as Russian unprovoked aggression  to grab back old USSR territory Russia sees this as a war of EU expansion, with the EU wanting to gain  influence over Ukraine to stop  Russian influence. President Trump wants a peace settlement as he has no intent to use US and NATO force to push back Russia. This encourages  President Putin to demand tough terms, just as President Biden’s prevarications  probably decided Putin  to invade in the first place. The earlier  failure of the West to respond forcefully to his annexation of Crimea  would also have egged him on.

So the US leaves helping Ukraine to the EU as their problem given the plan for Ukraine to become a member. The US does not want Ukraine to join NATO as Russia wrongly sees that as a threat. The  EU countries with the possible exception of Germany do insufficient  to help with either money or arms.

The UK does not have a big enough army in peacetime to even help keep a future peace in Ukraine, let alone  to join the fight.When we twice declared war on Germany and planned a land war on the continent we had to recruit a hugely increased army and  turn our economy over to war production before we could win, and needed our US allies to help. Time to be realistic about what we can do. Definitely time  to be more serious about putting in more force to defend these islands.

Yesterday I argued no one can accurately forecast the UK deficit or state borrowing for five years hence.The  deficit is the difference between two much larger numbers, total spending and total income. If spending is £1.3 tn and income £1.2 tn the deficit is £100 bn. If the forecast is 5% too low on spending which is £65 bn then the deficit is £165 bn, or 65% higher.

The OBR has to make a whole series of assumptions about what will be happening in five years time. If they decide productivity disappoints, as they did for this budget, there is a bigger deficit to deal with. If they think interest rates will be higher, or tax revenues lower, again there is a bigger blackhole to fill. For this budget they upped the forecast of tax revenues so there was a forecast overall win, not  a larger black hole.

Distracted by all this Chancellors spend time arguing over  the  assumptions which create big swings in requirements for extra taxes instead of concentrating on the much more important and real forecasts for the next financial year. The Treasury and OBR should  be able to provide fairly accurate spending forecasts for next year. Chancellors should be pursuing proper controls over immediate spending.

The black hole in five  years time approach can both lead to too many anti growth taxes and too little concentration on more immediate spending excesses. This last budget showed a Chancellor gaming the system with promises of tax rises to come and productivity gains in five years time to allow her to continue to spend and borrow too much for the rest of  this Parliament.

You do not need to be an economic “expert” to see what is wrong with the UK economy. The  government is spending, taxing and borrowing too much. As a result talented people leave for lower taxed new countries, businesses divert investment abroad, jobs are created  elsewhere. Meanwhile a badly run public  sector wastes and misdirects too much of  the cash it syphons off from families and businesses leading to yet more demands for higher spending and taxing.

The fiscal rules are meant to control this, but they do not. One of the main reasons is they are based on “controlling” the level of borrowing in Year five of the 5 year forecast. Under the system year 5 never comes. Instead of sticking with the Year  five figure and enforcing the control on borrowing when we get there, they keep rolling forward to always rely on a forecast 5 years ahead. This allows  regular increases to planned borrowing for the original year 5 forecast when the passage of time makes it the year 4 forecast then the year 3 forecast down to the current year. Spending and borrowing under control for year five are allowed to be much higher when they become Year 1.   Government relentlessly  pushes  up spending and debt every year.

Because the control is on a  distant year it makes it anyway a silly exercise. Neither the government nor the OBR negotiating the numbers for five years  time have a clue what the deficit will actually be then. Nor can the rest of us tell them, as it is beyond the capability of forecasters. In 2030-31 who will be the UK government? What policy will they be following to tax and spend? Who will be the US President? What policy will he or she follow on trade, tax and spend and energy? Will the world economy be expanding or contracting? What impact will AI have had on employment and productivity?How much extra pay  by then will doctors and train drivers be earning? How much more will HS 2 be costing?

Later articles will expose more of the nonsense of the fiscal rules. The Year 5 rule both seems tough to a Chancellor  making a budget, but ensures endless rises in spending and debts because a controlled Year 5 never comes. We need to concentrate on current year and next year, not year 5.

I was pleased to accept the offer of a seat in the Lords. I will continue this website as I did whilst I was serving as an MP. Being a member of the Lords will allow me to participate more in the work of Parliament and in the national debates about our  direction.

Today I invite your thoughts on the Lords, its composition, role and future. I believe in the supremacy of the elected House of Commons with the Lords as a revising Chamber which can ask the Commons to think again.I do not favour an elected second chamber. If elected at the same time as the Commons it would likely have a similar composition politically so what would it add? If elected mid term for the Commons it would likely become a block on the Commons governing.

The Lords can bring more expertise to bear on legislation and may have more relevant experience  to undertake a more detailed and less partisan examination of a Bill.

The Lords can sometimes open up new and wider topics for national discussion than the more politically  focused agenda of the Commons may cover.

The Lords can reveal bad problems with implementing legislation triggering government amendments. It may reveal substantial public displeasure with a measure, asking the government to think again.

Members of the Lords can help their parties in the Commons and can provide additional Ministers and Shadow Ministers

Reforms have removed the  hereditaries  , introduced a right to retire and a low minimum attendance to keep the seat.

I went to Parliament yesterday to make arrangements. I have asked for  a date when I can be introduced to the Lords to swear in, and have  been given an appointment next week to sort that out. I look forward to getting to work on  completion of the formalities to become a peer.

As readers know  I did not change the name or approach of the site when I received a knighthood and will not be changing it now.

 

As the Lib Dems, SNP, Greens and Labour enter a competition to see who can propose the most commitment to more EU taxes, tariffs and laws we need to remind ourselves of why we voted for Brexit and how it has already brought us some important wins. This is despite an establishment of civil service, courts, universities and too many MPs out to prevent  Brexit by tying  us firmly to the EU.

1. Large financial savings on membership costs. Had we stayed in with the increased budget it would be running at more than £21 bn a year of extra gross spend on EU matters including taxes we had to pay to them. Clearly  if we wanted to rejoin terms would be even worse, likely to be at least £25 bn.

2. Keeping all of our customs revenue and all our plastics tax instead of surrendering most of it to the EU, giving us £5 bn more.

3. Allowing us to sign trade deals with TPP and India promoting our non EU trade which is 59% of our exports. Trade has grown well since the vote.

4. Boosting our service exports, 57% of our total exports , by allowing us to insert service sector clauses into trade deals which the EU was reluctant  to do. There  has been great growth is service trade since we left.

5. Allowing us to develop the first anti covid vaccine and lift lockdown earlier

6. Allowing us to take VAT off green goods and female hygiene products.

7. Allowing us to take tariffs off all things we do not make or grow for ourselves, and off all materials and components needed by UK industry

8. Allowing us to reduce bad regulation of financial services to assist our successful financial sector

9. Permitted us to switch student support from Erasmus which mainly paid  EU students to come to the UK and some to UK students to study in the EU, to Turing where all the money goes to  UK students studying anywhere in the world.

10. We have been able to ban the export of live animals and improve standards of animal welfare.

 

 

According to the Budget Red book the government will  borrow £627.8 bn more over the next five years. 2029-30 shows the lowest additional borrowing as much delayed tax rises are meant then to come into effect,  after the election. Do people believe that?

At the same time the government over the five years needs to borrow at least £675 bn to repay debt that falls due. In total the bond market will be asked to subscribe for at least £1300 bn of new bonds. No wonder our government borrowing rates are the highest of the advanced countries.

So why does the Chancellor say our debt is coming down? Why so much extra spending? Why does she delay the main tax rises she wants until after the next election? How long will it take to revalue homes to be able to impose the Mansion tax on some 3 bed flats in central London? How long to consult and legislate to impose a tax on using battery and hybrid cars?

Why was there so little comment in her speech on how to control spending? Why no proper discussion of the productivity collapse this decade in public services? Why no detail on how she will spend the £3.25 bn planned for AI in the civil service? Why no plan to control steel losses? Why no mention of Bank of England losses? The OBR has upped its forecast of those losses to £288 bn from Q3 2022, or £164 bn net of earlier profits.

The extra borrowing she plans over 5 years would  mean at least £25 bn more in annual interest payments. So why does she go on complaining about the £100 bn plus the government is already paying each year to service the debt when she plans so much more?

She makes a great deal out of the fraud and wrong payments made under various covid schemes which Labour supported at the time. She is finding it difficult to get the money back. Instead of implying this was some unique incompetence of a former government, she should see the latest figures for the annual loss on benefit fraud and overpayments, running at around £10 bn a year on her watch.  Why doesn’t she stop that if if stopping fraud is as easy as she thinks it could have been for the one off payments on lockdown to compensate people for loss of working incomes.

The Chagos Treaty is still not ratified by passing a UK law to bring it into effect. The Lords is unhappy with it and it is subject to a legal case against. The government failed to consult Chagosians   properly who do not it given away to Mauritius.

The government is short of money so offering an annual subsidy to Mauritius to take over the islands is mad. This is valuable territory.

The government needs to reflect on President Trump’s  new world strategy. That makes clear it is in the US and the Western alliance’s interest to keep open the shipping lanes in Asia and to preserve the current status of Taiwan. The Chagos joint US UK base is critical to defending open navigation into the South China Sea.

 

Giving away the freehold means Mauritius, friend of China could grant fishing  rights in currently environmentally protected  waters. Chinese vessels could come close to the base. People could settle  on other islands close to Diego Garcia, creating tensions with the base.

At the moment this remote island base is well away from settlements and from prying  eyes. Changing it could be expensive and dangerous. There is no need to. Please government think again.