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

Anyone submitting a comment to this site is giving their permission for it to be published here along with the name and identifiers they have submitted.

The moderator reserves the sole right to decide whether to publish or not.

UK trade has flourished since the Brexit vote

When the UK  finally got out fully from the EU, four years after the decision to leave , we removed tariffs from one fifth of the product lines where we had to impose tariffs under EU rules. This was a win for UK businesses and consumers. We took  tariffs off intermediates needed by UK producers and off consumer items we do not make ourselves. Then we signed up to tariff free trade with the Trans Pacific Partnership, wins to come soon as it comes into force.

It should remind us the so called single  market is a protectionist customs union, charging taxes on 73% of the product lines it imports. It has no free trade deal with the big TPP. The EU often charges higher tariffs than trade partners. Cars for example are charged 10% coming into EU and only 2.5% into the USA. No wonder President Trump wants to level up. The UK should have another round  of tariff reduction, assessing where we could  take our tariffs down to US levels from the higher EU levels we are still imposing in some cases.

Our total trade is up 8.6% 2016 to 2023 in volume and much more  in money. Our service trade is up 30% in real terms. Our total exports to the EU are up 6.2% in real terms. [figures taken from recent published Commons Library brief using ONS numbers]

Such a pity so many condemn Brexit from ignorance of these successes.

Collapse of productivity is unaffordable and unacceptable.

NHS productivity has plunged 18.5% in five years. That’s despite or because of five years of record increases in money going in, and large increases in staffing, taking it to over 2 million employees. This is a national disaster.

The sackings should begin at  the top. There are too many six figure salary managers who manage to lower productivity by over recruitment and by diverting attention away from getting people  better to a whole series of woke issues about the staff and the organisation. I was blocked in the  past trying to find out how many chief executives  there are in the NHS in the alphabet soup of quangos and Trusts. Chief Executives who cannot meet budgets or cut waiting lists with all the extra staff and money they have should be told to go.

Good medical teams need building and supporting. Managers need to be good at organising work flow and ensuring a good patient experience. Wes Streeting needs to start at the top, appraising his reports and expecting a much better performance. They in turn need to expect more from the hospitals and GP surgeries that do the work.

How to contribute to this site

Some posts are not  accepted as they misunderstand this site. It is not a Conservative party site. If you have criticisms of the Conservatives take it up with them. The electorate made clear their disagreements with the last government.  This is an independent site geared to examining government policy and how it could be changed for the better.

When we had a Conservative government  I allowed plenty of criticism. I set out my own disagreements with the net zero policy, with the Bank  of England’s wild  ride, with tax rises, with the extent and nature of the covid lockdown and much else. I am now doing the same with a Labour government. I rarely  wrote about Labour when we had a Conservative government  and I will rarely write about Conservative or Reform now. We are likely four years  or more away from an election. We need to find ways to influence this government to reduce the damage being done . Nearer the election Opposition party policies are more  relevant. Now what we need the fragmented Opposition parties to do is to lead and where possible get behind good campaigns to change this government’s policies.

Rachel Reeves crashes the economy

In June the UK had grown at a 2.2% annual rate in the first half of 2024, and inflation was at 2%. How has Rachel managed to get growth down to zero and inflation heading for 3.7% according to the Bank of England? How did she get longer term interest rates higher than Liz Truss, which Rachel called ‘crashing” the economy?

1. Place a big tax increase on employing people to drive employment down and business costs up

2. Tax small business more to discourage family companies

3 Tax farms more, putting them off investing in new and more productive  equipment

4.Put up the managed energy prices three times to ensure UK has uncompetitive energy prices leading to business closures

5 Grant inflation busting pay awards to public sector workers with no productivity agreements . This requires higher taxes and helps push wages up in the squeezed private sector

6. Frighten markets with excessive spending and borrowing, putting up longer rates of interest

7. Announce more planning permissions for homes without solving the problems of too little demand and lack of affordability

8 Push up Council taxes, rail fares, water bills and public sector charges to boost inflation despite promises of stability

9. Allow extra payments to Ukraine, Mauritius , carbon capture and storage whilst hitting UK business and pensioners

10 Fail to ask Bank of England to curb its excessive losses, running at £30 bn nine months to December

11 Think growth can come from closer links to EU when EU is not offering us a better deal and when the German economy has not be growing for two years.

At least she can congratulate herself on dragging the UK down to German levels of economic performance, way below fast growing USA.

The government sets out to anger President Trump

It is difficult to believe the government is stupid enough to do all the things listed here. It appears they want to anger the USA

1. Appoint David Lammy as Foreign Secretary knowing he had launched a very nasty attack on the man likely to win the Presidency.

2. Remove a popular UK Ambassador in Washington, replacing her with a contentious political appointment known for his anti Trump views and pro China and EU stance

3. Open negotiations with an EU that is not going to improve our deal which already includes a free trade agreement, signalling the wish to be closer to the EU when the US calls EU policy atrocious

4. Fail to offer a win/win lower tariff trade deal to President Trump  on election, despite being told he was up for a deal

5. Signing a letter condemning the US approach to the ICC, knowing such posturing will annoy but not change  US  conduct

6. Pressing ahead with a dreadful deal over Chagos and the crucial US naval base at Diego Garcia against the US strategic defence interest

7. Trying to assert extra territorial powers over Apple and US data in a way designed to inflame Democrats as well as Republicans

8. Leading opposition to the idea of ending the Ukraine war by negotiation

9.Supporting high taxes on US corporations with special taxes on digital

10. Sending Labour personnel to try to stop President Trump’s election when it was clear he was likely to win.

11. Interfering in US policy to merge USAID with the State department.

These moves are a good way to encourage President Trump to demand a better deal from the UK.

Emergency political Cabinet?

Yesterday’s political cabinet was we were told a review of the growth strategy and where it has got to with its programme.

They had plenty to talk about. The latest polling shows Labour, Reform and Conservative all on around 170 seats, representing a huge defeat for the government. Any election is four years away, but  when polls show a significant number of cabinet ministers not just losing their government jobs but also their seats they get itchy about how bad things are.

It followed on the Bank of England revising its hopeless forecasts for 2025 by halving growth to 0.75% and seeing inflation may rise this year to 3.7%, almost twice target. The latest forecasts may be nearer the mark. Inflation is clearly going to rise, with 5% for Council tax, large double figure percentages for water, above inflation for energy and rail fares. National Insurance forcing up wage costs in April may lead  to more price rises.

The Chancellor killed growth stone dead. The economy grew 1.1% in the first half of the year (2.2% annualised) and zero for the second half. Inflation was at 2% by June and is now rising again. The budget is the main cause of the end of growth. Three months talking the economy down and threatening all manner of tax rises were followed by a tax laden budget which cut investment, led to falling vacancies and will lead to less business and higher unemployment.

The government now faces bad choices. Their own fiscal rules will require more tax rises and or spending cuts to get the deficit under control. The government talks about improving productivity  but has failed to say how. It wants to get more people back into work but dithers over what mix of support and benefit conditionality it will need. Like the previous government it refuses to tackle Bank of England losses. It stupidly overrides the Conservative decision not to give the Chagos away, incurring more spending.

Why did the Chancellor put up spending so much? Why offer big wage awards with no productivity deal?Why keep on recruiting more public sector workers  apart from front line medics and teachers? Why forecast 2% per annum productivity gains with no plans to deliver? Why fail to control costs on the railways? Why propose a big increase in borrowing, putting up interests costs?

 

 

Football is a last bastion of capitalism

One of the paradoxes of some socialists is they like football. You would have thought they would dislike most features of the way it is run in the UK . It has more of what they call the “excesses” of capitalism than most sectors and companies. It revels in large inequalities of income and wealth, sacks people frequently and divides people and teams into extremes of success and failure.

Socialists dislike large income inequalities. Players and managers of top clubs are paid unbelievable seven figure packages whilst caterers, security staff and admin are on modest wages.

Socialists dislike favoured treatment for talent. Football treats stars so much better than others, and is hard on those with less skill or luck in games.

Socialists dislike employers exercising disproportionate power. Clubs literally buy and sell players as if they were just assets and liabilities.

Socialists dislike billionaires who keep money offshore. Football clubs are keen to attract such backing.

Socialists (and non socialists) dislike exploitation of monopoly power over prices. Famous clubs can charge a lot for tickets and merchandise.

Socialists dislike people being sacked. Football managers who have worked hard and met their contract terms can often be sacked for losing too many games.

Socialists dislike people and institutions being divided into successes and failures. That is the main purpose of every game.

It is going to take regulation to change all that. If the new Regulator does seek to alter some parts of the current formula the UK could lose talent and money to overseas. Who is for a league with equal money for each club topped up by tax revenues? Who wants to subsidise losing teams? Who favours an end to “cruel “ knock out competitions? Who wants more protection for managers, and an end to bidding rounds for players? Regulation could easily drive money and talent away.An extreme culture based around individual and team performance is what fans like and is what makes the UK league such a success with world audiences.

The government digs itself a bigger Chagos hole

It’s bad enough having an international lawyer instead of a Prime Minister ss head of the government. Even worse when we have an inept one.

There are no legal uncertainties about the Chagos. The UK paid for them when Mauritius became independent. They were never owned by an independent Mauritius, They are UK territory.

The ICJ has no jurisdiction over the UK and the Chagos. When we signed up to the Court we ruled out the court taking cases about the Uk and the Commonwealth. Worrying about a possible loss of an ICJ case is therefore a nonsense.

The PM told the House there are security reasons to change ownership of the base. For all these years of UK ownership there have been no security problems. If Mauritius takes over what is to stop them occupying the other islands in ways which could impede free use of the base? As a non nuclear country might they want to impose rules over nuclear powered and armed vessels? What would stop them seeking to jack up the terms for the lease at a later date? As a friend of China what information might they pass on that had learned as freeholder of a major US naval base.

Priti Patel and Nigel Farage made the right points yesterday in the Commons ignoring Nigel’s muddle  over which Court it is that Starmer worries about. The government must back down . We cannot afford the cost and are stupid to give away a freehold we legally own.The Minister was a disgrace, refusing to answer how much they have offered, what the main terms of the lease are, or how there are any security problems with our ownership.

No deal is better than a bad deal with the EU

The UK official establishment cannot resist returning to negotiations with the EU. Why can’t they learn that the EU has no wish to offer us anything worth having. In or out, they see us as a soft touch for more money, an open market to sell to, and a source of fish. They see us as a competitive threat they must control by lop sided rules and regulations that impede us. As Single market Minister when they “completed” the single market I saw from the inside how they undertook a power grab and wrote laws designed to advantage large French and German companies and institutions. They even tried to put through a law governing stock exchanges which would have made illegal the biggest European exchange, our market in London. I did get that toned down.

EU aims this tine are greedy and unhelpful. They wish to carry on denuding our waters of fish with ultra large industrial trawlers, damaging the marine environment and preventing growth of our fishing fleet in more appropriate vessels. They want to re invent freedom of movement for young people. They want to control us with more of their over the top laws. They want more money for their programmes. They want to bind us into their inadequate defences more, and sell us more weapons systems.

The Uk pathetically just seeks “friendship” and closer ties. Maybe the government insists on easier rules for visiting musicians as the EU so far seeks to impede its citizens hearing  our talent, and maybe the government gets a vet certificate or two removed from our cheese exports. The paucity of the asks is embarrassing.

I was the only MP over Brexit who made the case for a clean exit, placing trade with the  EU on the most favoured nation basis of WTO rules. Anything else was bound to come at too high a price. I did not vote for the final  deal and expressed strong criticism of the outrageous treatment of Northern Ireland and the failure to take back control of our fish. The UK paid the EU too much money over a long transition for a free trade deal. Now we have one there is no need to try to improve it when the EU is only interested in making it worse for the UK..

More blows from the cost of living

The government says it cares about the cost of living, yet it specialises in putting it up.

It has  put through two further hikes in energy prices, now  controlled by the state, despite oil and gas prices coming down from past peaks.

It will put up rail fares by more than inflation to cover some part of its large wage awards to train drivers.

With the Regulator it is allowing very large rises in water company bills.

It has helped put up mortgage rates by borrowing too much and forcing up longer term interest rates.

Now it is allowing 5% increases in Council Tax, with 6 Councils allowed up to 10%. Its new grant formula pushes up Council spending and the tax in Councils that have done a better job in keeping Council tax down.

Why does it allow Councils to buy properties and utilities with taxpayer money. These so called investments often go wrong leaving Council fax payers to pay for big losses. Why are Councils given money for schemes like the £5.5 m road painting  and roundabout worsening scheme Lib Dem Wokingham forced on us?