John Redwood's Diary
Incisive and topical campaigns and commentary on today's issues and tomorrow's problems. Promoted by John Redwood 152 Grosvenor Road SW1V 3JL

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Fill the reservoirs now

November 22, 2022 124 Comments

I post beneath two Q and As on filling reservoirs now from high running rivers and the  need for investment in extra capacity. They are slowly moving to tackle the water shortage.

 

Question:
To ask the Secretary of State for Environment, Food and Rural Affairs, what steps she is taking to increase reservoir and water storage capacity. (83504)

Tabled on: 09 November 2022

Answer:
Rebecca Pow:

The Government recognises the need to improve the resilience of our water supplies and is committed to a twin track approach to improving water resilience. This involves investing in new supply infrastructure and action to reduce water company leaks and improve water efficiency.

The National Framework for Water Resources, published in March 2020, sets out the strategic water needs for England to 2050 and beyond. The Framework sets out how we will reduce demand, halve leakage rates, develop new water supply infrastructure, move water to where itis needed, increase drought resilience of water supplies, and reduce the need for drought measures.

Water companies are using the £469 million made available by Ofwat in the current Price Review period (2019-2024) to progress the infrastructure required. Before the end of this year, water companies will publish their statutory draft Water Resources Management Plans for consultation, that will set out how they will improve drought resilience and secure water supplies in the long term.

The Government also supports the agricultural sector with its Farming Transformation Fund grants for the construction of new reservoirs.

The answer was submitted on 17 Nov 2022 at 10:53.

Question:
To ask the Secretary of State for Environment, Food and Rural Affairs, what steps she is taking to help refill reservoirs from river abstraction, in the context of increases in rainfall and river water flow. (83503)

Tabled on: 09 November 2022

Answer:
Rebecca Pow:

Water companies are taking action to improve public water supplies, especially refilling reservoirs. They are using drought permits to allow them to take water from rivers, including new sources, or to modify or suspend conditions in their existing abstraction licences. When the Environment Agency (EA) determine a drought permit application they will ensure there are mitigating conditions in place to protect the environment. The EA is encouraging water companies to submit drought permit applications early to help improve supplies over winter in preparation for next spring and summer. The EA has granted 18 drought permits for South West Water, Thames Water, Severn Trent Water and South East Water. Defra has also determined a drought order for Yorkshire Water. The EA is determining further permit applications for Southwest Water, Yorkshire Water and Thames Water.

We are also helping the agriculture sector refill their reservoirs over the winter. The EA is monitoring and forecasting flows to advise the farming sector when they can abstract in line with their licence conditions, which protect the environment and other water users. October rainfall was typically above average meaning that many farmers could start refilling their reservoirs and we are encouraging them to maximise all opportunities to do this, given November is forecast to be dry in many parts of the country.

The answer was submitted on 17 Nov 2022 at 11:06.

 

 

Stop wasting money

November 21, 2022 214 Comments

The Autumn Statement put up spending and taxes. It should be amended by cutting out needless and wasteful spending.

We do not need a government ad campaign to tell us turning down the thermostat would cut our energy use. People are not stupid.

What we do need is a government sector that turns the lights and heating off when it is not using its buildings. We need them to cut the number  of buildings they use now there is so much Home working.

We do not need them to increase overseas aid by signing up to new COP 27 funds and pledges.

We do need them to control our borders to stop illegal migrants. The hotel bills are large and wrong

They should pause the expensive smart meter programme.

They should cut the massive costs of HS2

They should stop the planned £11 bn of losses on bond sales the Bank should not be making

They should get on with improved policies to get people off benefits and into work. No need for another review.

They should accelerate the NHS manpower plan which should recruit more medical staff to replace Agency temps, and cut overheads

 

Dodgy figures in the Autumn Statement

November 20, 2022 242 Comments

The Treasury keeps changing the figures it shows and withholds. I feel when reading Budget and Financial Statement books now I am being pushed into a view or judgement they want Ministers to make and readers to accept.

Let’s take the case of debt interest. They have decided to alarm everyone about the scale of debt interest. So they add to what all would agree is debt interest, the regular cash payments to lenders, the extra repayment amount on indexed debt which is not paid until the  loan is rolled over for another one on repayment.  With this year’s runaway inflation it more than doubles the apparent debt interest paid. So we are told on their definition debt interest has reached £120 bn or 11% of revenue this year.

That gives them the problem that as inflation falls away so will debt interest. So they will not tell us by how much in pounds. We can see it comes down on a graph from over 11% of revenue to 6%, so by 2024-5 on their odd numbers there is a big saving. Why not show us the cash interest figures for every year which are high anyway and offer a balance sheet line to show the increased cash cost of repayment of linkers alongside the  real win of repaying the majority of the debt which is not inflation linked  in pounds devalued by inflation.

There is then the assertion around half the  adjustments to get the deficit down will come from spending reductions and half from tax rises. To make it difficult to check  this they do not this time show the path for total tax revenues. The 50/50 is based around previous budgets and forecasts which had built in substantial increases in spending.

What this revision reveals is total spending will go up £133bn by 2024-5 compared to last year and by £224 bn by 2027-8. No sign of cuts overall. Income, mainly tax, can be derived by subtracting borrowing from spending. That goes up by £200bn between this year and 2027-8.

So to us mere mortals these budget plans are for a substantial cash rise in both spending and taxes. It will also on these numbers be a real increase in both, as they forecast inflation tumbling and going negative in 2025.

 

A Minister in office is not always in power

November 19, 2022 234 Comments

The events of recent weeks have shown that it is possible to be a Minister in office unable to see through changes of policy or enforcement of laws in ways the public and Ministers wish.

At the Home Office successive Ministers have made clear their wish to end people trafficking across the Channel. There has been a change of the law, yet still lawyers and legal processes conspire to delay final decisions on cases. People can claim to have been trafficked yet we do not seem able to return them to their home from whence they were trafficked. People claim they are asylum seekers yet they have come immediately from the safe country of France, and often came from another safe country before France. Two Home Secretaries have now been briefed against and complained about by civil servants. The Ministers have doubtless become frustrated at the lack of help to design a law which works or to enforce a law which was said to work. The idea is meant to be Ministers set out the aims of policy and provide the resources, whilst officials get on with implementing it in the best way.

At the Treasury Ministers are told they need to follow Bank and OBR orthodoxy. There has been a  notable lack of self criticism or curiosity as to how the UK has an 11% inflation rate when Ministers have endorsed a constant target of 2% inflation and left the Bank free to set interest rates, interfere in bond markets and oversee the overall banking  system to bring this about.  Nor has there been much public exploration of why successive OBR forecasts have been tens of billions out in recent years, and how this can lead Ministers to accept wrong judgements based on bad data. Treasury Ministers need to be more sceptical of the advice they are getting as so far it has landed us with an unwelcome inflation and may soon land us in an unwanted recession.

The OBR run the Autumn Statement

November 18, 2022 257 Comments

I said the OBR deficit forecast this spring for this year  was likely to prove an underestimate. Yesterday the OBR put it up by 75%.

I said all summer we would go into recession unless they changed policy. The OBR did not forecast that in the spring. Now they are forecasting a recession all next year.

Last year I argued to end Quantitative easing by the Bank and Treasury to avoid inflation taking off. They went for another £150 bn of money printing and we now have a nasty inflation.

I now argue for some offset to the monetary tightening the Bank is doing and want them to stop selling bonds at a loss into  the market. I fear they will carry on and make the recession worse.

I see the government are offering some offset to the recession policies with a boost to public spending this year and next. The money given to people and companies to help with energy bills and offset inflation will as the OBR says reduce the depth of the slowdown.

It would have been better to include some tax cuts to do this, VAT cuts help cut the inflation rate. Cuts in tax on business and incomes help confidence and may even grow the revenues faster.

The OBR have upped the ante with their bloated figures for debt interest including non cash items. These should come tumbling down as inflation falls. The Chancellor has done just what the OBR wanted. Their £50 bn black hole is bizarre. No one can say what the deficit will be in five years time. If we followed a more pro growth policy it would be lower than the 0BR say and could vanish altogether. If the Bank and OBR continue to dictate the black Hole will be bigger, driven there by a worse recession. £50 bn is less than the large revisions to OBR deficit forecasts in each of the last three years.

Steering the economy by OBR five year forecasts is like relying on a medieval map to get to a modern city.

My Speech at the Opposition Day Motion on Britain’s Industrial Future

November 17, 2022 168 Comments

Rt Hon Sir John Redwood MP (Wokingham) (Con): I congratulate the Minister on a lively and informative speech. It was great to have a positive vision for the future from him. He rightly reminded us that many of the exciting new technologies and opportunities available to modern industry and business are being grasped by both the private sector and the Government working together. I congratulate him and his Department on that work. However, I urge him and the Department to greater efforts in the range of more traditional industries that are still very much industries of the future. We have a choice. If we make the right decisions on taxes, regulations, support frameworks and orders, we can produce more such things at home. If we make the wrong decisions, we will end up importing too many of them.

I start with energy. The Minister’s Department has a crucial role in organising our energy and the transition that it wants as well as ensuring that we have enough of the traditional energy forms when they are crucial to heating our homes and turning our factories. In this period of transition, we can do more to extract more of our own oil and gas. That is greener than importing it, because, in burning gas that comes down a pipe from the North sea, far less carbon dioxide is generated than if the gas were extracted somewhere else, transformed into liquid form and transported—at least half the CO2 is saved that would otherwise be generated. More importantly, that is a safer supply. Even more importantly, if we are still to have high taxes on it, we will collect those taxes. At the moment, the more we import, the more dead money goes out of our country to pay somebody else’s taxes, doubly burdening our industry with the extra cost of what are sometimes extreme market prices to secure the supply—when there is not a long-term contract—and extra transport costs that must be put into the equation for effective delivery.

I urge the new ministerial team to take up from where the old team were moving to and understand that there are quite a lot of good proven reserves out there now. Production licences could be granted in a timely way, and we could have more of our own import substitution and more secure supplies for the future. It is possible to work with the industry on existing fields so that maintenance schedules can be kept to a minimum and output can be maximised, particularly over a difficult winter. We all know that if anything goes wrong with the UK and European gas supply over the winter, it will be our industry that gets caught first; industry is very reliant on plentiful gas supplies for much of its important processes.

We must be careful about carbon accounting. I think a lot of us feel that it does not make a lot of sense to say that the heavy gas-using industries and other fossil fuel-using industries in the United Kingdom, such as cement, glass, ceramics, steel and so on, will be penalised because they are generating carbon dioxide in their process, only to substitute imports of those same products that will certainly produce more CO2, not only because of the long-distance transport, but quite often from the processes as well, as this country has often gone a bit further in more efficient processes than some import substitutes. So that, too, is an area that we need to look at very carefully.

On the car industry, I would like to expand a little on the intervention. Again, a difficult transition is under way and it can only go at the pace that the customers are willing to let it go. At the moment, as we have been hearing, a relatively small minority of the cars built in this country are full electric cars—something to do with price and range, and people getting used to the idea of the electric vehicle—and so during the transitional period we again have a choice: either we produce the diesel and petrol cars that people still want to buy, or somebody else does that and we end up importing them. Again, I do not think that that is a good course. I would not want to be ahead of some of the other leading car producers in the world in definitely ruling out producing vehicles that still sell well, when we have put a lot of investment collectively into developing more fuel-efficient vehicles, which have much less coming out of the tailgate.

My final brief point builds on one that the Minister eloquently made in certain contexts. We can do a lot more, as the Government are trying to do, with sensible purchasing of our own products. Of course, we do not want to buy products that are less good quality or too expensive. There has to be competition within the UK market to reassure the Government they are getting value, but just as we have always done with things like warships, so we can do for more essential products. We should give the home base the best chance and, if necessary, help people come in as major investors with their factories in order to do so.

What can you expect for £1,087,000,000,000 a year?

November 16, 2022 178 Comments

Since 2018 public expenditure has surged. This year we see  government spending nearly £1.1 trillion, up by more than  a quarter compared to the 2028-19 level. We need to ask what do we get for all this money? Where does it all go?

Each household this year will pay on average £35,000 in tax to receive on average £38,000 in government activity. The system is very redistributive so the higher earners contribute many times the value of the benefits they receive, and some pay more in total taxes than they get to spend on themselves and their families on everything else.

These huge sums are leading more and more people to question why the level and quality of services is in many cases so disappointing. As an MP running part of the extensive complaints system for government which is an important part of the job I am in receipt of  too many justified complaints.

There is the Home Office, unable to process migration claims quickly and fairly to ensure illegals go back whilst  those we welcome can soon adjust to their new lives and get a job. There is the failure to stop the people trafficking across the Channel, the failure to prevent protesters blocking main motorways for hours on end and delays in reporting on people’s suitability to undertake jobs with children and vulnerable people.

There is the Probate Office, unable to process the long and complex information they require in a timely way. This leads to difficult delays in sorting out a deceased person’s estate and can be very upsetting for the families involved.

There are the delays in getting a doctors appointment or treatment at a local hospital. During covid managers of the NHS failed to use all the capacity taxpayers  were paying for in private hospitals when these extra beds were meant to be there for non covid cases. They  closed down wards in state hospitals for fear of cross  infection and did not use the  Nightingale covid hospitals provided. .

There are delays at the Passport Office, impeding people from travelling owing to unreasonable delays in renewing passports.

There are delays in the granting a wide range of licences that individuals and businesses need. North Sea oil and gas production has been held up by a shortage of licences and delays in granting them.

The Transport Department grants cash to schemes that reduce the capacity of main roads, making like more difficult to get to work, cutting access for emergency services, and making it more difficult for supply trucks to the shops.

In most of these cases Ministers are keen to see improvements in service levels and have agreed large increases in cash to achieve this under the general 27% increase in 3 years in total spending. It is time for public sector managers to raise quality and efficiency across the board.

A budget to beat recession? (from Conservative Home)

November 15, 2022 184 Comments
 The Autumn Statement will be one of the most crucial budgets ever delivered. Rishi and Jeremy have in their hands the opportunity to rescue the Uk economy from poor performance and recession if they wish, or they can accept the depressing official advice and double down with austerity. Tax rises and the wrong spending cuts now will turn a downturn into a nasty and long recession. This will lead to job losses, struggling businesses and a bigger state deficit. 
          Their challenge should be to put forward a budget and plan for growth as Liz Truss proposed, but one with forecasts, numbers and sensible controls over spending and borrowing which in his haste Kwasi left out. This is important for the whole country, and for MPs’ constituents. It is also important for the Conservative party whose reputation for economic competence hinges on it.
          Over the last fifty years we have seen Labour lose badly on two occasions and Conservatives lose twice, once badly, thanks to presiding over recessions

Edward Heath presided over the 1973-4 recession. His 1970-2 policies of competition and credit control were inflationary leading to a borrowing binge . The inflation was worsened by the  energy crisis when OPEC hiked the oil price. He tightened too much in response and lost the 1974 election. 

Harold Wilson lost control of the economy  in 1974-5, created a recession and left office. Labour lost the next election under his successor.  

John Major on official advice put us into the Exchange rate Mechanism. As I warned it took us through a very predictable  violent boom/bust cycle with a five quarter recession. This led to a huge defeat in 1997 which took the Conservatives  13 years to recover from. 

Gordon Brown created his own disaster, leading and encouraging the wrong official advice. He put us through a banking and credit boom, only to collapse it too fast through severe policy. The five quarter recession took the economy down by more than 6% . Labour have still not won an election in the 12 years that followed, with their reputation for economics in tatters.  

 

 

          It was a pity  Boris did not use the advice he was offered to cut out the money creation and bond buying  and tighten money policy last year to keep inflation down. We have more inflation now than we needed. Japan and China remind us with their low inflation rates it was not all  caused by oil and gas prices.  It was a tragedy  Liz did not present a rounded and costed Growth Plan within an economic  framework that would have worked as some proposed.  These mistakes must not lead the new team to conclude they must impose more austerity. The prime task today is fighting recession. Inflation will come down rapidly next year thanks to the  monetary stringency now  being applied. The Bank itself sees inflation down to 2%  in a couple of years time. 

          If government  accepts all the OBR and Bank advice to tighten too much into a downturn it will be bad economics and worse politics. We will end up with a deeper and longer downturn than we need, and with a bigger deficit than if we had been more willing to offset some of the recessionary forces.  You cannot tax your way into growth and recovery. A fractious and unhappy party is in  no mood for tax rises nor for spending cuts that harm individual incomes and front line services in health, law and order  and education. 

          Of course there is a need to rein in wasteful and less essential public spending. In recent years the purse strings have been loosened across a  very wide field. The Chancellor should stop the Bank of England taking losses on bonds. There is no need to do this. This will produce an immediate saving of £11bn this year. This has always been a joint control policy where the Bank needs the Chancellor’s approval.  

          The Department of Work and pensions should promote more employment for the many on benefits that could do some work. Remove the 16 hours rule for working whilst on benefit, and improve mentoring and assistance into employment  as we need to fill many more job vacancies from people already settled here. There is an unfinished part to Iain Duncan Smith’s excellent benefit reforms.  

            The government could suspend the Smart meter programme saving more than £1bn a year , as everyone who really wants a free smart meter now has one. The Treasury should stop Councils borrowing to buy up property . The Cabinet Office can impose a recruitment freeze on public sector jobs other than uniformed roles, teachers and medics . This will give more opportunities for promotion to those already working in the civil service, and assist in increasing productivity after a period of no progress. They can reduce the central London office estate to reflect more home working and transfers out of London. There should be a privatisation programme including the sale of  Channel 4 , the British Business Bank and more Nat West shares to the private sector .
             The Transport department should cut rail subsidies which are funding far too many near empty train services following the collapse of commuting . The Business  and Energy Department should trim the energy support package. They could limit cut price energy to a normal family amount so larger users pay full price for the extra they buy . We should not accept the need to provide more overseas aid for net zero or any other purpose other than a new disaster where we want to  help generously and energetically.
            We also need to boost tax revenues. Often the way to increase tax revenues from capital gains, profits, transactions and incomes is to lower the rate, not raise it. Every time we lowered Income tax and Corporation tax rates revenues rose.  The government should accelerate licences for North Sea oil and gas fields. Every extra barrel we produce ourselves switches substantial tax from a foreign country to ourselves as home production replaces imports. It also cuts the CO2.  Government should allow the private sector to finance production of oil and gas from the large Falklands islands discovery which would also displace foreign imports and help with expenditures. It could use more of the Defra grant money to boost home food production backed by more mechanisation/glasshouses. This will boost taxable farm incomes. 
           Any amelioration of the downturn will be revenue rich. The UK figures are very sensitive to the growth rate. As we saw last year, a bit higher growth rate gave us a central government borrowing requirement £120bn below the budget OBR forecast. Let’s have that budget for growth . It would help unite the party, it would help restore our economy and would cheer people up. It would be good economics and even better politics. It would also be quite a surprise. 

To ask the Secretary of State for Levelling Up, Housing and Communities, what steps he taking to avoid concentrating new housing investment in areas already facing shortages of services and infrastructure from rapid development.

November 14, 2022 202 Comments

This answer fails to deal with the question’s main point. If you are serious about levelling up you do need to use the planning system to funnel more of the new homes investment to places that want to level up.

 

The Department for Levelling Up, Housing and Communities has provided the following answer to your written parliamentary question (75745):

Question:
To ask the Secretary of State for Levelling Up, Housing and Communities, what steps he taking to avoid concentrating new housing investment in areas already facing shortages of services and infrastructure from rapid development. (75745)

Tabled on: 01 November 2022

Answer:
Lucy Frazer:

We are committed to enabling more homes to be built in the right places, and that is why we are taking steps in our Levelling Up and Regeneration Bill to get more local plans in place to deliver infrastructure in co-ordination with new homes. To make sure these homes are supported by appropriate infrastructure and services, we are introducing a new Infrastructure Levy to replace Section 106 obligations and the Community Infrastructure Levy.

We will also require local authorities to prepare infrastructure delivery strategies to ensure the right balance between delivering homes and infrastructure. This will build on policies we have already enacted in the National Planning Policy Framework, which set an expectation that local plan policies should make sufficient provision for housing, commercial development, infrastructure and community facilities.

The answer was submitted on 09 Nov 2022 at 17:57.