I am glad the government shares my enthusiasm for more trees. We need to keep the woodlands we still have left, and expand our forest cover. Trees enhance the landscape, help bind the soil, act as windbreaks and often improve the view. Properly tended they can also be an important source of raw material and income when harvested and replaced with saplings.

Locally our Councils are working to boost tree numbers. Nationally the government has committed to 11 million extra trees. It is making money available through both urban and rural tree funds. It is backing the Forestry Commission who have a big programme.

This work needs to be part of better planning. I am working with Wokingham Borough Council on the next local plan which I want to slow the rate of development after the substantial housebuilding of the current plan period. I want the Plan to make proper provision for green gaps between settlements, Sites of Special Scientific Interest, parks, woodlands and other amenity areas.

Many of us get a lift from our green environment. One of the best features of England is our fabled “green and pleasant land”. The mild temperate climate gives us green fields and leafy trees for much of the year which provides a good local environment close to nature. I am glad our local Councils are busy protecting and enhancing our green environment.

We also need to have a fair and controlled system of immigration. Our welcome to new people needs to be at a sustainable pace.

I see the Home Secretary is pledging to cut net migration once we leave the EU, bringing freedom of movement from the EU into the UK to seek work and related benefits to an end. Other parties in the election wish to continue with EU freedom of movement.

The numbers need working out in detail when we leave. The government will be happy to welcome students to UK universities, highly skilled workers to well paid jobs, and lower paid workers to important areas with low domestic availability of labour. There is talk of an agricultural worker scheme for example. The plan is to have a fair system for evaluating demand for Labour and eligibility for applicants.

The important thing is we can decide and control the process.There will also continue to be a fair system for helping refugees.

Total numbers need to be sustainable and give plenty of opportunity to people already legally settled here to get available jobs.

This week has brought good news that unemployment is at a 45 year low. Although slowing,  the economy is still generating additional new full time jobs. Pay is rising at 3.6%, usefully faster than price rises at 1.5%.

The combined effect  of job availability in most places with rising pay means people can afford to spend a bit more. Pressures on budgets ease when pay rises by more than prices, and when people get promotion or move to better paid jobs.

It has been a battle to get the state deficit down from the unsustainable Labour levels of 2009-10 to something we can afford. It has taken time to reduce the high levels of unemployment the government inherited in 2010.

There is nothing  wrong with some borrowing, both for individuals and for companies. Buying your own home usually entails accepting a large mortgage. 20-25 years later you own the home with no more mortgage or rent bills to come.  Buying a car with a loan or lease arrangement also makes sense as most people do not have the cost of a car in their savings account. If you have a job and a stable income the car is affordable.

Similarly successful companies can borrow to finance their stock or work in progress, or to finance capital equipment they need to produce their goods or services. A sensible level of borrowing can help their business and enhance returns for their owners.

Some query the need for the state to borrow. Under the new rules the government will only borrow for capital investment. Where the government borrows to deliver a service which the customers pay for, it can be a commercial return like any other. In most cases the state will be offering the service free to the user, paid for out of taxes. This makes evaluating the return more difficult. It does not mean there is no return or no need for necessary capital spending on roads, hospitals or schools. The government has to assess the outcome sensibly.

It is commonsense to save energy by investment in insulation and fuel efficiency in heating systems. It is a good idea to improve the fuel savings on vehicles and to find less fuel intensive ways of travelling. I am keen to see the removal of VAT from green products.

It is important to our quality of life that we protect and enhance the natural world around us. We need to protect woods and fields from development where possible, and make sure we look after the beauty of the landscape and the countryside beyond our cities and towns.

The government does run grant systems to allow people on qualifying benefits to insulate their homes with a grant, and to replace old heating boilers with modern more efficient ones. There is money available for loft insulation and wall insulation. It also makes sense for those of us not on benefits to make improvements in our own homes. Cutting the future fuel bill is a good idea. Modern boilers can be much more efficient than old ones Blocking off draughts and stopping heat leakage through walls makes sense.

We can also improve the fuel efficiency of our transport. More people are choosing to walk or cycle for shorter distances. New vehicles can be considerably more fuel efficient than older ones.

We can also cut down on food miles. One quarter of the freight miles travelled on our roads is carrying food around. Some perishable food coming long distance is flown in. If we choose more local produce or seek out the British label we can reduce the travel cost of our food and the impact that has on the environment.

Some contributors seem to think the public sector cannot add to national output or incomes. This is not true in either accounting or real terms.

A person attending a private school is paid for out of fees. Their education adds to national output. A person attending a state school has a similar education but their parents do not pay directly. It has a similar effect on national output to the private school place.   The state provision is as much output as the private sector and is paid for out of taxes.

There could be a productivity effect. If in a particular activity public sector or private sector productivity lagged then the total economic impact would be affected accordingly. In the case of schools private schools may well have higher staff ratios to state schools.

When the UK had  a lot of nationalised monopolies producing energy and transport we had an efficiency problem in those  sectors. In those cases privatisation led to an improvement in productivity, which was possible to bring about because people accepted the principle of paying for use out of their own incomes. Market pressures encouraged adoption of better technology and more efficiency.

I have been warning for two years that the combination of fiscal squeeze and tight money policy would slow our economy. So it has proved. Indeed if anything I am surprised that our economy has not slowed more. The global background is an additional reason for the weakness, with Germany slowing more than us and the USA less.

The USA has shown that the combination of rate cuts, liquidity provision by the Fed, and big tax cuts are delivering better growth than we and the other Main European economies are showing. That is why I welcome the new government’s decision here to increase spending on schools, the NHS and police. I also think we need some tax cuts soon, so individuals and families have more money to spend on their own priorities.

Those who write in to say I am too lax about the debts misunderstand the position. The government’s proposals are prudent and necessary. Excessive borrowing and spending on Labour plans would undermine confidence and be damaging. Faster growth will boost tax receipts and some of the tax rate cuts will bring in more revenue. After allowing for the state debt the Bank of England owns on behalf of taxpayers our debt to GDP ratio is fine. The QE debts we owe to ourselves so there is no net interest cost.

The latest GDP figures show we avoided recession last quarter and are growing at around 1% a year. We should aim to double that growth rate, which a sensible fiscal and monetary easing with the right tax cuts could do.

The costings of Labour’s programme are off the chart because Labour has made so many expensive pledges or promised so many unaffordable policies. The Conservatives put it at £1200 billion over five years or an extra £240bn a year. That’s a huge tax rise and  a colossal borrowing  increase.

There is the £196 bn cost of nationalising utility firms and the estimated £85 billion cost of the four day week they propose for starters.

Labour say  these costings assume all the ideas and pledges they have  told us about in the 2017 Manifesto and since gives the wrong impression because they will do not do all of them. They will get round later in the election campaign to deleting some of the items to make some reduction in the staggering bill.

This is trying to have it both ways. They want some people to vote for them because they are offering them more money or less work or a slice of nationalisation. They will keep the offers out there for longer to draw them in, and hope people do not notice when they cut some.

Given the enormous cost even after they have cut back some proposals they will still be recommending a huge increase in taxes, borrowing and debt. I look forward to seeing Labour’s costing of whatever programme emerges.

We know what happens when a government spends too much and tries to borrow too much. Labour did in in the early 1970s, had to go begging to the IMF for a loan and ended up making big public spending cuts. Labour did it again in 2008-9. They overdid their spending and borrowing and presided over a huge credit expansion, only to have to slash spending during the recession they created. Just look at the poverty in Venezuela and the cuts in Argentina where governments have tried to spend and borrow to excess in recent years.

Don’t let them do it again.

Today we remember all those who died so we can live in a free country. Their selfless sacrifice in two world wars led to more peace loving democracies emerging in Europe and Asia.

It is good news that 74 years have now passed without our country being enveloped again  in total war.  Today we also remember those who  have died in more recent local and regional wars despite the success in avoiding full on conflict between the great powers.

I will attend the Remembrance  service in Wokingham in a private capacity.  I have explained to local organisers that there are currently no MPs so there can be no official wreath laying on  behalf of the constituency.  Conservatives are not campaigning today in the General election.

The balanced budget rule which says spending on  current  budgets has to be covered by tax income is sensible and prudent. Whilst education is an investment in young people, teachers’ pay is still a current and recurring item of spending.

Some of you are concerned that the government can borrow to invest. Investment means the capital budget where you buy items like new school buildings or a new road which will be used for many years going forward. Most investment in the state sector is building and construction work.

The Balanced budget rule still provides a constraint on how many new buildings you can build to expand a free to the user service, as all the staff and running costs of the new buildings fall on current account under the Balanced budget rule. It does encourage investment in replacement buildings that are more fuel efficient and in other ways cheaper to run or public investments that generate a revenue return.

In order to justify borrowing to invest we need to show the need for the new capital provision and the imputed return where it is for a service provided free to the user. Let us take the case of the M25. This expensive motorway offers no direct financial return to the taxpayers who paid for it, because we do  not have road charging. If we had put in place a road charge system instead of the current Vehicle Excise duties and fuel duties, the M25 would have shown a great return for the state investor. The state has to impute a value to the likely use of the facility to assess one public sector project against another. By definition this can only be a judgement based on  stated assumptions. The state also has to take into account that use is likely to be higher because it is provided free.

In the case of borrowing to provide a new school the case is overwhelming where there are more pupils than school places in a local area. If it is a replacement school then the project needs to show substantial running cost savings compared to the building it is replacing, and preferably a return of capital to the state from disposal of the one it is replacing unless on the same site.

A new railway line is easier to assess, as the railways do collect money from train users. Spending a lot of money on a  heavily loss making line would not  be a wise investment.

Somehow the state has to improve its way of evaluating all these competing projects to come up with a list that genuinely expands the national wealth or are essential to the delivery of good quality public service like health and education.

 

I was disappointed to hear on the radio that it was a sign of the times and surprising that I was supporting the fiscal changes made by the government. The BBC saw me as   some kind of austerity hawk who had suddenly changed, showing the public the BBC think they have every right to comment on  my views without bothering to read  or understand them.

As readers of this blog will know I campaigned for Prosperity not austerity as the driver of policy before the last election as well as for this one. I see recent changes as  good progress in the direction I have wanted campaigning for more money for local schools and the NHS and for a boost to our economy from lower taxes.  

Indeed my opposition to the austerity framework of policy goes right back to my resignation from the government of John Major. I resigned over the Maastricht Treaty and possible membership of the Euro. As I made clear at the time I saw the Maastricht controls on the economy as likely to induce a bust. They had done so in the European Exchange Rate Mechanism and could do so again if we joined the currency.  We did not join the Euro but we have always accepted the Maastricht debt and deficit controls, with unfortunate economic consequences. In the Hammond years they have overtightened our economy, cutting its growth rate.

The new fiscal framework is a bit looser but officials wedded to the 3% deficit ceiling and the 60% state debt to GDP target have ensured there are surrogates. Allowing 3% of GDP borrowing for capital spending with a balanced current budget is a bit looser than an overall 3% budget deficit ceiling with pressure to run a deficit considerably lower than 3% much of the time. The need to reduce state debt as a percentage of GDP is not entirely dropped but it now relates to a whole Parliament lifetime and not to each individual year, and only bites if debt interest exceeds 6% of tax revenue. This allows flexibility to take a bit more advantage of low interest rates,.

Because the  BBC will never explain the  origins of our current controls they do not  wish to expose this kind of detail. It means they misrepresent  the views of those of us who wish our country to be prudent but do not wish our economy to be short changed when inflation is under control and growth is weak.