Sir David Amess

David was a long-standing friend and colleague. His senseless murder leaves his family devastated, his friends bereft and his constituents without a dedicated MP. He went to great lengths to help his constituents and to represent his area. He was always kind, hard working and willing to engage with people of wide ranging views. He was a great campaigner and a helpful mentor to new MPs.

His tragic death will not stop MPs talking directly to people or being active in their constituencies. There have been too many murders of MPs during recent decades, when MPs strive to ensure the nation’s disagreements and passions are settled through votes and arguments, not violence.

Ingredients of an industrial strategy

If we want to rebuild industry that we have lost and attract modern industry to make the new materials and products the world is discovering there are some basics government needs to do.

It needs to ensure good transport and communications in industrial locations. As monopoly provider of roads and railway lines it needs to ensure sufficient accessible capacity. It needs to allow or encourage high quality high capacity broadband.

It needs to continue to strive for excellence in school and College education. It needs to work with schools and Colleges over how they help people gain qualifications and interests that can lead on to well paid jobs in industry.

It should pump prime good ideas for new technologies, working with Universities and company labs. It should provide a market for innovations, buying them for use in the public sector. New drugs are a good example, bought into the NHS, or new vehicles bought into the MOD.

It needs to use its planning and licence granting powers well so industry can establish and expand in suitable places and can tap local sources of raw material and energy as appropriate.

It needs to avoid rushing to nationalise. There has been a long history of nationalised industries in the UK under  governments of all persuasions sacking employees, overcharging customers and losing large sums for taxpayers to reimburse.

It needs to avoid imposing unduly complex controls and interventions, which invariably lead to worse outcomes and demands for yet more offsetting interventions.

 

Time to grow more of our own food

I notice in my local supermarkets a keen enthusiasm to display the Union flag on many  foods the retailer can claim are home grown. There is a marked reluctance to celebrate the EU origins of continental food with an EU flag, or even to put a Dutch flag on the salad items and a Spanish flag on the vegetables that come from there. This makes it a bit more difficult for home grown food enthusiasts to spot the import. It implies the supermarkets think there are plenty of people who want to buy UK food, but  not enough who will insist on EU food so they seek to disguise it.

Our time in the Common Agricultural Policy lost us a lot of market share. As recently as the mid 1980s the UK grew 84% of its own temperate food, but this had slumped to 60% last year. The EU did its best to speed the demise of sections of UK agriculture. They provided grants to remove UK orchards to give continental apples and pears a freer run at our market, on the proviso that the farmer could not replant with new fruit trees. They kept our milk industry short of quota, forcing us to import more higher value products like yoghurt and cheese from the continent. Even pro EU John Major went into battle against the severity of their beef policy in response to an unfortunate outbreak of disease.

Now we are free to grow and rear more of our own food we should do so. The Environment Department should make cutting the food miles a crucial part of its green agenda. It should tailor grant schemes to encourage new plantings, investment in mechanised nurture and harvesting, and support for on farm reservoirs and soil improvement programmes. The NFU have raised their standard over the opportunities. The Netherlands supply much of our salad stuff and flowers. They have  no weather advantage over us, so we should get on and invest in competitive production with suitable government assistance of the kind they have enjoyed.

It is not a green policy to pay our landowners not to farm our land and then to import our food from hundreds of miles away with the need for so much transport, chilling and packaging to get it to us.

 

The Business Department needs to promote UK energy to promote UK industry

I attach below my proposal to the Business Secretary:

 

Levelling up requires the UK to attract and retain more investment in industry as well as services. One of the main requirements to keep and attract industry is a plentiful supply of affordable energy. This may well in the future be renewable electricity or hydrogen gas made using renewable electricity, but for the next few years industry remains heavily dependent on gas.

This means we either allow more UK gas to be produced and supplied on longer term contract at affordable prices, or watch as more of our industry is closed down and replaced with imports from countries that do have cheaper gas. If you want to make glass, ceramics, paper, steel, cement, plastics or many other products you need gas. Importing it from somewhere else does not reduce the carbon footprint. It usually  increases it.

The UK energy policy in recent years has been to close down our coal power stations,to avoid building much new gas generating capacity and to rely more and more on imports. We need Norwegian, Qatari and EU gas in increasing quantities to keep our plants open. When there is a worldwide gas shortage our partial dependence on imported gas at world spot prices causes particular stress. We need increasing amounts of EU and Norwegian electricity.

We compound the difficulties of the steel industry by failing to mine a specialist coal we have in the U.K. and need for steel output. The chemical industry of course relies on oil and gas feedstock for much of what it does, but we have not allowed sufficient production and a close working relationship  between the energy industry at home and the chemical industry. Germany has a larger chemical industry without a home gas and oil industry which should have placed it at a disadvantage but Germany does cut energy prices for industry and relies on a lot more coal in the total mix.

Shouldn’t we trust the market more and grant the permits for UK exploration and development of domestic oil and gas? Wouldn’t that reduce CO2 by cutting dependence on imports from coal based systems like Germany and China  and from the extra transport it takes to bring the goods to us?

 

Newsnight

Some of you say you want to know about media engagements.  This morning BBC Newsnight invited me on for tonight. They wanted to know if I was happy to talk about energy or the Northern Ireland Protocol and I said Yes, either or both. Chasing them this afternoon for the details they then said they had changed their mind and cancelled it. No idea why, as I would imagine they would have to follow at least one of those stories.

They then said they did want me but after a long preliminary private  interview  decided my views were not suitable so they cancelled me again. They seemed to want me to adopt caricature austerity views which I have never held.

If gas is dear you need more of it or a better alternative

The Business Secretary was the Energy Minister, and is now the boss of the Energy Minister. His disagreements with the Treasury over whether he can offer any subsidy to hard pressed manufacturers need not prevent him helping the energy using industries very directly. He should invite them in with the gas supply industry and the UK gas producers and discuss how going forward the UK can produce more domestic gas to reduce our reliance on erratic and currently very expensive imported energy.

An industrial user of gas that needs plenty at a competitive price to make steel or glass or paper or ceramics wants some reassurance that going forward they can obtain enough gas at sensible prices to be able to keep their customers. If the government allowed the UK gas industry to find, produce and deliver more of the gas that is available in our islands and seas they could offer more long term contract gas to domestic industry on sensible terms.

The Minister could explain to the green lobby that this is a greener answer as well. It makes little sense to bring gas compressed by use of energy around the world in large tankers needing a lot of diesel to power them to our shores, when local gas could pass down a pipe for a fraction of the power needed for the import. If something is too dear you either need more of it or a substitute. There may be other ways of making steel and paper in due course, but for the time being if we want to save our industries they need cheaper gas.

 

James Bond and today’s UK

I was gripped by the latest James Bond movie through its action packed twists of plot.

The film is a statement to the world that UK  derived brands and cultural icons can fill cinema seats and entertain millions in many different cultures and countries. I wish it commercial success as it helps the traditional cinema revive after lockdown.

What kind of image of the UK does it project? Whilst viewers would be wise to see it as drama not documentary and will appreciate many of the unrealistic conventions of the 007 genre, there will be those who take away a message about the UK from it.

I was surprised to be warned that the film contained moderate violence. There didn’t seem to be anything moderate about a series of mass murders, mass sanctioned deaths of arms carrying criminals, the use of explosives to enter and control populated buildings and missile strikes on an inhabited island. The story centred as before around the actions of the UK secret services on the  world stage. The Head of the service was happy to authorise killings anywhere in the world in pursuit of dangerous global criminals. There was no reference to the National Security Council and only once was it thought a good idea to mention to the PM some of what they were doing. So it was clearly not a representation of the legal process, rule of law and democratic controls that apply.

Leaving aside the unrealistic idea that officials in the UK can authorise machine gun fights and dangerous car pursuits leading to the death of drivers in overseas countries , the film gave a very positive view of the UK in three crucial respects. The senior officials were very loyal to our country. Our country stands for right and the defeat of evil worldwide criminal gangs throughout the movie. The officials could summon up precise force, equipment and clever innovations to win any war against a criminal  gang however violent and resourceful they might be.  Whether it was in Scandinavia or near Japan, people could be quickly deployed. What’s not to like, unless you are a  criminal.

Just as the film overdid the lack of legal restraints on UK counter action, so I fear it flattered government in its portrait of speed, resource and innovation. Let us hope our senior officials study the  brave and inventive  officials we see in the drama to see how we can increase our success in  the struggle against  violent serious global criminals within the rule of law.

In many ways the cars were the stars. Aston Martin emerged victorious, though its vintage vehicles got lead roles and its latest machine a bit part. Range Rover was present in force. Shrewd product placement should help some UK brands in a competitive luxury market. One of our naval Destroyers  also appeared in action, reminding the world that the navy gives us the capability to intervene anywhere where there is a sea to sail.

 

 

 

 

Inflation

The main Central Banks of the world have been very relaxed about inflation. They have all argued that as lockdowns end there will be a brief uptick in inflation, which will then subside. The USA has been particularly strong on  this view and has continued with massive dollar creation as well as ultra low interest rates to promote a stronger and quicker recovery. I have always thought they were overdoing it. The ECB has also persevered with a massive Euro creation programme, against more deflationary pressures in  the deficit countries. It is having the predictable inflationary effect on the German economy whilst supplying some boost to the usually sluggish Italian one.  The UK authorities started reining in  earlier than the others and run the risk of slowing growth too much. As a very import dependent economy the UK will import a lot of inflation from the others unless sterling strengthens more.

Some at The ECB and Fed and the Bank of England economist are now saying that maybe inflation is going to go higher and last longer than their institutions have been saying. There is a surprise! What did they expect given the volume of dollars the Fed decided to tip into the system? What should Germany expect given the scale of Euro creation going on? The UK has to beware that fuel inflation is going to be fast thanks to the unacceptable reliance on imported and spot market energy. There will be wage growth as the UK sorts out years of low pay in areas from farming through driving to catering where wages were kept down by many  migrants arriving to take the jobs. We face higher bills for transport, home heating and a range of goods that rely on gas for their manufacture.

The UK needs to work away at reducing its dependence on imports in general, and on imports with highly volatile day to day prices in particular. We have just seen a wild swing in the price of timber, where we import so much of what we need for housebuilding, for biomass power stations and for furniture. Given the passion to grow more trees, why dont we produce more of our own?  We have just had to import a large amount of very expensive gas to combat a shortage of wind in our power system. It makes little sense to pay top prices for imported LNG, dragged around the world in diesel guzzling tankers when we could supply more of our own under long term sensibly priced contracts. Why do we not put in  more gas storage while we are about it, so we can draw on stocks for any temporary high price shock?

The main Central Banks have talked themselves into a corner. If they now think they were too blase about inflation, they need to make sure their adjustments to the amount of money they create is not at the same time allied to rises in rates as this would likely tip economies into stagflation or even into recession. It’s a tricky path. The Fed has most to do to decelerate from a  very inflationary stance. The ECB has more excuse to wean itself off money creation more gently, as the southern economies are more sluggish. It will leave Germany suffering from a nasty inflation, needing to buy in a lot of foreign fossil fuel to keep the factories turning.The Bank of England has already announced an end to money creation.

Dame Lucy sees the need to help

I was thinking it  has been a poor time for leaks, when to my surprise the following intercepted memo appeared anonymously in my inbox.  It appears by keeping a low profile during turbulent Brexit times Dame Lucy has survived in the Cabinet Office.

From Head of Cabinet Office  Post Brexit renewal unit

To Professor Redmayne, Professor of European inequalities

 

Dear Karl

I need your advice to assist me in presenting to Ministers on how to tackle various supply chain and labour market issues which you will have seen in the media. As you will appreciate I worked very closely with the previous government to try to secure an Agreement with the EU that captured and retained all EU law and our single market obligations. This was  in accordance with the then  Prime Minister’s wishes to replicate many of the features of our membership to avoid changes and shocks. This work was altered by the change of Prime Minister in 2019 and by Parliament’s unwillingness to vote for the comprehensive partnership we had secured.

As the head of the new Post Brexit Renewal unit I need to give advice on how the government should behave towards the full body of EU law that is  now on our Statute books, and how we should negotiate if at all on the Northern Ireland Protocol and the transition over fishing. Looking at the situation it seems to me I need to point out that the UK does now rely on imports for some of its electricity and fuel, that it needs to respect EU law under the NI Protocol and should not be dogmatic about fish given the passionate concerns the French have about this minor industry. The government needs to understand the power of the EU and the legal  realities of the position they find themselves in.

It would be most helpful if as an external independent expert you could let me have background on the extent that the UK will need imported food and fuel over the next few years. A study of relative regional imbalances in EU countries and the UK would be topical given the debate here about levelling up. If it is your continued view that freedom of movement of workers and adherence to the common fishing, energy and farming policies and standards is best for the UK it would be good to have the case set out. I would expect you to have the contacts in and references from larger European companies who would take this sensible view.

There is a strand of Brexit commentary taking hold that thinks paying people at home more to take jobs that would otherwise go to continentals coming here under freedom of movement would be a good idea. They are also keen to rebuild domestic capacity in everything from food to fish and from energy to technology. Your help in explaining the difficulties and theoretical problems with this approach would also be a useful balance to the debate.

Some Ministers think there are easy Brexit wins from changing laws and cutting taxes like VAT on various products. We need to present the case against a race to the bottom and set out the  balance set by the growing body of EU law designed to protect the  single market and European values. They do not seem to understand that it makes sense to import more food, cars, energy and other items in a spirit of European solidarity, and to welcome EU workers here.

Given the prestige of your department and the important work it does I am sure we can come to some agreement on the scope and reward for this study that a Minister will approve. I will draft it around the twin themes of levelling up and post Brexit policy. I note that the Health department has recently agreed a study mainly of health  inequalities when the Treasury wanted a simple attack on waste in the NHS.

Yours

 

Dame Lucy Dolittle