The shortage of energy and the realisation of the need to keep the lights on has led to some crucial changes of U.K. policy recently.

The government does now see the need to keep the 3 ol£Pd coal power stations open for when the wind does not blow. Let’s hope they are in time to save them. yesterday wind only delivered 4% of our electricity, requiring huge quantities of gas.

It now sees the need to get more gas and oil out from the North Sea given the world shortage and the wish to avoid Russian energy.

Let us hope its fracking review comes up with the answer that we should offer incentives to landowners and local communities to allow onshore production as well.

I have received the below two written answers from Ministers at the Department for Environment, Food and Rural Affairs:

 

The Department for Environment, Food and Rural Affairs has provided the following answer to your written parliamentary question (158851):

Question:
To ask the Secretary of State for Environment, Food and Rural Affairs, if he will publish an assessment of the impact of high fertiliser prices on the volume of planting of wheat in England in 2022. (158851)

Tabled on: 25 April 2022

Answer:
Jo Churchill:

It has not proved possible to respond to the hon. Member in the time available before Prorogation.

The answer was submitted on 28 Apr 2022 at 12:07.

 

 

The Department for Environment, Food and Rural Affairs has provided the following answer to your written parliamentary question (158850):

Question:
To ask the Secretary of State for Environment, Food and Rural Affairs, what steps he is taking to help secure more planting of greenhouse food crops in the context of high gas prices. (158850)

Tabled on: 25 April 2022

Answer:
Victoria Prentis:

An innovative, productive and competitive agricultural sector is one of the Government’s key priorities, and we recognise the role greenhouse crop production has in ensuring a reliable and sustainable supply of fresh produce throughout the year.

The Government is working with the sector on a forward-thinking approach. It is looking at innovative ways of growing crops, such as increased use of greenhouse crop production and other state of the art farming technology which can help maximise crop growth and increase productivity.

We are aware of the challenges facing greenhouse growers and other farming sectors, as a result of the recent increase in the cost of a range of inputs including high gas prices, and the impact this is having on the production of food crops.

We continue to keep the market situation under review through UK Agriculture Market Monitoring Group, which monitors UK agricultural markets including price, supply, inputs, trade and recent developments. We are increasing our engagement with industry to supplement our analysis with real time intelligence.

The answer was submitted on 28 Apr 2022 at 11:33.

I have received the below written answers from the Department for Transport:

 

The Department for Transport has provided the following answer to your written parliamentary question (158848):

Question:
To ask the Secretary of State for Transport, what the projected reduction in rail losses and rail subsidy is for the 2022-23 compared to 2021-22. (158848)

Tabled on: 22 April 2022

Answer:
Wendy Morton:

The Department’s Main Estimate in 2022/23, for both support for rail passenger services and to deliver reforms, is £3bn. This is a reduction from an estimated outturn of c.£5bn in 2021/22, primarily due to an increase in revenue. Actual 2021/22 outturn will be published in due course as part of the Department’s Annual Report and Accounts.

The answer was submitted on 27 Apr 2022 at 14:32.

 

 

The Department for Transport has provided the following answer to your written parliamentary question (158852):

Question:
To ask the Secretary of State for Transport, what estimate he has made of the number of commuter miles that will be travelled on the railways in 2022-23 compared with pre-covid levels. (158852)

Tabled on: 25 April 2022

Answer:
Wendy Morton:

In line with our published guidance, the Department has developed a number of scenarios of possible rail demand to reflect uncertainty including how passengers respond post-Covid-19. The Department considers a wide range of evidence for our project appraisals and policy decisions.

The answer was submitted on 27 Apr 2022 at 14:34.

 

 

The Department for Transport has provided the following answer to your written parliamentary question (158853):

Question:
To ask the Secretary of State for Transport, whether he has made an estimate of the expected cost to the (a) railway industry and (b) public purse of offering discounted tickets on certain railway journeys from 25 April to 27 May 2022. (158853)

Tabled on: 25 April 2022

Answer:
Wendy Morton:

Government has supported industry to develop and deliver the sale; the scheme is run on a commercial basis.

The answer was submitted on 27 Apr 2022 at 14:36.

The Chancellor has said a Windfall tax on domestic oil and gas is on the table. That is the low tax Chancellor. He says if the industry does not get on and invest he will think about it. He should know there is already a large windfall tax in place on UK oil and gas profits. They pay double corporation tax.

The Chancellor has a problem. Investment is lower than we would like. It is lower than many rival economies. It needs to be higher to help boost productivity, the key to rising living standards. There is an additional issue. UK policy in the EU was based on increasing our imports in industry, energy and agriculture leaving us with a large balance of payments deficit. We need plenty of inward investment to meet the bills in foreign currency for all those imports.

The Chancellor has decided to increase the UK corporation tax rate from next year. This is bound to deter more investment and put off some that might have otherwise have come. Ireland choosing a much lower corporation tax rate than ours greatly exceeds us in the amount of foreign investment it attracts, and collects more corporation tax revenue in relation to its GDP than we do. Treasury models and sages say this is impossible. In order to offset the negative effects of higher tax on investment the Chancellor offered super deductions against corporation tax this year to encourage  an investment surge. It has helped but it has not been on anything like the scale needed. Many investors look through the super deduction to the higher rates to come and do not like what they see.

The Chancellor promised us he would spend the spring and summer studying what new types of offset or deduction he could offer to try to embed a more favourable tax regime for new investment into his corporation tax proposals from next year. We await those with interest. I can assure him the threat of a Windfall tax is not part of such a package.

The best way to attract more investment is to have low simple and stable rates. The more you change it and the more complex it is the more investors will decide to go elsewhere. Threatening investors who you want to make large long term commitments is a particularly bad idea. That is Labour policy, which I oppose.

This week when many of us would have liked more time to debate the cost of living response or to talk to people on doorsteps in the run up to the Council elections MPs have been detained late at Westminster each day to vote down a large number of Lords Amendments to the Borders Bill and a couple of other pieces of legislation. I have  no problem with our second chamber wishing to probe, criticise and propose improvements . That is their worthwhile and legitimate constitutional function. There is more to question  when they persist in challenging the Commons on matters where there is public will, manifesto commitments and a clear statement of intent by the elected House.

Of course in a free society peers like anyone else are entitled to their views and can use their constitutional rights to the full. They also need to ask themselves if it is wise to constantly disagree with central policies they do not like when they have been put to electors and when they attract large majorities in the Commons. The bishops with a guaranteed 26 unelected seats in Parliament say they intend to oppose the government’s policy to reduce people trafficking and illegal migration when the majority of the public and the majority in the Commons is urging the government on to do more to tackle these abuses and dangers. They highlight this issue when there are so many injustices and abuses worldwide at a time of war in eastern Europe, of starvation and civil war in some African states, and serious human rights abuses in a number of autocracies.

There is  no likelihood of Lords reform on a grand scale. Tony Blair looked at it when he had a large majority and strong political support countrywide and decided it was too difficult given the likely opposition of the Lords themselves to reform.  This present government would be wrong to divert energies to it when there was no Manifesto proposal and so many other matters more relevant to people’s lives. Maybe it will  be possible over time to evolve a better Lords. The current imbalance in membership means it heavily over represents an establishment view that does not favour an independent UK shaping her own policies, preferring a world of global treaties, so called independent bodies and the rule of the technocrats. It could do with a few more people who are entrepreneurial and freedom loving. Maybe it should move to single ten year terms for peers. Maybe retirement should be accelerated, allowing people to keep the title but lose the vote. The Lords is very large and only works because a good number of peers do not seek to engage day by day in its proceedings. It needs  to show a bit more political balance or avoid looking like an establishment stitch up against the popular will.

The ONS published revised figures for the debt and deficit in the year to March 2022. Compared to the figures released as recently as the Spring Statement they now think borrowing last year was £20bn higher than they thought in March, though still massively down on the budget 2021 forecast. They also warn us that the figures will be subject to future revision and that could be material. As the cash requirement figures they published are so much lower than the deficit figures it seems likely the deficit will be revised down again before we are finalised with the history.

Revenues were well up on the original 2021 forecasts and were even up on the recent Spring Statement forecasts. it leads me to ask again how can the Treasury be so sure they needed an extra £12bn from a National Insurance rise when the revenues increased last year by several times that amount over their forecast? And how come they can afford to withgo a portion of the £12bn now they have raised the threshold for paying National Insurance?

The latest figures tell us that there has been a large rise in debt interest, to £69.9bn.  This figure combines genuine cash payments of interest on borrowings, with more complex non cash items relating to index linked borrowings repayable often in many years time.

Debt interest remains low relative to GDP and spending thanks to low interest rates . Much of the borrowing is long term, locking in these favourable low interest rates for the full term of the loans.

The fact that the Bank of England owns a large portion of the bonds is also helpful as a 100% owned servant of the state. The Treasury pays interest to the Bank on these loans, but can get a dividend back from the extra money  the Bank receives as a result.

 

The Treasury now adds the increase in repayment value of indexed gilts each time inflation numbers emerge to the debt interest figure. This is not a bill the state has to pay month by month as inflation rises. As they confess it is a non cash item.

The extra cost of the debt is only passed on to the bond owner on maturity of the bond. At this point the state will simply refinance it, so there is never an immediate cash cost that needs financing out of tax revenue. Some of these bonds are  not repayable for many years.

Normal bonds do incur cash costs with the payment of interest and these are properly considered a running cost to the state.

 

Last year  out of the total cost of debt interest attributed by the Treasury of £69.9bn, £34.7bn was indexation. The true cash cost of the debt was £35.2bn, around half the stated figure.

 

The  most infamous cake quote came on the eve of the French revolution from their Queen. “Let them eat cake” as a solution to the poverty of those who could not afford bread became a phrase to sum up just how out of touch governments and elites can become from the reality of the lives of many of those they govern. Marie may never have said it but it is all most people know of her.

More recently Boris Johnson’s famous statement that he was in favour of having cake and of eating it was a welcome dose of common sense and optimism against those who favour austerity and bad choices. There is no point in having cake unless you are going to eat it. Leaving it to go mouldy is a bad plan all round. Selling it to someone else may be a good idea for a producer but for the rest of us the whole point of  cake is to eat it.  The aim of economic policy should be to allow all those who want it to earn enough to afford cake, and for there to be a good supply with plenty of choice for the cake eaters.

The latest intrusion of cake into our politics has come over whether a birthday cake appeared at a work gathering in Downing Street. If it did did it turn a meeting into a party? Was any cake eaten? Suddenly the pressure was on to show this was a time when cake if had was not  eaten so no rules were broken.

Meanwhile Keir Starmer’s keen wish to see all rules applied and all statements to be truthful does not seem to impose these important standards on himself. Drinking  a beer with colleagues himself apparently does not constitute a party nor an offence against lockdown rules. Accusing the PM of something he never said about the BBC   is apparently not worthy of a review by the Privileges Committee.

Last year economic policy was expansion minded. The  Bank of England carried on printing lots of money and kept interest rates around zero. The Treasury decided they could live with a large deficit and allow more spending. No big tax rises were allowed. As expected the economy  recovered quickly from the lockdowns.Inflation leapt up as the monetary stimulus was too big.

Some including the Treasury blame world energy prices for the inflation. This does not explain why Japan still has practically no inflation despite depending on imports of oil and gas. Nor does it explain high importing China’s low inflation. The U.K. has almost as much inflation as the USA and Euro area who printed even more money and kept rates lower for longer.

This year the Treasury has hiked taxes and the Bank has hiked interest rates whilst  ending money printing. They have chosen to do this as energy and food led inflation is taking a huge lump out of people’s spending power, acting like a bumper tax rise. This means the economy will slow sharply.The Treasury and Bank have gone from being too lax to being too tough.

Taxing jobs through National Insurance rises is wrong. Hiking the company  tax rate next year will deter investment. These  policies will cripple  growth and lead to a bigger budget deficit. You need growth to get the borrowing down. The government also needs better spending discipline .