The Bank of England did a great job with the Treasury in creating plenty of money and offering substantial stimulus to the economy to offset the worst effects of the anti virus policies introduced in March 2020.  It was right to continue those into 2021, but it failed to rein them in as the recovery accelerated last year. It has been driving whilst looking in the rear view mirror. A year ago they did not see the big inflation coming even  though their extra loose monetary policies in the second half of 2021 were bound to fuel it. Now they can see the inflation in full flood they wish to do something about it. We have   had the third interest rate rise in quick succession.

The policies we followed in the EU of encouraging us to sacrifice national capacity in a wide range of areas from energy, through energy consuming industry to food and fishing on the grounds we could buy all that from the continent has left us very vulnerable to the supply chain and trade disruptions world politics is creating. Instead of having our own lower domestic gas price like the USA by producing enough of our own we are hitched to ultra high spot European gas prices. Instead of having enough of our own aluminium, steel, ceramics, glass and the rest we need to import ever dearer product at high marginal prices. Instead of growing most of our own temperate and glasshouse food we are over dependent on what can become stretched supply chains with rising prices.

The Bank of England needs to be careful in its new found ardour to control inflation. The big impact of rising domestic heating bills, fuel bills at the pumps, food costs in the supermarkets and rising mortgage rates is going to take a lot of spending power out of the economy. It looks likely as if the Treasury will make the hit worse with its tax rises. The Bank should pause to see what impact the cruelties of April have on growth and activity as many people struggle with their bills. The Bank needs to keep an eye looking ahead out of the windscreen at what comes next as well as checking the rear view mirror. They cannot stop the current inflation they helped create with too  much money and credit. They need to worry about the balance between growth and price rises going forward where there are  now big  headwinds against growth.

Let me have another go at explaining to the Treasury why hypothecated taxes are a bad idea and have not been adopted before  now. The idea that an NI rise of around £12bn will pay to get the NHS waiting lists down and to fix social care is deeply misleading.

The first problem with it is how does the government transfer the money from the NHS to social care? Will the NHS be willing to say goodbye to the £12bn soon? When will the waiting lists even begin to come down, let alone come down to sensible levels? I suspect the NHS will want to keep the money

The second problem is we spend £40bn  of public money a year on social care. The extra £12bn will not pay for social care. It will merely pay for some improvements. It is wrong to give people the idea that social care is cheap, when it is dear and will get dearer.

If we truly want hypothecated revenues to pay for the NHS then we need to tell people all current Income Tax, Inheritance Tax, Stamp Duty, property transaction duty  and Capital Gains Tax is needed to pay for the current NHS budget.  Then they might understand the sums involved. It would take all current Council Tax to pay the present £40 bn of social care.

The government would be well advised to change all its presentations of sums of money and public service delivery. It is not the case that a £10bn service is good and a £15 bn service naturally better. When I go to the shops I do not come home and say I have spent £80, only to be told by family I should have spent £100. Instead I report what I bought and might report the sums involved if I thought it was good value. My family might want me to buy more things or get better bargains but would not urge me to simply spend more money. Government should talk about what it buys and how it ensures value for money rather than bragging about large sums spent.

The Department of Health and Social Care has provided the following answer to your written parliamentary question (119393):

Question:

Rt Hon Sir John Redwood MP (Wokingham) (Con): To ask the Secretary of State for Health and Social Care, what plans he has to secure value for money from the additional funds allocated to the NHS for 2022-23. (119393)

Tabled on: 07 February 2022

Answer:
Edward Argar, Minister of State:

The new Health and Social Care Levy provides £23.3 billion for the National Health Service over the Spending Review period. We will ensure that this investment is provided for frontline care in England, increasing efficiencies and using reforms to improve productivity. This will include prioritising diagnosis and treatment, transforming the delivery of elective care and providing better information and support to patients.

The answer was submitted on 15 Mar 2022 at 09:50.

I asked this question for a variety of reasons. I think it will prove difficult to switch the money from this tax from the NHS to social care over the course of the next three years as planned. I am concerned that it will lead some people to think £12bn extra on the huge NHS budget or £12 bn in total for social care will handle the needs of each service, when the current totals on public health and government financed social care in the UK is already at £230bn. I am concerned about how the money will be spent, wanting to see more detailed plans of how the money is spent on the extra nurses, doctors, medicines and procedures that are needed to clear the backlists.

There are savings to be banked from the end of the pandemic. The large costs in setting up and rolling out new vaccines and the test and trace system will be behind us, and the high costs of the early intensive care of covid patients will be much reduced now the vaccines cut the numbers and reduce the severity of the disease for most patients. I am also trying to find out how costs will change following the current reorganisation of management structures where presumably efficiency was part of the original plan behind yet another reorganisation.

Rt Hon Sir John Redwood MP (Wokingham) (Con): With a three-year visa but only six months of guaranteed accommodation, will people have any tenant rights? What is the back-up provision if the sponsor wants to terminate well before the end of the visa?

Michael Gove, Secretary of State for Levelling Up, Housing and Communities, Minister for Intergovernmental Relations: It is our expectation that those who commit to have someone in their home for six months are undertaking quite a significant commitment, but it is already the case that the expressions of interest suggest that there are many people who want to do exactly that. The experience of previous sponsorship schemes has been that those who have undertaken such a commitment have found it a wonderful thing to have done, and the number of those who have dropped out or opted out has been small. However, it is the case—my right hon. Friend is absolutely right—that there may be occasions where relationships break down, and in those circumstances we will be mobilising the support of not only of central Government and local government, but of civil society, to ensure that individuals who are here can move on. The final thing I would want to say is that many of those on the frontline coming here will of course be women and children, but many of those coming here will want to work, to contribute and to be fully part of society. It is the case already that we have had offers from those in the private sector willing to provide training and jobs to people so that they can fully integrate into society for as long as they are here.

I recently had a discussion with Mark Littlewood from the Institute of Economic Affairs about my latest book, Build Back Green: The Electrifying Shock of the Green Revolution. You can watch it here:

The government now says  it does wish the UK to be more self reliant. One obvious area to start with is energy, the centre of the current cost of living and international crisis.

The government wishes to move to a  net zero future. They need to understand that for the next few years most people will need gas for their home heating boilers, most energy using industry will still need gas for ceramics and steel, bricks and cement.  Most cars, trucks and vans will still need petrol or diesel. The electric revolution will be more widespread next decade, not this.

That is why the UK government now  needs to call in the oil and gas industry in the UK and encourage it to fill the gap of the next few years with more UK produced gas and oil. The Business Secretary implied he would do so. So when will he make the announcements that policy needs? We do not need more studies or White Papers. The need is urgent. He and his officials need to give licences to explore and to produce more  from all the known deposits and fields. The Treasury needs to consider if the tax regime is sending the right signals, as it will be a big winner from more domestic production. Producing UK oil and gas already incurs Corporation tax at double the standard rate.

For its wider goal of decarbonising the government needs to make more rapid progress with small nuclear reactors, to conclude if this is feasible and economic and if so pump prime a development and production programme to make them a  next decade reality. It needs to see which combination of technologies could back its extension of windfarms so that they can keep the lights on when the wind does not blow or blows too much.  They need to decide on   the balance of green hydrogen production, battery storage and pump storage as the main means of storing wind energy when it is available and using it when the wind is on strike. Affordability matters when they make their choices. You cannot rely on more wind farms alone as there are too many hours when there is no wind or when you have to switch off the turbines because the wind is too strong. All the energy they produce on windy nights needs to be stored for use on calm days.

Let me make clear I strongly oppose the brutal Russian invasion and their resort to medieval sieges with modern bombs and artillery raining down on civilians and defenders. I do not post here the few submissions I get which slavishly follow Russian propaganda denying atrocities or blaming others for the  deaths and destruction we can see from reputable media sources.

I also strongly support NATO policy to take every precaution to avoid this becoming a NATO/Russian war.  Whilst NATO would overwhelm Russia there could be much larger loss of life and destruction  in Ukraine and the conflict would be widened by Russia into NATO countries before they lost. NATOs aim should be to encourage settlement between the parties whilst helping Ukraine resist Russia’s unprovoked aggression.

The U.K. as a leading member of NATO needs to stick with NATO policy. In the end like all wars there has to be a truce and preferably a peace settlement which can only come from talking. The U.K. will not play an important role in that as it falls to Russia and Ukraine as the combatants to decide what compromises they will make to end the fighting. It may  take a neutral intermediary like Israel to help them.

Russia seems to want to gain legal title to Crimea and the bits of Donbas it already influenced. It wants to add a land corridor from Russia to Crimea. It wants Ukraine to pledge it will not join either the EU or NATO. Maybe it still wants a change of Ukrainian government. It does not look as if Russia can either easily conquer the whole country or govern significant parts of it by military occupation now it has united most Ukrainians outside Crimea and Donbas against it. Maybe Russia still  thinks it can get unconditional surrender by starving and bombing people out of cities, but it still leaves it with too few troops there to keep down a population of more than 40 million.

Ukraine wants the Russian army to exit and wants to restore democratic government to the whole country. These positions are so far apart because Russia still looks as if she thinks she can at greater cost in lives and destruction claim more territory and the Ukrainians have growing confidence they can make further conquest difficult for the Russians.

There will only be a truce or peace if Russia gives up many of her imperial ambitions and if Ukraine offers Russia some way of climbing down that Putin can accept. Unpleasant  though that is  to the Ukraine side a lot of lives rest on it. It looks to an outside observer who does not have to do any fighting  as if Ukraine will not be able to join the EU or NATO any time soon. It  looks  as if Crimea would in a free vote vote to be Russian. Maybe these are building blocks for a ceasefire. The EU and US  involvement in removing an elected President of Ukraine in 2014 for being anti closer links with the EU triggered military responses from Russia  which have just got a lot worse.Whilst President Macron seeks a ceasefire the  EU issues a Council statement about Ukraine’s European EU future. This in Putin’s other reality is a further provocation of an expansionist Europe.

Most of us believe in free trade in our own lives. We rely on the free internal market of the Uk to supply most of our wants. I rely on the farmers to grow my  food, on the millers, bakers and retailers to supply my bread and on the energy companies to heat my house and fuel my car. Each of us trains, specialises and takes a job in a relatively narrow field knowing we can rely on our fellow citizens to supply our other wants.

We do this because it is impossible for us to command all the skills and resources it needs to live to the level of sophistication we enjoy by working together. I do not need to plant my garden with potatoes, learn to sew clothes and try to get up to speed on how to make electronic devices when there are so  many people and businesses that can do these things better, faster and cheaper.

The same theory should apply at the international level. Russia should have cheaper oil and gas because it has so much more of it than us. Ukraine should have cheaper wheat as it specialises in growing grains on its fertile plains. Unfortunately war can stop all that potential trade. Taiwan does have better microprocessors, but when the world is short of them we are not going to get all we need by hoping for more imports.

National resilience is about having the capacity to do the things that matter for yourself. In the world wars the UK had to dig for victory, putting more acres under the plough to  grow more food as our imports were being attacked at sea. Today if we want successful industries we could do with more of our own microprocessors and more affordable gas to fuel our factories as foreign supplies are damaged.

There is little point in spending lots of money on defence equipment if in a war you were unable to scale up the production and draw mainly on your own resources to equip and supply your forces. That is why I have stressed that a plan for national resilience is an important part of any National Security Council work on defending ourselves.