There are more talks underway between the UK and the EU. So far the EU has acted toughly with unfriendly actions and rhetoric, whilst the UK has behaved with diplomatic charm  constantly stressing the wish to have a positive and wide ranging relationship once we have left. It is important that the UK continues to be warm and friendly about the future relationship, but also important that UK negotiators are not tempted to make offers on money or on the rights of the European Court against  eventual promises to talk about trade and the wider relationship. We should not pay for talks, and there is no need  to pay for trade either.

The EU has broken normal diplomatic conventions in the way they are handling their side of the talks. Usually states negotiate government to government, or in this case EU to government. They do not at the same time open talks with the opponents of the government.  Instead the EU has welcomed delegations from the official opposition, from parties and individual MPs hostile to Brexit, and others who are in disagreement with the UK government. I see press articles which look as if they have been sourced from the EU or its friends claiming that the UK government may be about to fall, or there might be change to a Labour government, or there is about to be a change of PM where there is no evidence to support any of these claims. At the same time the EU issues instructions to its member states seeking to prevent them talking to the UK on the grounds that they want a single view for the negotiation which will be the view set out by the Commission. There have been stories and quotes implying the EU wants to punish the UK for leaving. Their idea of punishment seems to be more punishment for them, as it entails imposing tariffs and obstacles to trade where they have a large surplus.

The EU has insisted throughout that there is a Brexit bill to pay though it cannot produce any legal basis for such a bill. It has insisted on only talking about three main chosen issues, and declining to talk about the important wider issues of the future relationship at the same time. As both sides agree nothing is agreed until everything is agreed it is silly to refuse to talk about the wider issues. With the clock ticking the UK government should now privately explain to the EU that if there is no prospect of talks about the free trade offer the UK is making before the end of this year then the UK will have to tell businesses to get on with planning for exit under WTO terms.

The UK is offering the rest of the EU great free access to the lucrative UK market. Translating this into the format to register as a free trade agreement with the WTO is easy as we already have the full framework in place. For the EU now it is a simple binary choice. Do they want to carry on with the access they currently enjoy to the UK, or would they prefer to access the UK as a third country under WTO rules and with WTO tariffs?

One of the difficult things any Minister has to grasp and handle is the distinction between their government roles and their political roles.

In the UK if a Minister wishes to act as a Minister, changing policies, spending government money or leading the administration in their department, they need to do so working with the relevant officials, and keeping the department and the wider government informed of their actions. Cabinet members have various delegated powers to spend  money and change policies, and in some cases Statutory powers to operate in a quasi judicial capacity without consulting other departments and colleagues. Any major decision or decision that has an impact on other departments needs to be cleared in correspondence or debated at Cabinet or Cabinet Committee unless it is a decision solely entrusted to a named Secretary of State.

If a Minister wishes to be involved in a local or national election, wants to change Manifesto policy for their party, wishes to attend a political function or otherwise act as a party politician they must not involve the civil service. They may not normally use a government car to get to the event unless there is a security need to do so. They have no duty to report the matter to the government machine, and will only tell the official government of decisions or problems that they come across at any such event  that are relevant for the government to consider.

If a Minister travels abroad and wants to meet senior representatives of a foreign government it is normal to advise the Foreign Office and to study any brief they send so that the Minister sticks to the government view of the issues that relate to the UK’s relationship with that country. If a Minister goes abroad for a holiday or to visit friends and family there is not usually any need to consult the Foreign Office or to understand  the government line on all the issues, as the Minister is not speaking as a Minister or becoming involved in public policy. If a Minister goes to a foreign country to participate only in a conference or series of  meetings that are clearly party political, again they cannot use government assistance and do not have to tell officials.

Various officials in Whitehall clearly do not like Priti Patel for whatever reason. They started briefing against her, claiming she had held meetings when on holiday in Israel that should have been reported to the Foreign Office, and cleared in advance of holding them. The Prime Minister was brought in to adjudicate. According to the press she asked for a full statement of what Priti Patel had done on holiday and told her she should not  freelance in this way. When it subsequently emerged that the Minister had not made a full statement of what she had done, the Prime Minister clearly decided to take further action.

It is ultimately for the PM’s judgement whether any given meeting or event was a political or an official one, and whether any given Minister has stepped too far from government policy in what they have said and done. It is clearly best if Ministers can work well with their officials, or can at least trust the official machine with details of their activities. It can also be the case that sometimes officials have their own reasons for wanting to criticise their Minister through unofficial and anonymous briefings, or by report to the Prime Minister. Only the Prime Minister can ultimately decide the merit of these criticisms. Establishing control when something has gone wrong is not easy. Some say sacking the Minister gives the PM control, but it also gives a win to the officials who wanted the Minister out.

I have just been informed about this website. I have nothing to do with it, and have not authorised it to publish any of my material. People going to it should know it is in no way backed or supported by me.

I have no trouble with the political passing of the Tsars 100 years ago. Russia deserved better. A way had to be found to involve the people in the government. The murder of the Tsars was part of the dreadful violence the revolution unleashed. The  revolution caused more misery and suffering. As is the way with most violent revolutions the revolutionaries unleashed a tyranny on those who disagreed, and a pogrom of those they did not like. The small independent farmers were wiped out. Religions were suppressed. Dissidents were tortured, imprisoned or killed.  A revolution born of war fatigue ended Russian involvement in the First World War, but the Communist government  then hurled Russia into even greater losses through  killing many of her own in internal mass murders. They followed this with a major commitment to war with Germany in the 1940s.

The revolution peddled the myths of Marxism, whilst the revolutionaries battled each other over how far they should spread their power and message abroad. The proletariat were told they would inherit the earth. Instead they lost their remaining freedoms, drafted into industrial labour, placed in rented flats and made to live and work as the state dictated. The production machine was heavily slanted to making armaments, at the expense of consumer items for the public. The favoured few at the top of the single ruling party lived and worked  in the palaces of the Tsars and in modern luxury whilst most Russians were denied cars and consumer goods that became common in the west as the century advanced.

Russian literature is so often the story of struggle and of  the secret service, of torture and autocratic rule. Living standards fell well behind western ones whilst freedoms were also denied. It is strange that various western intellectuals thought the Communist system superior and were prepared to write for it or even to fight for it or spy for it. In my youth I developed a passionate dislike of the Communist message and its social consequences. I saw the USSR shoot people who tried to leave the eastern bloc, whilst anyone in the west was free to go and live in the USSR if they chose. I noted that even the most ardent pro Communists amongst the intelligentsia usually opted to stay safely living in the freer west.

I noticed in all the BBC allegations about use of tax havens they of course made no mention of why it is that most UK collective investment fund investments are now made through Dublin or Luxembourg.

The EU invented the passported investment fund that can be easily used throughout the EU  called UCITs – Undertakings for collective investments in transferable securities.  These have replaced many of the domestic UK unit trusts that savers used to use.  88% of these vehicles are established in either Dublin or Luxembourg rather than in London which remains the principal centre for investment expertise.

One of the reasons behind this dominance by two of the smaller world centres is the favourable tax regime. In Ireland overseas  investors in the funds pay no Income tax, CGT, Subscription tax, Corporation Tax or Redemption tax to the Irish authorities. Obviously holders of the units do pay income tax on the dividends and CGT on the gains in their country where they are registered to pay taxes. UK investors large or small pay Income tax on dividends and CGT on gains in any offshore fund they hold anywhere in the world, unless their gain is below the taxable threshold or unless they hold the investment in a pension fund or ISA which are tax exempt. Ironically given the coverage it is the smaller savers who can more easily use sensible tax avoidance schemes like pensions and ISAs to avoid tax on their holdings.

In Luxembourg  too there is a  very favourable tax regime to encourage the establishment of UCITs. Dublin has proved more attractive because it also offers a very low Corporation Tax rate of 12.5% if the sponsor company for the UCIT also wishes to move there.

It is curious how Labour and the BBC concentrate on favourable tax regimes in UK offshore centres but not in these two larger EU locations. I see nothing wrong with the approach of the Irish or Luxembourg authorities who have successfully competed with a tax and services offer which has attracted a lot of  business away from London and other large centres. I do detect bias in the recent treatment of tax avoidance stories.They have been unwilling to point out up front that offshore funds do not allow UK citizens to avoid tax on their investments, and do not point out the huge volume of offshore funds generated by EU policy favouring places other than London within the EU.

I understand the interest in the various stories about actual and alleged misconduct by MPs at Westminster. I have no intention of writing about them and will  not  be publishing any comments about individual cases. I do not know the rights and wrongs of individual cases and have no wish to get in the way of any enquiry or legal process.

If criminal wrongdoing has taken place it must be prosecuted. If an MP has behaved unprofessionally but not criminally then there needs to be an apology and some recognition of the error. If an MP is falsely accused they deserve a fair and independent process to clear their name.

The Prime Minister and Leader of the Opposition are working together to produce a new procedure for anyone working at Westminster to pursue a complaint about another MP or staff member. This needs to be done with due process  in a way which ensures it will be properly examined independently, with judgement and arbitration as needed. Staff members need protecting against any predatory MP, and MPs need to be able to dismiss any  false allegations in a timely and convincing way.

The opponents of Brexit who are still out to stop or dilute it seem to see Brexit as some big economic event. It is difficult to see why.

They concentrate on trade. There is no evidence that joining the EEC or completing the single market did anything to boost UK growth so it is difficult to see how leaving it will do the opposite. Our trade with the rest of the world  handled with tariffs under WTO rules is continuing to expand more rapidly than our trade with the EU. The figures quoted for the proportion of our goods and food  trade that is with the EU fail to point out it is far more imports than exports.

I predict that you will not see the impact of Brexit on world growth or world trade figures after we have left. If there are tariffs we may import more food from non EU sources and less from the rest of the EU but not much else will change. We will certainly grow more of our own if the EU insists on tariff barriers.

It is also likely the EU will want tariff free when they think they have wrestled as much cash as possible from the UK government in search of a deal.  The big win economically for the UK will be saving the money we send them. The more we delay taking control of our own money, the more we delay getting the  benefit. The win is a double one, as it will lead to a sharp improvement in our balance of payments when we cancel the contributions, as well as giving us money to spend at home on our own priorities.

I assume the briefings that the UK government is offering E60bn of divorce settlement is disinformation. There is no way the public will accept that, and unlikely the UK government would have offered anything firm  just to hold talks that the EU is going to hold anyway.

I see we are  now going to train more nurses at home instead of expecting to bring in more EU nurses after we have left. All EU nurses currently here are of course welcome and can stay as valued members of our society, but it must be a good idea to train more of our own and work away at reducing unemployment further.

Those who say non tariff barriers and delays at borders are issues under WTO procedures are out of date. In February this  year the new Facilitation of Trade Agreement by the WTO came into force which will work well.

I read in the papers that the Treasury is busy scrambling around to find more taxes they can put up. If they stopped giving away so much of our money to the EU and   stopped trying to find ways to carry on giving away our money to the EU  they would not need to worry about where to find the cash. If they fully embraced the idea that lower tax rates often lead to higher revenues we could make more economic progress.

This week the Republicans at last rose to the challenge of tax cutting. They announced a blockbuster package. If it or something like it passes it will increase US growth materially, it will  be a boost to the whole world economy, and it will suck business into the USA from higher tax regimes elsewhere.

The  Bill includes slashing the Corporation tax rate from 35% to 20%, and to just 12% as a one off to get large US corporations to repatriate profits they have been holding offshore to avoid high rates. It gives a big boost to the average earner by cutting bands of Income tax from 7 to 4, and lowering the tax take on all but the richest. It is costed as providing a $1.5 trillion stimulus over ten years. In practice I suspect the proposals will collect rather more revenue than the conventional official models predict, but it will certainly be stimulatory in its impact.

We do not need at the same time a budget in the UK looking for new ways to tax small business with extra VAT or National Insurance. We can live without a tax attack on the self employed. We do not need further tax attacks on homeowners. We need to match the US approach and show some enthusiasm for lower tax rates. We need a more dynamic economy, collecting more revenue, which comes from fewer, simpler and lower tax rates.

So much of the UK economic establishment is dominated by endlessly repeating the arguments of the Brexit referendum for no good reason.  Instead they need to talk about tax cuts and tax reform, appropriate deficit levels and Central Bank policy. There is a danger the UK will be left behind by the boldness of the US approach. If they carry this package or something like it it will have an electrifying effect on the US economy.

The Bank and the FSA allowed far too large an expansion of credit and derivatives prior to 2007, as many pointed out at the time.

They then decided to crash the banking system by withdrawing liquidity and putting up rates, leading to the Great Recession.

Since then they have restricted banks in making new loans, and have sought to offset the negative effects of this on jobs and output by keeping interest rates near zero and creating money themselves which they inject by buying up state debt.

Savers suffer from the low rates, but benefit from the inflation of asset prices this causes. Credit is cheap from banks but rationed strictly. Alternative credit from shadow and non banking sources is quite expensive.

This is not a good model. Getting to a better one will take time and patience, but we need to sketch the direction of travel.

The first task is to wean us off QE, by setting out a programme to cancel the state debts the state  now owns and to cease reinvesting the income and capital proceeds from  the state owned  bond portfolio. We will then  see that UK state borrowing as defined by international standards is relatively modest at around 65% of GDP.

The second task is to allow the commercial banks to create a bit more credit to finance a bit higher rate of growth. This should be done by adjusting the macro prudential requirements now that the banks have much better capital and reserve ratios.

When better growth is restored then the Bank can gradually increase rates when the data justifies it.

The aim should be to end up with 2% inflation, growth at over 2% and a small real return for savers instead of a negative real return.

I thought the interest rate cut some weeks after the Brexit vote was needless last summer. The economy was speeding up at the time, credit growth was lively, house prices and home building were on the up, new cars sales growing strongly and unemployment coming down. The Bank had all the wrong forecasts , arguing that unemployment would rise, jobs would fall, house prices would fall and confidence would crash.  Instead of looking at the data the Bank trusted its own wrong forecasts and cut rates!

Yesterday the Bank did the opposite. The data shows house prices slowing, car sales falling, credit growth slowing and money growth retreating. The Bank should know that because it has deliberately brought it about by ordering a credit tightening under its macro prudential powers.  The latest retail sales figures, growth figures and house prices figures are showing much slower rates of growth than in the summer of 2016. So what does the Bank do? It puts rates up!

Its argument is s sloppy one. It says we are getting close to capacity, and cites the fall in unemployment. This it says requires a rate rise to bring inflation back to target though it has previously always said the inflation spike this autumn is a one off which will subside.

It is odd that the MPC in its explanation of the economy refers to Brexit several times and makes no reference to the Bank’s own monetary tightening, reduction of credit growth and tax attacks on housing and cars by the government. The Bank seems to have lost its impartial interest in the figures and gained an unhealthy wish to blame Brexit for anything adverse. If Brexit is such an all pervasive influence why doesn’t it get the credit for the strong jobs growth, the rise in housebuilding and the strong manufacturing performance over the last year?

If you look at a graph of car sales they rise strongly up to March 2017, with no effect from the vote or the Article 50 letter but a big effect from the budget and government statements on diesels. If you look at a graph of BTL investment you see it takes big hit in April 2016 before the vote when the government introduced big tax rises. I suggest people look at the evidence instead of trotting out alleged Brexit effects for bad news, and saying despite Brexit for good news.