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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Controlling the borders

The Home Secretary has been trying to get legislation through Parliament. She has made clear that the government wishes to stop the cruel and exploitative trade in bringing people illegally across the Channel risking their lives. The lawyers and courts have made it difficult for the government to enforce the law against illegal migrants, so the Home Secretary is trying to toughen it in a way which will make it more difficult for them to thwart the policy aim.Border Force apparently need even clearer instructions in legislation to stop this trade.

We need  further developments. The Home Secretary  recognises the current situation should not continue. It is wrong to allow a lot of people to get here by illegal means and then to keep them here at great expense unable to work. It would be much better if economic  migrants applied before they came and only came if they get permission to come.

Your thoughts on how Ministers can get the system to deliver would be interesting.

What estimate has the Health Secretary made of total NHS redundancy payments for the last year?

I suspect the true answer to my question is considerably higher than the answer they provided. I wonder why they left some categories out when I asked for the total?

The Department of Health and Social Care has provided the following answer to your written parliamentary question (146530):

Question:
To ask the Secretary of State for Health and Social Care, what estimate he has made of total NHS redundancy payments for the last year. (146530)

Tabled on: 24 March 2022

Answer:
Edward Argar:

The total value of the redundancy payments incurred by National Health Service in 2020/21 is £27.4 million.

The following table shows these costs by voluntary and compulsory redundancies in 2020/21 by the NHS England group and Consolidated Provider Account group. The NHS England group comprises of clinical commissioning groups and NHS England. The Consolidated Provider Accounts group includes NHS trusts and NHS foundation trusts.

Entity Voluntary redundancies including early retirement contractual costs £ million Value of compulsory redundancies £ million
NHS England group 2.5 6.1
Consolidated Provider Account group 2.8 16.0

Notes:

These values do not include mutually agreed resignations contractual costs, early retirements in the efficiency of the service contractual costs and contractual payments in lieu of notice. Exit payments following employment tribunals or court orders and non-contractual payments requiring HM Treasury approval.

The answer was submitted on 11 Apr 2022 at 10:40.

The Chancellor should show he understands the cost of living crisis

The big rise in energy prices is like a big tax rise. It  takes a lot of money out of peoples purses and wallets. It reduces discretionary spending as many people cut back to meet the higher bills for the basics. It ushers in stagflation as the economy slows and inflation stays high.

The last thing we need when energy- and now food – prices soar are tax rises as well. That compounds the squeeze and slows the economy more. Last month the U.K. economy after a year of fast growth slowed to just 0.1%whilst  inflation rose again.Today we should expect  a further rise in prices.

The Chancellor should announce now that he will remove the NI rise and take VAT off fuel. Of course he also needs to bring the deficit down. That requires growing revenues. Producing  more of our own oil and gas will give revenue a big boost as there is a double corporation tax rate on that activity. Easing the squeeze will mean more VAT on non energy purchases as there will be more of them, and more Income tax.

It also requires better control over public spending. Maybe we could start by cancelling overseas aid to countries supporting Russia, and charge all the Ukraine spending to the overseas aid budget as a better substitute.

Ukraine

It is good news that the Ukrainian army and people have lifted the siege of Kyiv. The Russians  by general report have given up trying to capture the capital or the west of the country, to concentrate their sieges on Donbas and southern cities.The tragic  bombardment of Donbas continues, with indiscriminate attacks on civilians and the widespread destruction of homes.

Let us hope there is no return of Russian tanks and troops to Kyiv and the west. It means many Ukrainians who left the country are considering returning to their homes. Some will find their homes as they left them, others may find them looted or shell damaged. The U.K. and other NATO and EU countries should now direct more assistance to those who wish to return and to how buildings and services can be repaired so they can have a better life again. It is very important Ukraine returns as much of its land and economy to more normal working as possible and restores more homes for more of its people. That after all is what they are fighting for.

Fighting inflation without a big downturn

The Fed, the ECB and the Bank of England all made the same mistake last year. They carried on printing more money and buying up bonds to keep interest rates around zero for too long. They were right to offer a big stimulus in 2020 to offset the covid inspired downturn, but misjudged the recovery and helped fuel the inflation.They ignored those of us who warned against excessive laxity. They stuck to silly unrealistic forecasts of inflation for this year of around 2% when it was obvious it would rise considerably higher, especially in the USA where the stimulus was largest.

The Bank of England saw sense soonest, stopped money printing at the end of last year and has started to raise rates. The Fed carried on printing until March this year and has only just started to hike and unbelievably the European central bank is planning to print Euro 90 billion more in the second quarter of this year and is putting off tightening to be reviewed again in the third quarter. Spanish inflation is already at an alarming 9.8% and Eurozone inflation generally is over 7%. How much higher do they want it to go?

The UK has to be careful, as it is not only tightening money policy but also increasing taxation at the same time. The danger is this double hit to an economy which has been recovering well from covid lockdowns will prove too severe, slowing the economy too much. The Bank’s tightening means dearer mortgages and credit, squeezing many consumers further as the high energy prices kick in like a big tax rise. That makes the NI rise and the tax increase on energy that comes with higher energy prices an inappropriate added threat to ,jobs and output.

The UK needed a bit of tightening to curb price rises. It does not need to lead world austerity just as the cost of living crisis hits. The government also needs to do more to assist and stimulate more domestic production of everything from fertilisers to gas and from food to microprocessors. To the extent  that the inflation stems from a series of supply side shocks, boosting supply can start to right the position.

I want some more please

The government needs a touch of the Oliver Twist in its approach to UK food production. Freed of the Common Agriculture policy which left us short of permits to produce milk, paid grants to rip out   our orchards and used rules to slim our beef herds we expected a policy that promoted more UK produced food. We need to recapture the lost market share of the CAP years.

Instead so far the government has used its freedoms to pay farmers to leave farming, paid farmers to wild their land and stop growing crops, and paid them money for a range of environmental goods that impede or prevent food growing. What we now need is recognition that imported food can be hard to come by when the world experiences shocks like the Ukraine invasion and the gas shortages. There is a good green argument to cut the food miles. It is easier to be assured of the safety of our food and of the humane treatment of animals and birds reared for the table if the work is done at home under UK regulations.

Agriculture in most parts of the world is heavily subsidised and regulated by governments. Most countries use their powers and money to promote more domestic production,  not to stop people farming. We need to catch up. The UK needs to restore full fertiliser production, hit by high gas prices. It  needs to work with supermarkets to ensure sensible prices are offered farmers to grow the grains, rear the animals  and produce the milk and eggs people will want, seeing that farmers costs for these items have risen rapidly in recent weeks.

Farmers need grants to help buy the more automated systems to plant and harvest a wide range of crops, and to assist in putting in the extra greenhouse and polytunnel capacity needed to extend our growing season. It is bizarre that we import so many flowers, salad stuffs and vegetables from countries like the Netherlands that have no better weather than us but have better systems of investment encouragement and support.

The cost of living and energy prices

Some have queried why Ministers have not been sharing tips to keep the energy bills down. I think they are wise not to. Someone on a six figure salary who can afford the price rise is not well placed to lecture others on how they might use less energy. There are plenty of experts who can help people see if they can manage their bills down a bit without going cold.

These experts and the industry backing energy efficiency measures can help all of us see if we can insulate our homes and improve our use pattern of energy to save energy or to save money on the bills. Anyone thinking of a heat pump will be told they first need to insulate their homes to high standards to get any such installation to work. Such high standards will cut the bills for a traditional gas boiler quite a lot.

More insulation comes at a cost. There are government schemes to help those on lower incomes with the initial cost. The pay back from tank and loft insulation can be quite fast. Improving or changing windows and walls is much dearer and more intrusive though it may make sense in the context of wider home improvements someone with a bit to spend can afford to undertake.

An energy strategy

There are some good developments as the government seeks to change energy policy. There is rightly much more attention to security of supply, and to the need to develop our own energy sources to eliminate reliance on imports. There is an understanding that for the next few years most UK people will have petrol or diesel cars and vans, and will heat their homes with gas or oil or solid fuel boilers. For the period of transition prior to many more people heating and travelling with electricity there needs to be a reliable supply of oil and gas at affordable prices. The strategy accepts that we need to use more of our own oil and gas from the North Sea. There is a review of onshore gas. The best answer to the issues that poses is to adopt a model which allows any community or landowner to say No to drilling, but to allow communities willing to see such developments a share of the turnover or profits or offer them free or discounted energy.

For the longer term the government favours a major commitment to nuclear. There has been a long history this century of PMs wanting more nuclear only to find it is watered down and delayed by a range of forces against. The best hope the government has of changing this is probably to back the development here of a suitable small modular reactor that can be produced at scale mainly in  factories and assembled  on site with suitable substantial concrete workings for containment. The UK could become an exporter of such technology to extend the production runs and lower average unit costs. There are sites around the country where larger nuclear stations are closing who might welcome a new replacement and would have some of the skilled people necessary to run it.

The government still favours more wind farms. It does now accept that these will not satisfy our demands for power on calm days or on days when the wind blows too strongly. It is therefore investigating ways of storing the power on windy days and nights to use on days of high demand and little wind. This is going to be necessary to keep the lights on. It also needs to account properly for the cost of the windfarms themselves and for any backup or storage needed to make them reliable for consumers.

Meanwhile the next few years whilst people still need plenty of fossil fuels for home heating and transport and industry remains fuelled by gas we are going to need more gas as a  stop gap. The government needs to work closely with industry and grant the necessary permits in good time to help this endeavour.

Too many wars

As a teenager I was shocked to read of the horrors of the Great War of 1914-18, and to hear a little of the reality from my two grandfathers who both fought in the trenches and survived. My study of what was called English history which was really UK history made me think the UK had fought too many wars, being dragged into many continental conflicts for  no good reason.

I am  no pacifist. I understand there are violent and dangerous countries that may wish us harm. Indeed having stronger defence forces than we currently enjoy seems like a good insurance policy and a necessary statement to put a hostile power off challenging us. We needed force to liberate the Falklands from the senseless and violent Argentinian invasion, and to help the USA liberate Kuwait from an unwanted occupation. There may be other such needs in the years ahead.

Throughout the last 500 years of our history we have sought to prevent a single dominant power taking over much of Europe by force. In the sixteenth century we with the Dutch resisted Spanish attempts to add the low countries and England to their continental empire. In the seventeenth and eighteenth centuries we worked with a coalition of other states to prevent French military domination of the continent, culminating at the turn of the nineteenth century in the great victories of Trafalgar and Waterloo to end  Napoleon’s empire building based on his large and threatening armies. In the twentieth century we twice fought against German domination of the continent. Today we have  no issues with the EU emerging as a single force on the continent. We made the sensible decision not to join them, as our interests are global and based on trade, investment and contacts with the wider world. We should leave most continental political issues to our neighbours to resolve through their elected member states governments and through their strong centralised law making at EU level.

Foreign policy obviously looks very different from Warsaw which is closer to Moscow than to London, or in Berlin so much closer to the eastern borders of the EU than the UK is. Countries with continental land borders may choose closer agreements and arrangements with their neighbours to regulate their affairs. The UK is right to condemn Russian aggression and spiteful violence towards Ukraine and to help as a non combatant with other allies. The big issues about Ukraine’s European status, possible membership of the EU and development of the Association  Agreement are not matters we can or should wish to get involved with. We wish to see the end of the war and the dreadful violence and damage being done but we should not wish to influence the political settlement which has to follow. The main protagonists are Ukraine who need to resolve their own future, and Russia. Ukraine may want more help from the EU which they wish to join given its role in the conflict and its interest in future governing arrangements for Ukraine.

The latest CO2 report

The latest UN report on CO2 reveals what some of us have been saying for several years. CO2 output continues to rise year by year. The large emitters led by China and India are producing a lot more, and the USA remains at a high level. Total world CO2 output is now 54% higher than in the base year of 1990, when it is meant to be falling from that level. It demonstrates that many countries have  not offered a realistic target to reduce their emissions to assist the world plan, and demonstrates that some countries do not even deliver what they have promised. Meanwhile the UK producing under 1% of the world total is one of the few that has made major reductions. In 2020 CO2 output was just half the 1990 level though it presumably went up a bit in 2021 as we came out of lockdown. It was down 38% on 1990 levels in 2019. As the press releases based on the Report state, on this basis the world will not come anywhere near hitting the targets they say we need to hit to avoid a temperature rise of more than 2 degrees.

The net zero movement is only going to succeed if all major countries participate fully and take actions that do actually reduce their CO2 output. Some of the UK’s tough actions to cut its CO2 have probably served to raise total world CO2, as we have closed down industry at home only to import from places like China where they may produce more CO2 per unit of manufactured output. As I have often pointed out, keeping our own gas unused and importing LNG is a sure way to more than double the amount of CO2 generated in the overall process of extracting, transporting and using gas as a fuel.

In a world of energy shortages and high prices and food shortages the UK needs to take self sufficiency and security of supply more seriously. Making and growing more at home can also cut world CO2 at the same time, though UK CO2 will rise on the way of accounting adopted for this. Today the world economy is running on a model which maximises exports from high emitting economies and industrial processes, with imports into countries that could make and grow with less CO2 if the net zero rules were properly enforced in the exporting countries. It looks as if COP 27 needs to have more realistic tougher talks with the big emitters if it is serious about cutting overall world CO2 anytime soon.