Budget day

There have been many mini  budgets over the last year. Never have the official figures for the outlook changed so drastically so rapidly, as forecasters rushed to bring their estimates in line with the big lurches in activity created by anti pandemic policies. Today we await new forecasts from the Office of Budget Responsibility. We should do so remembering that they like all  forecasters were of course hopelessly wrong footed by the arrival of the virus. They will  now  find it difficult to gauge the pace of recovery and the sustainability of gr0wth against an uncertain health policy background and given the damage done to many businesses shut down by lockdown. In an economy where a 0.5% variation in growth was a big movement prior to CV 19 we have gone to a world where a 5% variation is modest.

The lack of clarity and reliability in the forecasts provides a good reason why this is not the budget to raise taxes to tackle the deficit, as the authorities have no reliable idea of what the underlying deficit will be once we are out of lockdown and into recovery. Some are suggesting there is a gap of £40bn or even £60bn that needs filling by tax rises. Yet the forecast budget deficit for 2020-21 is £400bn or ten times the alleged underlying gap. Let us assume this forecast was too high and the 2020-21 deficit comes in lower than that. Who can say what the 2021-22 deficit will be when we need to know how fast the recovery will be in 2021-2. What we do know Рor should know Рis the bulk of the deficit this year is the result of the pandemic. It comes from a collapse of tax revenues as many people and businesses are  not at work earning wages and profits . There was ab ig fall in VAT on everything from  eating out to travel.  It comes from a huge surge in pandemic related spending on everything from furlough through the self employed scheme, small business loans to the train subsidies and vaccine costs. As soon as we get out of lockdown most of the extra costs of the pandemic will fall away, and there will be a surge of tax revenue.

What we can also say is that were the Treasury to impose new taxes and higher tax rates on the economy now, or even propose such changes  for later this year, it will slow the recovery before it has properly begun. It will prolong the need for special measures spending, and lower the tax take. It will damage confidence at the very moment we need to encourage businesses back to work. Small businesses and the self employed include many who are approaching retirement who could decide not to bother to reopen. It includes people who were not earning a good sum prior to lockdown who might decide it was no longer worth the struggle. The brightest and most energetic will of course  be able to reopen and succeed even with tax rises, but we need a more democratic small business and self employment policy that helps the many who provide a good local service but who are  not going to be able to battle against heavy odds stacked against them by an overtaxing government.

Reduction in NHS beds to control innfection

 

Question:
To ask the Secretary of State for Health and Social Care, how much bed capacity has been reduced by to improve infection control in hospitals in England during the covid-19 outbreak. (156227)

Tabled on: 22 February 2021

Answer:
Edward Argar:

The latest data shows that the average daily number of beds open overnight in Quarter 3 2020/21 was 121,524 compared to 128,326 in Quarter 3 2019/20.

Hospitals continue to flex their bed capacity as part of planning to meet the demand from both elective and emergency streams. We are working hard with trusts to maximise the number of open beds while maintaining safe care through the pandemic.

The answer was submitted on 02 Mar 2021 at 12:35.

Cars, batteries and the UK motor industry

The UK government’s decision to announce an end to diesel and petrol car production by the end of this decade is speeding up the need for many decisions about the future of this important industry. Yesterday the Business Secretary had to talk to the Commons about the future of Ellesmere Port, where Vauxhall has been making engines and then assembling cars based on the internal combustion engine for many years. He assured us he wants to help Vauxhall stay there, to make a new all electric vehicle. Clearly under government plans for the industry they cannot carry on making the current types of car for much longer. I hope he succeeds in his “discussions” as he called them.

The battery is an important part of the structure of an electric vehicle, and a substantial part of the cost or added value. Car assemblers are likely to want to be close to battery makers, to take delivery of the whole “skateboard” or¬† the sub assemblies which will comprise the battery, the wheels,¬† axles and the electric motor. Electric vehicles are very different to petrol or diesel cars. Designers might soon start to make them look very different too, as they do not need the same engine compartment and fuel tank in the boot¬† that we have grown used to.

In a wide range of questions from MPs wanting some of the new industry to go to their areas the Secretary of State was offered several good potential sites for battery production, and potential willing workforces. He was reminded of the possible production of lithium for the batteries from the hot springs that can be tapped amongst the granite masses of Cornwall. Because many other countries see the opportunity to gain investment in these new products and technologies, there could be some competitive bidding by governments in terms of support to the companies thinking of taking the risk of putting in large battery and car plants for the new  vehicles. Companies will expect help with site acquisition, training of staff and access to raw materials and power at least.

The Business secretary told us he expected to have one battery factory up and running by 2024, then added that he wanted more. 2024 is not far away. Governments have to accept that because they are leading these changes and want them, they need to work hard to help the industry adjust. The industry’s problem is they need to commit to huge investments in new products and plant before the demand for the electric vehicles has taken off. Meanwhile their cash flow from existing products has been damaged by the new controls to come on diesel and petrol cars. Sorting this out is going to prove costly and is full of competitive hazard for companies and countries.

Speaking for England

Some of you have noticed I have dropped the Speaking for England phrase from this website. I did so after¬† careful consideration. When I thought through and set out my promises to electors for the late 2019 General Election I decided that the forthcoming Parliament had enough to do to see Brexit through, develop the wins from Brexit, and drive through a levelling up economic agenda. I doubted the Prime Minister’s interest in constitutional reform for England, so thought it better not to arouse expectations. I did in the past promise a referendum on EU membership before it was party policy, and helped bring that about, and promised to speak for England and helped bring about English votes for English issues before that was¬† party policy.

I was torn over the speaking for England issue, as it is clearly unfinished work. When I helped¬† persuade David Cameron to take the issue of the unfair devolution settlement seriously I both argued for an English¬† veto on laws affecting England and a right to initiate England only laws for English MPs. We secured the new procedure that any law affecting¬† just England requires a majority of English MPs voting to vote for it. I did not secure the other half, the right of a majority of England’s MPs to initiate and pass a law for England¬† which MPs from other parts of the UK do not approve. William Hague led a successful attempt to block us. England therefore remains way¬† behind Scotland in our devolved powers, as the Scottish Parliament can initiate and veto legislation for Scotland over a wide range of devolved matters.

Some of you argue England needs its own Parliament, like Scotland, away from  Westminster. I disagree. I do not want to spend more taxpayer money on more politicians and another layer of government. I do want England to have a better voice in government, and control over its own laws. This can be done by having a Cabinet member leading for England and representing England, working closely with the Secretaries of State for Local Government, Transport, Health and Education who are mainly England only Ministers. It can be done by an English Grand Committee of all UK MPs elected for English constituencies forming the English  legislature at Westminster. If I were an English nationalist then of course I would argue for a separate Parliament with as much power as possible. I would prefer the UK to survive as my country, but do want a fairer deal and a better say for England within our devolution settlement.

Deaths with and from CV 19

 

The UK government has rightly worried about deaths from CV 19. It  has used these concerns along with worries over hospital capacity to treat seriously ill CV 19 patients to drive its anti pandemic lock down policies. The government has repeatedly said it wishes to  be data driven. This requires consistent and accurate data over time to help inform policy decisions

I first took up issues of data adequacy with the government on April 11 th  2020. I reiterated and enlarged my concerns on this site on  April 26th, May 22nd, November 7th and at other times. I asked how the Uk defined a death caused by Covid 19, how it handled deaths with Covid 19 where  it was not the main cause of death, and what use it made of deaths attributed to or with CV 19 when there had been no test on a patient to establish they had the disease. We know from the public daily reporting that the UK has adopted a standard of notifying CV 19 linked to a death if the patient has had CV 19 during the 28 days prior to death whatever other health problems they also experienced.

Others have now taken this up. People have come forward to complain  that their relatives did not think their family member died of CV 19 yet it appeared on the death certificate. Doctors have explained that in some cases mistakes were made, in some cases the death certificate correctly identified other causes of death but needed to cite the presence of CV 19 at some point during  the last 28 days of life. These figures matter, as people make international comparisons without being able to adjust the figures for the differing criteria adopted to define a CV 19 death. If you are going to be data driven you need to understand what your data means, and understand any weaknesses or possible errors in  its compilation.

Using the global published figures the UK comes out as below the countries with most cases per million people, but at the top of the lists of deaths in  relation to case numbers. Assuming the high level of testing adopted in the UK has come up with a  realistic view of the total  number of cases, this leaves us with the need for an explanation of why alongside Belgium we have the relatively high death rate of 2.9% of all identified cases, compared to the USA at 1.79% and figures closer to 2% for many other advanced countries. It looks as if the UK has ascribed more deaths to CV 19 than comparable places . I do not want to  argue that our treatments have been less effective, given the huge efforts contributed by UK medical science and NHS staff to the task.

I suggest the government sets some data specialists onto the task of auditing these figures and adjusting where necessary. It does not seem fair to the NHS to leave the world with the impression we had a higher death rate from this disease given the many queries of death attribution we are now seeing. As many of the people who were recorded as dying of CV 19 were over 80, they belong to the generation that is likely to have other medical conditions that could have been the cause of death.

Scotland’s government

 

It wasn’t meant to be like this. Gordon¬† Brown and Tony Blair pushed through devolution for Scotland, telling us that would kill off the nascent Scottish independence movement. I wrote at the time:

“Usually , the granting of¬† more and more powers for separate development and separate government within a once unified state leads inexorably to stronger nationalist movements”¬† (The Death of Britain? 1999)

I drew attention to the many ways a canny Scottish government could press for more powers and exploit the compromises of the  settlement. It always looked like a political  journey, not a fixed  constitution.  The SNP could blame the UK government for things that went wrong and demand more powers to fix them.

Some defenders of the Union still think Gordon Brown was right, if only the UK Parliament grants a few more powers. They naively think that there is some amount of power for a devolved Parliament that will satisfy nationalists. Surely we have seen enough to know that whatever powers they have they will want more, because they do want their version of independence.

Today I would ben interested in your thoughts on the state of Scotland’s government and Parliament. I myself have no intention of rushing to judgement or intervening in the tense battles between the present and former First Ministers. This is a debate best conducted between those involved and through the voices of the Scottish parliament, now at the very centre of the row. We have¬† heard Mr Salmond’s serious allegations about the conduct of the senior Ministers and Law Officers, including allegations of misleading the Parliament and obstructing the work of its Committee trying to get to the truth. We now need to hear the government’s defence.

The rise of the pound

In the first two months after our exit from the single market and customs union, the pound has risen against the dollar, the Euro and the yen. It is up by 3.6% against the dollar and Euro , and by 8.6% against the yen. In the referendum campaign I rightly criticised the silly pessimism of Remain forecasters saying there would be large falls in GDP immediately after a Leave vote, a collapse in house prices and a surge in unemployment. On sterling I merely said that the pound would doubtless continue to fluctuate once we had voted to leave as surely as it had varied widely during our period in the EU. I thought relative interest rates, QE rates, dollar money policy and the other usual issues would have more impact on the pound than Brexit. So it has proved.

Yesterday the pound was at the same level against the dollar and the yen as it recorded before the referendum vote, a time when the establishment and market view was that Remain would win. It would not have been easy to forecast that the pound should now be exactly where it was against the dollar and yen after a Leave vote and after exit given the elapse of time and the many other influences and variables involved. It should worry Remain forecasters that their one remaining gloomy forecast of a big fall in sterling has not proved to be right either. The pound is down by 5.5% against the Euro over the same time period, as the Euro has appreciated against the dollar and yen.

The future of the pound is never easy to forecast given the huge volumes of currency transactions and the differing money policies of the USA, Japan, the Euro area and the UK. We seem to be living through a current period of dollar weakness, probably reflecting the very loose money and fiscal policy being pursued in Washington. The rise this year so far in sterling will help limit inflationary tendencies on all those imports and will make exporting a bit more difficult. What is interesting is that in the first two months of exit sterling has risen against all major currencies including the Euro.

Since I wrote this yesterday there has been a sharp rally in the dollar reminding us of how volatile the main global currencies remain.

Freedom

We have lost a lot of freedoms during the battle against CV 19.  Most have accepted the need to take tough measures to protect those at risk of serious illness and death. Now vaccines supply a way out of the public health imperative it is important we do not come to think some of these controls are acceptable or useful for the future. These were extreme measures which should be temporary.

I never thought I would be living in a country where you needed a reason to leave your house, where you were banned from making trips just for pleasure and where every social contact you wished to make had to be done electronically or under a special dispensation allowed by the regulations.

The government has promised us the way out of lockdown will be data driven. The slow indicative timetable to eventual freedom on June 21 is subject to revision. It is highly likely the data for serious cases admitted to hospital and deaths from CV 19 will continue to fall rapidly as the NHS completes vaccination of most people over 50 and anyone with another worrying  medical condition. The government must understand the data is dynamic, and lagged. It needs to respond to the trend and to the vaccination figures, and get on with relaxing the controls.

I do not think it a good idea to make a vaccination certificate an official document that is used to enforce controls on people’s conduct in the UK. Of course if foreign countries want proof of vaccination for people to travel there that is up to them and the potential traveller. We might wish to require vaccination for people coming to the UK, particularly from countries that still have bad attacks of the pandemic or to require quarantine. A more difficult question which the government as employer does need to resolve is should NHS employees have to have the vaccine in order to work in NHS establishments?¬† I am happy with the current policy of advising them to but not enforcing it. It would be quite wrong to make the rest of us have the vaccine in order to go to a shop or theatre if the government isn’t even willing to require vaccination as a condition of employment in exposed state employment.

My contribution to the debate on Coronavirus: Supporting Businesses and Individuals, 23 February

Now is not the time for tax rises. Now is the time to promote a vigorous recovery as soon as it is safe to do so. Yes, the deficit is far too large, but it is affordable as long as it is a one-off.

The deficit is the product of sensible support for individuals and businesses when they were locked out or closed down, and it was sensible support for the economy as a whole at a time when tax revenues had fallen sharply because people were not allowed to go to work and businesses were not allowed to trade. The way out of all that is not tax rises that would sap confidence and undermine business cash flows even more. The way out is a vigorous recovery that will replace lost revenues, and reduce the need for the support that the Government have rightly produced for small businesses and individuals.

What businesses and individuals will need is turnover, orders and work. I ask all Government Departments‚ÄĒled, probably, by the Department for Business, Energy and Industrial Strategy‚ÄĒto look at how the UK Government can make more work available. The Government have mighty procurement programmes, so when we are building great new railway lines, let us ensure that it is UK steel for the tracks and that it is UK-produced trains with plenty of components and value added, as well as the assembly work taking place in the United Kingdom.

As the Department for Environment, Food and Rural Affairs designs new grants and loans schemes, it should be promoting British food and agriculture at the same time as taking care of environmental concerns. There is a great opportunity to reduce the amount of imported food and to substitute Great British food from our farms and fishing grounds.

BEIS itself leads on energy. Why are we importing so much energy through interconnectors? Can we not have another round of capacity procurement so that we have future electricity generation here in Britain? We have plenty of means of generating power; surely we can harness that.

The Government should want to greatly expand the electricity output of this country because they want to unleash on us a great electric revolution in transport, space heating and powering our factories, so let us make the provision early. Let us invest now for the future so that we have that electric power when it comes to be needed.

A number of businesses have been very badly damaged by lockdown and shut-out, and I am glad that the Government are making some money available to them. I urge them to be generous. It was not those businesses’ fault and we need them to be there when we have recovery.

Small businesses and the self-employed are mightily flexible, but they cannot survive on thin air, and they will need to repay their debts, so give them some turnover and some tax cuts.

The state of the pandemic – show your papers?

It was tragic news from the USA that the country surpassed 500,000 deaths this week from CV 19.  The President and Vice President commemorated the sad landmark in a moving ceremony and with appropriate words. The USA and the UK make daily announcements of the deaths attributed to the virus, with Ministers and Administration representatives making regular statements of sympathy for the relatives of those lost.

The EU passed through the 500,000 deaths before the USA. They have gone over to weekly reporting, and last announced 515,519 deaths. The incidence of the virus and the death rate has been very variable around the EU. Belgium’s death rate has been¬† more than three times that of Greece. Luxembourg has had more cases relative to the size of its population than most, whilst Finland has low figures for cases and deaths. The world figures released daily on the world o meter does not include EU figures so you have ¬†to add up all the relevant national figures. This is surprising given the leadership role the EU has adopted over responses to the pandemic in member states. It would be good to see more analysis of the reasons for the very different rates of cases and deaths amongst neighbouring states.

Asian countries led by Japan have had much lower case rates and lower death rates than the Americas and Europe. I have yet to see a good account of why the spread of the disease and the fatalities have been so much lower in much of Asia. It would be good to know if it was  to do with the nature of the response, or to the treatments, or to greater natural immunity from  past exposures to similar viruses or to diet or other  issues.

The U.K. after Israel has achieved much more in offering vaccines to people vulnerable to the virus and vaccinating most at risk. In both France and Germany misleading negative briefings against the Astra Zeneca vaccine has held up acceptance of  vaccination on top of the slower moves of the EU authorities to approve the jab and to buy enough for fast roll out.

We now learn that the U.K. is considering using vaccination certificates for other purposes. Ministers accept there are practical and moral problems with such an idea. I would be interested in your thoughts on this possible limitation on freedoms.