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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A change of accounting could give us a better energy policy

It is wrong that the U.K. is importing Russian Gas by LNG carrier. It means more CO 2 is generated than burning home  produced gas. It means Russia gets huge tax revenues that the U.K. would reap on home gas. It means we miss out on more better paid jobs. It means we finance Russia’s thug wars.

It is wrong that the U.K. continues to import wood from North America to burn in the Drax biomass power station. We should growing more of our own timber to stoke the fires at Drax.

It is wrong  that we are importing electricity from a European continent short  of energy and dependent on Russian gas and coal for some of its generation.  We should generate our own using U.K. fuels or renewables.

So why are we undermining our national resilience? Why are we making U.K. consumers pay even higher prices to cover the  extreme  costs of imports at current spot prices? Why are we creating more global CO2 with this import based system?

Part of the answer seems to be the civil service and some Ministers’ passion to get the U.K. count of CO 2 produced down. The  way they count it if we import fossil fuel or products made with fossil fuel is the  CO 2 generated counts against the  exporting  country and does not add to our total. Yet the world ends up with more CO 2. Time to account for all the CO 2 to weight decisions back in favour of domestic energy and production.

What proportion of covid-19 test kits are imported?

Rt Hon Sir John Redwood (Wokingham) (Con): To ask the Secretary of State for Health and Social Care, what proportion of covid-19 test kits are imported.

Maggie Throup, Parliamentary Under Secretary of State for the Department of Health and Social Care: Currently 90% of lateral flow device tests are imported although we expect this to decrease to approximately 70 to 80%.

What progress is the Government making on improving ventilation in NHS properties?

Rt Hon Sir John Redwood MP (Wokingham) (Con): To ask the Secretary of State for Health and Social Care, what progress he is making on improving air extraction, air filtration and UV cleaning in NHS properties.

Edward Argar, Minister of State at Department of Health and Social Care: The ‘Health Technical memorandum – Specialised ventilation for healthcare buildings (HTM 03-01)’ was issued on 22 June 2021, which includes updates guidance on ventilation to manage infection risks and the technology available. The guidance is available at the following link:

https://www.england.nhs.uk/publication/specialised-ventilation-for-healthcare-buildings/

All trusts must have an Authorising Engineer (Ventilation) designated by the trust management to provide independent auditing and advice on ventilation systems, to review documentation on verification and validation and witness the process as necessary.

In April 2021, updated guidance on the cleaning of National Health Service facilities was provided in ‘National standards of healthcare cleanliness 2021’, which is available at the following link:

https://www.england.nhs.uk/wp-content/uploads/2021/04/B0271-national-standards-of-healthcare-cleanliness-2021.pdf

While ultraviolet (UV) cleaning has been considered, it does not replace the need to physically clean the environment and therefore it has not been recommended instead of physical cleaning. In addition, it cannot be used in occupied rooms, therefore its applicability in an operational healthcare environment is challenging. However, we understand that some NHS trusts deploy UV cleaning based on local cleaning needs. As new research and technology becomes available, the NHS will update existing or provide additional guidance.

What is a possible end to the Ukraine tragedy?

The valiant resistance of Ukraine to the invading Russian army means  Putin cannot have his way. It looks as if he expected little Ukrainian resistance, a drive into Kiev for his tanks and troops, followed by the rapid departure of Ukraine’s elected President. Putin probably thought he could then have settled terms with the Ukrainians over their future government. He probably wanted them to rule out any future NATO membership and to recognise Russian leadership and trade patterns as some kind of friendly satellite. He may well have assumed he would rapidly consolidate a land bridge from Crimea to the eastern rebel provinces of Donetsk and Luhansk and may have wanted to create a split Ukraine with some under direct Russian rule . Instead six days on he has made far less progress militarily and is being forced into using far more force for far less effect than planned.

Putin is currently exploring a negotiated peace at the same time as pressing his ugly invasion. Maybe the talks are cynical. Maybe they are an attempt to find a less embarrassing and less damaging way out from the violent mess he has created. How should Ukraine respond, given the unprovoked aggression from Russia, the lack of any climb down so far by Putin, but also the wish to avoid more violence if that is possible?

Putin probably expects still to get more control of Ukrainian territory by military means. He has vast firepower compared to the defenders. He should however weigh the shortage of Russian troops to seize and occupy a country and population as large as Ukraine’s, now that most people people there are hostile to him and willing to fight for freedom. He needs to remember that wholesale destruction of cities and mass deaths of civilians will be seen by the West as war crimes, confirming his and Russia’s pariah status. What would be the point of prosecuting the war with widespread death and damage, creating lasting hostility from those Ukrainians who survived and making it impossible for Russia to govern it in any acceptable modern way without the use of permanent large scale intrusive force?

The Chancellor’s lecture

The Chancellor’s latest Mais lecture told us he believes in a free enterprise economy and lower taxes.  I have no problems with that. It began with a quote from Adam Smith and praise for a competitive free enterprise approach to delivering goods and services. The lecture then modifies this vision as it needed to do by reminding us that we encourage substantial government intervention in such an economy. He did not raise the issue of how far government intervention can go before you cease to have his ideal private enterprise model. Today by common wish we have the state as a near monopoly buyer of healthcare and education. The railways have effectively been renationalised. Government also presides over a major policy of transfers of cash to those on low or no incomes .

The lecture states an aim of growing faster. This is to be achieved by concentrating on people, capital and ideas or innovation. The lecture talks of the need to raise the productivity performance of the economy. It is unexceptional that we could achieve more progress with more and better education and technical training. He wants a higher rate of private sector investment, given the big boost to public capital investment that has been agreed. He wants to see more innovations and ideas, which will require a private sector boost to investment in research and development. The lecture lacks detail on how any of this might come to pass.

He asserts that a larger state will not deliver faster growth or higher prosperity. There is some truth in that. He then argues he must not cut tax rates before he has got the deficit down, as he does not believe there will be more revenues from lower rates. This flies in the face of abundant evidence. The Thatcher/Lawson Income  tax cuts brought in a lot more revenue from higher earners. The Republic of Ireland low corporation tax brought in a  surge of new investment and extra corporation tax. The smaller Osborne corporation tax cuts brought in extra revenue.

His policy of tax rises and frozen tax thresholds in April runs the risk of less revenue than if he set lower rates. It will bring slower growth, reducing the output and incomes to tax. The lecture disappointed in saying nothing about the energy crisis and little about the cost of living crisis which is related. If he wants to grow with faster productivity he needs to address the chronic shortage of affordable energy for industry in the UK and needs to restrain the impulse of other Ministers to favour imports over home production in a wide range of areas.

My intervention to encourage less dependency on Russian energy

Rt Hon Sir John Redwood MP (Wokingham) (Con): Will the Government now allow and encourage more domestic production of oil and gas, to help reduce the cruel dependency of Europe on Russian energy?

Elizabeth Truss, Secretary of State for Foreign, Commonwealth and Development Office: We certainly are committed to using the UK’s oil and gas fields. Energy independence is vital. We also need to invest more in nuclear, which my right hon. Friend the Business Secretary is working on.

 

Offset the economic damage

Sanctions  come with a cost to those  imposing them as well as to those suffering them. The West’s sanctions on Russia will slow world trade, help keep energy prices high and add to the loss of real incomes . There will be a bit more  inflation  and a bit less growth as a result.

 

Central Banks have to grapple with emerging stagflation. It means they should not be too hawkish on curbing inflation  when falling real incomes will start to do their work for them.

In the U.K. after a policy which was too inflationary  there rests the danger of flipping to too tough a policy with too sharp a slowdown. The Bank is determined to over correct for its error of continuing to create too much new money last year. The negative impact of the war and sanctions reinforces the case to abandon the tax rises and cut VAT before they hit in April.

Russian money

There are wild allegations circulating about dirty Russian money in London and in U.K. politics.

U.K. law is very clear. U.K. parties cannot accept donations from overseas residents and companies. All donations with their source have to be registered. If anyone has evidence of a party breaking this rule they should send it to the police.

U.K. law is also clear about Foreigners with wealth coming to live,work and invest in the U.K. They need to meet the Home Office rules on rights to live and work here. When transferring money into the country they need to satisfy banks receiving the cash or securities that they comply with anti money laundering rules. These rules are designed to stop people depositing any proceeds of crime. This ranges widely from drugs and arms dealing money  through theft and bribery to tax avoidance. Again if anyone has evidence of a rich foreigner resident here breaking these laws they should inform the authorities.

We should not want to live in a society where it is a crime  to be rich or where any rich foreigner living legally here is automatically branded a crook.  There will be rich Russians in London who have  obeyed our laws and who oppose Putin’s thuggery. If they wish to give money to political parties they need to comply with our donation laws. Many rich settlers in the U.K. make welcome contributions by investing, creating jobs and supporting good causes. It will now be illegal to do business with Putin cronies now on the sanctions list.

(I pay for my own election leaflets and political support.)

Letter to the Business Secretary

Dear Kwasi

I see you wish to help the PM apply pressure to Russia as Putin prosecutes an illegal and murderous war against Ukraine.

There is  a major way in which you can make a difference. The PM’s wish to see stiffer sanctions has been impeded by Germany and Italy owing to their dependence on Russian gas. A single western country cannot bring much pressure to bear without all other countries undertaking the same measure so it is watertight.  The UK needs to help ease the energy squeeze in Europe.

You should invite in  the leading oil and gas investors and licence holders in the UK industry and work with them to increase the output of UK oil and gas. This should be a series of immediate short term measures to maximise output from existing fields in production, and work to move through exploration to production investment and licences for new fields and field expansions. Over the next couple of years the UK could achieve a substantial increase in output which can replace UK imports at the moment or could be exported to help displace Russian gas in the EU.

Burning our own North Sea gas rather than imported LNG more than halves the amount of CO 2 generated, gives us a big increase in domestic tax revenues from the existing higher corporation tax rate applied to oil and gas production and helps ease the squeeze on European energy markets. In due course nuclear and renewables will provide more of our energy, but only once these plants are built and once many more people have switched from gas to electricity to power factories and heat homes. You need a plan for this decade which remains the decade of gas in the UK and Europe. That plan must cut reliance on Russian gas and oil.

 

Yours

 

John

 

Main points from the Net Zero lecture

The world will make little progress to reduce CO 2 this decade owing to the likely increases in Chinese, Indian, and Russian output. Protesters for net zero need to concentrate on these  large emitters set out in the slides.

Removing carbon dioxide from human activity needs buy in from most people living in the world so they change their lifestyles and jobs. To do this we need a new generation of green products which people want to buy. They need to be cheaper or better than current technologies. The digital revolution is the model. Governments don’t make people buy smartphones, shop on line or use the internet. They choose to do so.

Governments will not force the transition they want by bans, subsidies and taxes. These breed resentment and will lead to unpopularity for parties associated with limiting consumer choice, hiking prices and overtaxing.