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 V shaped recovery?

Andy Haldane at the Bank of England is an optimist thinking we will experience a quick V shaped recovery. A V shaped recovery implies that the output and incomes we lost in the three months of downturn will be replaced in the following three months. One side of the V, the fall, should be balanced by the other, the recovery.

This requires very fast rates of growth in jobs, output and incomes. If we take the overall downturn as 20% then you need a 25% recovery to get back to where you were. For those badly affected sectors that suffered a halving of their turnover, they need 100% growth from the bottom to recover fully. With car sales down 99% at worst, they need to recover by 10,000% to get back to the start.

There will be fast rates of growth for the sectors coming out of lockdown. It is curious the so called PMIs, the surveys of orders and output undertaken month by month, are not stronger than they are. They are meant to measure the rate of change from the previous month, so where that was very depressed you would expect a very fast rate of growth to recover. Maybe people filling in the forms have allowed general mood to influence their replies,and have not allowed enough for recovery.

The problem is many of the worst affected sectors will not get back anytime soon to where they were, because social distancing and changed patterns of work and leisure behaviour means less business for them. Some entertainment and sports venues will remain closed to audiences for the rest of the year. Some shops will not re-open. Some bars and restaurants will have to accept far fewer customers to allow social distancing.

It is true some businesses will record growth taking them above the levels of January. On line everything will be doing more. Some things will benefit from a rush of sales as people catch up with delayed haircuts or postponed home and car buying. This is unlikely to be sufficient to make up for the weakened areas this year, so I fear we will end the year lower than we began. Full Recovery will take longer.

The flexibility of the car

The car often gets a bad press. It is briefed against for not being green enough. The  bad side effects brought on by accidents are not welcome, but all transport brings it with it deaths and injuries when things go wrong.  Motorcycles and cycles bring risks, and there have been tragic public transport crashes.

The Covid 19 disaster has reminded us of the strengths of the car. You can travel in it without breathing over fellow passengers on a bus or train and without exposing yourself to infections from others. You can start near to your home and end near to your work or shop or other destination . The road network still offers considerable scope to get to where you want to go though it could be improved to cut accidents and ease flows through junctions.

The car offers individuals and families considerable travel freedom. It allows us to do a weekly shop and get the heavy goods home easily. It allows us to get to work and back, and to visit family and friends. Currently it allows us to reduce or remove our use of public transport as suggested by the guidance.

I am all in favour of  experiment with different fuels,  better exhausts, or higher safety standards. Each recent  model  generation of cars has improved safety features, better fuel efficiency and lower harmful exhaust waste. The important thing is to do this whilst keeping the popular characteristics of the car, the ability to go most places with a decent  range.

My car always waits for me and will go as soon as I want to go. That is an important flexibility. true green policies need us to avoid so much congestion through bad road design and insufficient parking.

How should Parliament work?

Normally in these blogs I highlight areas where things have gone wrong or need improving. Today’s blog begins with thanks to the Speaker and his staff for something that went right. He got a virtual Parliament up and running smoothly and quickly when some of us thought Parliament needed to be working. It was  a time of big decisions on the extent of the  lock down and management of the NHS response to the virus.

The virtual Parliament allowed MPs to ask questions and make speeches from home via the Zoom link, and reminded Ministers that their blizzard of decisions needed to  be reported to MPs and subjected to questions and suggestions. There were remote divisions where an MP voted by computer once through the on line security.  It was a big step forward and answered the question of how could Parliament function whilst observing social distancing?

It did however have some limitations. No MP was allowed to intervene on a Minister or other speaker, preventing challenge and proper debate. There were no easy informal exchanges between MPs as a debate or the government’s business evolved. Everything had to be planned and timetabled in advance, so there could be no spontaneity.

The Leader of the House was keen that something more like the Commons was restored. Again the Speaker and  his team responded well, giving us the Mark 2 Covid Commons. Now we have regained the right to intervene. Most MPs need to attend the Commons to speak and vote, and so there is more scope for suitably socially distanced conversations with other MPs as needed. Voting in the lobbies has been restored with orderly and segregated progress to and through the lobby to vote, speeded a bit by the presence of card readers to accept your vote.

The issue is how can it evolve further? There could still usefully be more spontaneity were some speaking slots to be available unallocated in advance, and if some questions were not previously allocated. The chamber with only 50 people in it at any one time does not have the atmosphere it normally has, with most debates heard in silence. Outside the chamber the social distancing advice does not always remain observed, as MPs want to talk to each other. Democratic politics is about the  numbers that support a cause as much as it is about the justness of the cause. Daily life at Westminster is about running causes , building support and arguing for change.

UK Swiss trade agreement

The U.K. and Switzerland have signed a document to complete a financial services Agreement to make trade easier on our exit from EU controls. The U.K. is the largest net exporter of financial services and Switzerland the third in the world.

July 4th – is this freedom day?

Today there will be restaurants, cafes and pubs open. More life will return to town centres and village streets after the long hibernation.

Some businesses are  very positive. They have worked hard to come up with compliant models for doing  business, and are hopeful customers will return. They desperately need support so some cash flows through the tills to start paying some of the bills.

Others are worried. Some still are banned from opening at all. Some have permission but do not see how they can make their model work , given limitations of space in their premises and the demands of social distancing.

Today I would be interested to know the reactions of my readers to this partial relaxation. Will you hit the town to buy a coffee or have lunch out? Do you want to visit the pub? Will you eat or drink in doors, or opt for the garden choice if the weather allows?

The government is worried in case too many people rush to the centres and fail to keep some distance between them. The  businesses are worried in case a cautious public stays away in large numbers, leaving the hospitality businesses with all the costs of their new set up and not enough revenue to justify it. It is your town or village centre we are talking about. Those who want to save them have to use them. Governments cannot subsidise them indefinitely  to serve too few people.

Back to school

Yesterday the government set out its wish for the schools to return to educating all eligible children from September.

This is a vital task. Children need the benefit of life in the classroom and in groups for break times. Well taught lessons and the competitive edge of others around them can lift their learning. Whilst many parents have done a good job with home teaching and supervision their children have still missed the stimulus of their friends and classmates. Teachers know the curriculum and how to prepare students for public exams.

It is also the case that some children get more help at home than others which can increase inequalities and unfairness. Parents too will benefit as many need to concentrate more on home working for their jobs, or need to go to work rather than child minding.

The new rules end the idea of social distancing between all in a class or bubble, but keep the different groups apart. We’re CV 19 to enter the school the aim would be to isolate the children in the affected bubble and keep the rest of the school open , unless testing suggested it had already spread further.

Some schools have done a good job with Remote learning. Progress should be made with getting all up to standard as it can be a useful adjunct or stand by to classroom face to facE work.

Measure it if you want to manage it

On Tuesday I raised the issue of management information with the Chancellor of the Duchy, the Minister in charge of the Cabinet Office. It’s an unusual subject for Parliament, as it is sadly neglected. Political argument often proceeds based on a few statistics. The numbers become friends and enemies to the disputants, and may be imperfectly understood or even misleading.

Large departments of government like big companies need managing. The CEO or Permanent Secretary needs a few general figures to monitor the main trends and outcomes. the numbers need to accurate, consistent and informative. In the Benefits department figures on delays and error rates for example matter and should trigger action from the top when they wander too far from decency. In the NHS success rates for treatments and waiting times are an obvious couple of concerns. Value for money also should figure with a way of capturing unit costs.

This high level information is also important for the Cabinet Minister in overall charge. Government produces masses of numerical information . The. Art is finding within it the relevant information for any person’s level of responsibility.

The Prime Minister’s building plans

The Prime Minister set out a vision of hope and optimism yesterday about economic recovery. He also detailed some £5bn of accelerated and useful public sector investment in better school and FE buildings, road improvements, health buildings and new schools. This is welcome.

We also need to recognise that even allowing for the temporary sharp fall in output the UK economy is still a £2 trillion economy. A recovery rests heavily on the positive response of the private sector . Better roads and communications help. Good quality education and plenty of educational opportunity for all is crucial.

The big numbers of state support rest in the furlough scheme and the 8 million people currently helped by it. Success in recovery will come from finding the right ways to get the companies that employ them off state support, and restoring as many of those jobs as possible. For those who do lose their jobs from their current employers, we need maximum job opportunities to speed new openings for those made redundant.

Here the challenge is to think through what the future offers for shops, cafes, restaurants and a range of services on our High Streets. Maximum flexibility is needed for landlords and tenants to adjust their use of buildings to new ventures or socially distanced versions of old activities. There needs to be many strands to generating more new jobs. These can come from the digital revolution, from the artificial intelligence reforms and from the onward march of the robots. They can come from growing more of our own food, catching and processing more of our own fish, growing more of our own timbers , generating more of our own power and all the other openings identified.

Yesterday the Environment and Housing Secretary set out proposals to make it easier to flex the use of commercial buildings with all this in mind.

We do need education to equip young people for the opportunities of the digital world. We are entering an era of rapid change, where the transition to a digital and on line economy has just been out into fast forward by the arrival of home working for the many.

Reforming Whitehall

Michael Gove’s lecture makes interesting reading. He says he wants a civil service which is better at delivering and places more emphasis on the implementation of agreed policy. Previous governments too have sought to make distinction between the civil service as policy advisers to Ministers, and the civil service administering large programmes of tax and grants, or managing public services and investment programmes. Tony Blair set up a Delivery unit in the Number 10, to reflect his frustrations that things he wanted done were delayed or diluted.

When I was Margaret Thatcher’s Policy Adviser I always regarded getting the policy worked out and agreed by Cabinet and Parliament as the start, not the end of the process. It then had to be turned into practical administration or spending. Margaret embarked on a substantial reform of the civil service, encouraged by Michael Heseltine who ran a Ministerial information system based on big data. Michael was right that Ministers often were not shown the key data any business person would expect at the top of a large company. The purpose of the reform was to separate the implementation or administration of various activities from the policy work and Cabinet level decisions over priorities and resources. A set of Next Steps Agencies were set up under professional public sector chief executives to run substantial services or programmes. The CEOs were set targets, offered bonuses for good performance, and were responsible for the day to day detail. Ministers remained responsible for the policy, the overall results and the financing.

A service like the NHS has long had professional and medical management running it. There is management at the national level, at the regional level, at the local level and in each hospital and surgery. They have large budgets and considerable devolved power. Ministers do not expect to be making decisions about which cleaning services to use or how much protective clothing to buy. Ministers are never involved in awarding huge contracts to suppliers. During the recent crisis responsibility moved upwards, and Ministers were drawn into procurement of ventilators and clothing, blurring the divisions between overall responsibility and the day to day judgements about how to spend budgets and provide for staff in each unit. Ministers had asked for plentiful supplies of PPE and tests and had offered the money to pay for them, but found they were pulled into how to do this at a time of world scarcity and rapidly changing views of how to defeat the virus

Under Labour some hospitals had scandals over high death rates or poor levels of care. Ministers had not ordered those to take place, and had not designed policies likely to produce such results. Once these issues became important national arguments, they of course had to step in, make decisions, and take some blame. It went to prove that in what can become a very centralised large service it is difficult to keep responsibility and remedial action at the local level, even though it was individual hospitals that created these problems.

It would be good to sharpen Whitehall’s focus on delivery again, and to learn from recent experiences in adapting a large public service to the hostile conditions of Covid 19. The call for better data is also a wise one. Often in the public sector the data is there but it it is not available to decision takers in a timely and accessible way, or it comes in data series where the basis of computation is not properly understood. The data at the regular press conferences on the pandemic kept changing with different definitions and different aggregates, which made good decision taking more difficult.