John Redwood's Diary
Incisive and topical campaigns and commentary on today's issues and tomorrow's problems

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Not enough growth

The OBR who got their last year deficit forecast wrong by ÂŁ91bn estimate that 2023-2025 will see economic growth settle down to 1.7%,1.6% and 1.7% a year. They assume migration continues with the population expanding by 0.3% a year, a bit down on pre pandemic and pre Brexit levels, to give per capita growth of around just 1.4% a year for the 3 years. These figures are disappointingly low.

It could be that they are simply more forecasting errors. After all they underestimated GDP last year and are usually on the pessimistic side. Or it could be that they expect the Treasury to carry on following austerity, EU alignment and state debt driven policies for the next five years which would deliver similar low levels of growth to our years in the single market under the Maastricht economic rules which drove the Osborne/Hammond debt and deficit austerity policies.

The government should challenge these assumptions and work out a growth strategy to improve these forecasts. We need to put behind us the years of dependence when the UK willingly signed up to rules and systems which exported more and more of our industrial output to continental factories, made us more and more dependent on EU imported food, power and much else besides and left important parts of our economy smaller as a result.

It is high time the Treasury set itself the task of making a good improvement over the UK’s performance of the last 28 years in tge single market. We now have the freedoms to do better if only we will use them.
Tomorrow on Conservative Home I will set out a possible new framework for UK economic policy in response to the government statement that it is looking to change the rules governing economic management.

Lots of borrowing, but well below forecast

I sympathise with the official forecasters at a time of big change in the economy, with a large fall in output and incomes stemming from the measures to curb the pandemic. Getting forecasts right when the economy is falling further and faster when the measures go in and recovering faster and more when they are removed than in previous cycles makes it difficult to get the numbers right. I have had less sympathy with the undue gloom the OPBR put into their November 2020 and March 2021 forecasts, and said at both timeS I thought they were exaggerating the deficit. So it has proved.

In November they forecast a deficit of ÂŁ394 bn for 2020-21.In March this year forecasting the year to end March which had almost ended, they said the deficit would be ÂŁ354bn, a ÂŁ40bn fall in four months. Yesterday they announced the provisional outturn at ÂŁ303bn, ÂŁ51 bn down on a few weeks ago and ÂŁ91bn down on November. They point out they were thinking in March of ÂŁ27bn of losses on loans which have not yet materialised and would not be a new demand for cash or borrowing anyway. Even taking this out it still leaves the forecasts way too gloomy. They underestimated the amount of tax revenue collected, and overestimated state spending.

I am raising this again because it will have knock on effects on future years. The ÂŁ51bn revision downwards to the estimated deficit between this March and April is twice as much as the government now thinks it needs to add to tax revenue in 2024-5 to control the deficit. Could it be that those future years forecasts are also wrong? Might they be too pessimistic, so how necessary is the extra tax? I have other issues with the future tax policy over how you do secure more revenue and what the role of growth is in meeting the state’s requirements. Even in their own terms, however, the OBR should examine the possibility that they have been too pessimistic for future years, and consider the need for some caution in drawing early policy conclusions for future years from forecast numbers which have recently proved so unreliable. Did they urge a needless or undesirable tax rise?

Justice for Post Office managers

I was pleased to learn that at last the Post Office accepts its accounting software was faulty and led to wrongful accusations and cases against Post Office managers. Various MPs took up these matters without success, as in this 2014 debate to highlight the problem:

Post Office Mediation Scheme, 17 December 2014

Mr John Redwood (Wokingham) (Con): I am grateful to my right hon. Friend for leading on this issue and for bravely taking the case of many people in the postal sector to the management. From his discussions with the senior management of the Post Office, is there any sign that it now recognises that it made mistakes? Is there any willingness on its part to recognise that at least some of those people are completely innocent and deserve an apology and compensation for the way that their lives and businesses have been wrecked?

Mr Arbuthnot: That is a very difficult question to answer, because the Post Office pleads secrecy. It will not tell us what is happening in the mediation scheme. We asked in July how the mediation scheme was going, but it refused to tell Members of Parliament because it was all confidential.

More lobbyists discovered gaining access to Ministers

I have to reveal today that there are around 250 privileged lobbyists nestling at Westminster who do not get enough scrutiny.
These talented individuals have managed to organise themselves passes to the Palace of Westminster.
They use their passes to loiter and linger around the corridors to get the opportunity of direct private exchanges with Ministers, to propose their plans and causes without officials present.
They even get access to some meetings where Ministers brief them and take their questions in closed sessions.
They often work with private sector companies, trade unions and charities to help them make their case and make it look better based and respectable.
They themselves receive public money, and seek to raise other money to back their campaigns.
Their latest campaign is particularly clever. It is a campaign to stop other lobbyists from access, presumably to enhance their own special access and to cut down lobby competition.

I refer of course to the 250 Opposition MPs who are on the taxpayer payroll and can lobby for much of their active day. If Ministers stopped listening to lobbying I suspect they would have some sharp words to say. Parliament is a system partly for organised lobbying for causes MPs and their constituents back. There is no reason why others cannot see or write to Ministers. There is nothing wrong with charities, Trade Unions and businesses lobbying for policies that help them. That will be obvious and declared when they make their case.

Of course Ministers need to treat all representations properly, and avoid any conflict or avoid acting where they are themselves party to a lobbyists cause or profit.

Too many deaths and injuries on local roads

Motorways are by far our safest roads for a variety of reasons. Separating vehicles going in different directions, and providing high capacity segregated routes onto and off them greatly reduces the capacity for smashes between vehicles travelling in different directions or from drivers misreading each other’s conduct at a junction. In addition no cyclist or pedestrian is allowed on them, removing the danger of conflict between a fast moving vehicle and a vulnerable person. Motorways are more like railways which also have better safety figures thanks to a ban on all pedestrians and cyclists from proximity to the track, and from seeking to keep trains moving in opposite directions on different track.

The main reasons A and B roads are so much more dangerous lies in three main areas. First, pedestrians and cyclists are allowed, and are very vulnerable to mistakes by drivers or by themselves when coming into conflict with vehicles. Second, many junctions lack capacity and are poorly designed, leading to crashes between vehicles seeking to use the same piece of road to go in different directions. Third, there is scope for vehicles to wander or overtake in the lane coming the other way, leading to potentially very dangerous crashes between vehicles travelling in opposite directions. On a 50 mph road this may mean a 100mph crash.

Most of these A and B rods are under the control of Council Highway departments. They have options under national legislation and grant schemes to make improvements in each of these areas to cut accidents. As with motorways the first necessity is to increase overall capacity to reduce tensions and conflicts between vehicles. Pedestrians and cyclists deserve better treatment through the provision of dedicated cycleways and footpaths that avoid main A and B roads to cut conflict with vehicles. Junctions need review. Wherever possible roundabouts should be used rather than traffic lights, as that ensures all vehicles are heading in the same direction of flow and not meeting head on. Where there are signal controlled junctions they should where possible be reconfigured to provide segregated right hand turning lanes with short filter light phases where traffic is sensed by intelligent lights as waiting. Priority should be afforded with plenty of green light phase for the main road which should allow flow in both directions at the same time with right turning traffic held. On straight stretches of potentially fast road there should be consideration to painting a third overtaking lane where there is sufficient width allowing alternate overtaking by vehicles in opposite directions to cut frustration and dangerous overtaking.

Fan power rules

It is good news the sensible views of fans have prevailed in the row about the so called super Euro league. It is also good government need not now look for a power or excuse to intervene. I assumed the league would die a natural death. No club from any European country outside Italy, Spain and U.K. was involved which said a lot about a silly proposal.

Safer roads

A number of people have written to me urging greater road safety. I agree, and have lobbied Ministers with proposals that could help reduce the deaths and serious injuries on our roads. At my recent meeting with the Roads Minister I was impressed by the work she and her department are doing to drive fatalities down further.

In the year to end June 2019 1752 people died on our roads. The figure was considerably reduced by 14% in 2020, but this owes much to the fact that most of us were prevented from driving for pleasure or work for several months of that year. The motorways are the safest roads by far, followed by national strategic routes with dual carriageway capacity and grade separated interchanges. You were 3.5 times more likely to die on an A road than on a motorway. 9 out of the 1752 deaths in 2019 occurred on smart motorways.

The death rate was much lower for car drivers than for most other categories of road user. Car drivers experienced 195 deaths per billion vehicle miles, motorcyclists 5051 deaths, pedestrians 1640 and cyclists 4891 deaths.

Some argue that the new smart motorways are less safe than the older motorways they replace. The Minister assured us the data shows that the smart motorways are one third safer in terms of death rate than the standard motorway. They have far fewer deaths on the hard shoulder or pull ins , which occur on other motorways to a few of the many people who stop for their own comfort or convenience when the hard shoulder is only meant for emergency use. Smart motorways have more capacity which reduces density of traffic and scope for hitting another vehicle. They provide more driver information to warn of motorway conditions to allow reduction of speed where needed. Smart motorways are the safest roads we have, so the more they are rolled out the safer the overall network becomes.

Ministers have agreed to put in more Emergency pull ins in response to public demand, and to improve surveillance to allow early warning of any stopped vehicle. I support more smart motorway capacity to relieve the strains on much less safe A and B roads for through traffic. I will look at A and B roads in a later piece. The M4 one is nearing completion to complement the section of the M3 also converted.

My contribution to the Finance (No. 2) Bill debate, 19 April 2021

Of course, I am not going to vote against this Budget and I wish the Government well with it, but I would like them to pause a little, think through where we are and recognise that they may need to revisit some of these decisions in the months ahead.

My worry is that they are being too tough in their tax measures and too tough on people’s incomes at a time when we need to build confidence and recovery, and they are doing so at a time when it is really impossible for their expert advisers and other economic forecasters to give them a clear steer of what the public finances will look like in two years’ time, let alone in three or four years’ time.

The Government seem to think that their experts can define a given amount of money that will be a shortfall in order to hit their longer-term Government targets, and therefore say that we need to make these tax changes for the next few years in order to fill the alleged black hole. It may be that they are trying to fill a hole that does not exist. It may be that we will have a much better recovery than the forecasters are thinking.

It may be that the economy responds much better over the next two or three years or, indeed, over the next two or three months, as the relaxations kick in.

We can see the difficulty that the official forecasters have if we look at the numbers they gave us as recently as November 2020. Then, the OBR, forecasting the budget deficit—the amount of extra borrowing—for the year 2020-21, said that it would be £394 billion, an enormous amount.

Bear in mind that it was having to forecast for only four months, as two thirds of the year had already gone. When we got the 11-month figures, up to February, recently, we discovered that they had come in at just ÂŁ278 billion and so, subject to what happened in March, it may be that the OBR was the best part of ÂŁ100 billion out on the deficit for the year in question when it tried to forecast, already knowing quite a lot of what had happened. It was, of course, massively too pessimistic. It is great news that we will have borrowed so much less than we feared, although clearly we are still borrowing far too much on an unsustainable basis, which is why we need to promote a strong recovery to get the deficit down.

I therefore say to the Government: let us show a little humility. The experts and advisers are not able to give us anything like accurate figures—I can sympathise with them, because extreme things have happened in response to the pandemic—so are we sure that we need to make these moves over the next three or four years?

There is also a case for showing a bit of humility and thinking ahead about whether we might need to show a bit more flexibility because the Government themselves have rightly said, now that we are out of the European Union and the economic world has been stood on its head, that they want to set out a new framework for guiding the economy.

I encourage them to do that, and I hope it is a framework that promotes growth and considers real issues such as the increase in the number of jobs, the rise in real incomes and the productivity growth that can be achieved.

We need to get away from the Maastricht criteria, which have governed our policy for many years and still seem to be behind the architecture of this Bill. We seem to be driven by the need to get state debt falling as a percentage of our national output by the end of the period that we are talking about today for the tax changes. State debt is now a pretty useless figure to try to target in the way that the Maastricht criteria did.

We now live in this age of monetary experimentation, where great banks such as the Bank of England, as well as the European Central Bank, have bought in very large quantities of state debt—indeed, they still are doing so. Surely, where that happens in a single sovereign country with its own central bank, owned on behalf of the taxpayers by the state, we should treat the debt that we have bought back in rather differently from the debt on which we owe money by way of interest to people outside—some our own citizens, some foreigners—who have been financing the Government.

That makes state debt a very difficult number to use to guide the economy. Of course, the future system must have some control over the build-up of actual interest charges that we have to pay to third parties, but it should concentrate much more on promoting growth.

May we therefore have just a few words from the Government, accepting that these numbers are very difficult and that the current forecasts are likely to be very wrong? No one can say exactly how wrong they are going to be, because so many things will happen over the next two or three years and nobody has been through a bounce back of the kind of pace that is possible from such a big hole in our economy, created by necessary health measures to cure the pandemic.

We need a policy that is very supportive of more jobs, of higher incomes and of encouraging investment, enterprise, saving and, above all, self-employment and more small business activity.

My worry is that the Government are being a bit mean with people and with small businesses in the name of controlling state debt at a time when we have no idea what the state debt will be in two or three years’ time, and when the state debt number is now very different because of the purchase of state debt by the state itself.

I would hope that the Government recognise that we may need to revisit all this, and I would want them to be on the side of people keeping more of the money they earn and, above all, of a much better deal for small business and the self-employed, where I think they are too tough.

My Question during the Statement on Covid-19, 19 April 2021

Sir John Redwood (Wokingham) (Con): I congratulate my right hon. Friend on the big reductions, based on the vaccinations, in case and death numbers. Will he briefly update us on better air extraction, cleaning and other measures to control infection in hospitals to reassure the many patients who now need non-covid treatment?

The Secretary of State for Health and Social Care (Mr Matt Hancock): My right hon. Friend has asked about this many times, and he is quite right to, because it is not just about cleaning.

We have learned a lot during the pandemic about the importance of good ventilation, and that is now embedded in infection prevention and control. As cases in hospitals come down, hospitals across the country are separating, as much as is possible, those who might or do have covid from people who are coming to hospital having been tested and knowing that they do not have covid.

That is incredibly important to reassure people that if they are asked to come to hospital by a clinician, it is the best place for them.

Euro elite entitlement is not a good look for great football clubs

So the football clubs currently in 5th, 6th, 7th and 9th place in the Premier League think they should be in a super Euro league with founders rights to stay there when they cannot currently even get into the slots to qualify for European competition next year. They think they are entitled to compete with other teams that have done well in the past but are similarly gifted a place in the star league. I find it bizarre they should think this a good idea, and even stranger that when their fans and the wider public tells them this is a very bad idea they still do not retreat.

Most people know it is wrong. It is wrong because being an elite team or an elite sporting performer needs a willingness to be regularly tested against the best to prove they are still deserving of the laurels. It is wrong because it demonstrates complacency and arrogance in equal measure. Winning decides who goes to elite tournaments, not buying a permanent place. It is wrong because the many loyal fans of these great clubs are proud of their clubs for what they achieve on tbe pitch and are ashamed by this proposal. It is wrong because it puts money before sporting values and ignores the sense of community which a team and club represent. Some of the best drama in English football comes in the FA cup when outsider teams can take on and sometimes beat the famous. The league itself is a ladder to climb for the energetic and good, and a series of privileged higher divisions which you tumble from if you lose your edge and skill. It would not be so interesting if everyone stayed put each year, the good and ambitious thwarted and the unsuccessful cushioned.

The pursuit of money by exploiting the fan base more may pose questions some owners and well paid footballers might not like asked. If clubs persist in doing things fans dislike, they might not keep all the fans. If clubs pursue too much money and spend much of it on ever higher footballer wages, they may encourage a backlash against the business model that does this. I have no problem with great footballers earning large sums because they entertain and people willingly pay to see them. I do have problems with badly run clubs running up excessive wage bills they cannot afford and pricing lower income fans out of much of the fun. How many fans would be able to afford time and money on Wednesday nights to travel to the continent to see one of these planned superleague matches? And why would they think it important if some of the best and most successful clubs of the day were kept out by the squatters rights applying to most of the clubs in this planned league? There is also the issue of how many games can a club play successfully in a season, and what can it expect of a great player who will also wish to play for his national team? Allowing players time to play for their country is a crucial part of football’s popularity which will be stretched again should this invention go ahead.