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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The Netherlands government picks a diplomatic fight with Turkey

It looks as if the strong polling of Mr Wilders and the PVV in the Netherlands has worried the government led by the VVD. They have recently denied access for Turkish Ministers to their country on the grounds that their visits would be inflammatory.  The Foreign Minister was stopped from coming and the Family Minister was ushered out of the country. Turkey is of course a NATO ally and has recently agreed a comprehensive and close Association Agreement with the EU. This Agreement includes the free movement of people from Turkey to EU Schengen countries which include the Netherlands.

It will be interesting to see tomorrow if the idea of acting in this manner serves to reassure those otherwise thinking of voting for Mr Wilders and the PVV, or whether it simply highlights Mr Wilders agenda in a way which helps him. Turkey is angry about the actions of Mr Rutte and his VVD party, and have asked the Netherlands Ambassador to remain out of Turkey. Meanwhile protests about this in the Netherlands have led to the use of water cannon and ugly street scenes.

None of this is good news for the EU/Turkey relationship, and brings the whole issue of the EU/Turkey Association Agreement back into contention. Many voters in the Netherlands have been worried about these Association Agreements, but so far the Dutch government of Mr Rutte has gone along with them at EU level, so they do apply to whole EU Schengen area including the Netherlands. This row may serve to remind unhappy voters about these developments.

It does not look as if Mr Wilders can win enough seats to be part of a future Dutch government, but if he wins more seats than any other party it will add to the stresses and strains on the ruling coalition which emerges from the election.

Voting for the Brexit Bill

Today I will be voting to ensure the Brexit Bill at last passes the Commons again unamended , so the government can send the Article 50 letter. I do so because I campaigned to give UK voters a referendum, and made clear before and during the referendum campaign that the people’s decision would be implemented by the government.

I am pleased the Bill has passed with a large majority in the Commons, and trust the two Lords amendments will be removed by the Commons who rejected these views before.

As I stressed in my speech on the Bill, the letter itself marks the end of the UK’s membership. The one thing I agree with Lord Pannick about, the lawyer who led the Gina Miller case in the Supreme Court, is that the notification of leaving is irreversible. Under the Treaty you can only leave legally by notification. Once you have notified you have up to two years remaining in the EU to seek an agreement about the future relationship, but are out  without such an agreement at the two year stage, or sooner with an agreement. That provision was put into Article 50 deliberately to ensure the EU cannot delay unduly the exit of a country in order to get more money out of them in the form of their regular contributions as members. The rest of the EU should not be able to delay exit unduly when a country has decided it wants to leave. The EU, after all, is meant to be an association of democratic freedom loving states, so their freedom must include the freedom to cease to belong.

I  am surprised to see the rest of the EU is still using the misleading analogy that this is a divorce. It is not. It is a country leaving an international treaty arrangement which no longer suits it, because that Treaty based organisation has changed so markedly compared to one the UK agreed to join in 1972.  There are no provisions in the Treaty to make additional payments to leave or to carry on making payments after leaving.

The main question to be settled about our future relationship is whether we trade under WTO Most favoured nation status in future with the EU as we do successfully at the moment with the rest of the world, or whether we carry on tariff free. The UK would be happy to carry on tariff free despite being in large deficit on this basis, so it is a simple choice for the rest of the EU. It is high time UK media started putting this basic question to the other member states and Commission, instead of trying to find holes in the UK stance.

At the same time they could ask the rest of the EU why they have not yet reassured all UK citizens living on the continent they can continue to do so after Brexit, as we wish to do for all  continental EU citizens currently settled in the UK. The UK government is not a threat to either tariff free trade or civilised treatment of EU citizens living in a different country to their home one. I find it odd that the EU might be a threat to these straightforward common decencies. Why is the people who most like the EU that have a such a low opinion of its likely conduct?

The Foreign Affairs Committee gets it wrong – Parliament should just enable the letter to be sent

Parliament will have every opportunity to debate the progress of the Brexit negotiations over our future relationship with the EU. Right now Parliament needs to show resolve to get on and send the letter under Article 50. It is annoying many on the continent that the UK has delayed this process.  The government is right to want a simple unamended Act of Parliament to allow the letter to go, to show that Parliament is united behind the democratic wishes of the public as expressed in the referendum. That is the way to increase the chances of a better deal for our future relationship. If Parliament seeks to bind the government it will be seen as a weakness by the rest of the EU  in the talks that follow.

A budget for Brexit

The Chancellor intends to move to one budget a year. He also made clear that budget will be each Autumn. The budget we have just witnessed was designed to change little, and to launch various consultations ahead of the main event. It is therefore a little unfair of some to complain that the March budget did not set out what he intends to do post Brexit, nor did it herald and develop the economic opportunities Brexit presents. Let’s hope that comes in the autumn.

Over the next few weeks I will include some articles on this site looking at the opportunities in various departments and sectors. The first general point to make in today’s opening article is that post Brexit the government will have more money  at its disposal to cut taxes, increase spending or reduce the running deficit, thanks to the cancellation of our substantial net contributions. The balance of payments will get an immediate and substantial continuing boost once we cease making those payments abroad for our financial contributions. As the balance of payments deficit has been all too large during our years in the EU and especially in recent years, this will  be a welcome improvement.

The Leave campaign by way of illustration of the advantages of cancelling the payments said it could be spent on the NHS. They always made clear it would in practice be up to the government of the day to decide  what to do about the saved money. As part of the Vote Leave campaign I set out a detailed possible post Brexit budget, which combined increased NHS spending with more money for social care and a series of tax cuts taking VAT off tampons, green products and domestic fuel. These proposals made it to the Today programme and the Telegraph amongst others.  That illustrative budget had some worthwhile ideas in it. Indeed, the extra money for social care has just appeared in the latest budget and is welcome.

One of the big advantages of Brexit will be the restoration of our own control over taxes. The VAT cuts I suggested should be popular across the political spectrum, tackling excessive energy bills which fall hardest on people on low incomes, and encouraging more energy saving which makes sense. I would also like to see in the Autumn budget measures to cut tax rates where the rates are currently too high to maximise the revenues. It seems clear, for example,  that the last Chancellor’s penal Stamp Duty rates have cut  property transactions markedly, to the detriment of total revenues and getting in the way of people improving their property and tailoring their home to their latest family and income circumstances.

The European Parliament

The European Parliament reminds us they can veto or approve any EU/UK deal on the future relationship.Some of them also say they want to offer EU citizen rights to individual UK citizens who want it. This appears to be a generous offer, as of course the UK will  no longer be paying in or accepting the judgements of the Parliament, Council and Court.

It is difficult to reconcile this with their wish as well to ensure insofar as they can influence it that we will not be better off out. Fortunately whether we are better off or not will be mainly up to us, based on the approach we follow when we are free to make our own decisions.

I trust the European army will not be making conscripts of European citizens.

Self employed status

I am glad the PM has agreed to delay NI proposals and has confirmed that the Chancellor will listen to concerns. They will receive a report on the wider issue of self employed status and will also consider the differences in benefits between the self employed and other employees.

I am still consulting my constituents on the issue and will welcome their views on these wider issues as well as on Mr Hammond’s tax increase proposal.I will then put suggestions to the Chancellor.

Fairer funding for schools

I along with MPs with similarly placed constituencies urged the Coalition government to narrow the large gap between the money going to schools in some parts of the country and the much smaller sums going to schools in places like West Berkshire and Wokingham. Conservatives were not able to get agreement in coalition, but did put a commitment to fairer funding in the Conservative 2015 Manifesto.

Ministers have since been working on a scheme. This is currently out to consultation. The request for people to write in on the “National Funding Formula” was first issued on 14 December. The closing date is 22 March. I am writing to remind those interested as they might like to send in their thoughts.

I have put the case to Ministers along with other MPs on several occasions. I will be having another meeting with the Secretary of State shortly about it again. The case is very simple. The main cost of education for each pupil is similar around the country, as it is based on teacher pay and other staff wages paid at  national rates. Of course there should  be extra money for pupils that require more support, and to recognise problems in deprived areas. There also needs to be some recognition of higher property and support costs in expensive parts of the country. The current gap between the highest and lowest funding, at more than 100% of the lowest level,  is too great.

I have asked for the  introduction of a new system as soon as possible, and for further transitional increases in money whilst we are awaiting a fair funding answer. The total support per pupil needs to be sufficient for decent provision. Individual schools may have other budget problems. If a school is unable to recruit sufficient pupils then its total funding will drop, and that may force it to reduce the number of subject options as it adjusts its teaching numbers to the lesser number of pupils.

In 2014-15 the per pupil funding of English schools ranged from £8595 per head in the City of London to just £3950 in the lowest funded authority. The average was  £4550. Wokingham received £4125 and West Berkshire £4367.

 

The contact is SchoolsNationalFundingFormula.CONSULTATION@education.gov.uk

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Some object to this entry test. I have changed server for a variety of good reasons. I was getting a large  number of computer inspired nonsense contributions and some advert contributions which I need to keep out, and am told this is the best way to do so. I will make enquiries to see if there is any other way to stop this material.

Some also query how I select which items to post. Let me repeat I delete

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I do not delete posts that disagree with me or the Conservative government, and do delete posts that are personally disobliging about people in all  political parties whatever the merits of the case.

 

Budget 2017 – Not much changes

Lots of money moved around in the Budget arithmetic. Practically all of the changes resulted from new forecasts. At last the Treasury and OBR have thrown off the inaccurate gloom they were enveloped in from the time of Brexit vote, and have brought their figures more into line with reality. As a result revenues leapt £10.5bn for 2016-17 compared to the November forecast!  Borrowing is now scheduled to be £51.7bn instead of the £68bn estimated in November, as spending is down a bit as well. I assume they have at last  got their 2016-17 forecasts  broadly right, as they must know most of the numbers by now.

I raised the issue of wildly inaccurate forecasts and the danger that they drag Ministers into policy responses that are not warranted by the underlying situation.

The Chancellor himself moved very little money around for next year. He took us through a number of detailed spending pledges, itemising   £5m for a commemoration  for women’s voting rights, £25 million for small business rate relief recipients, £25 million for a one off pubs rates relief, and £20 million for free schools capital. The one major item which is also  welcome is the £1200 million more for social care. There is also £250 million for NHS improvements.

The Budget also proposed tax changes for later years, including an increase in Self employed rates of NIC and a reduction in the tax free dividend payable from a company. I would  be interested in opinions on those measures, which come in during the likely run up to the next election.

Budget Spring 2017

In the March 2016 budget the government decided to increase total public spending from £681 bn last year, to £694bn this year and to £706 bn next year.  For 2017-18 we are going to need a higher total, given the pressures on social care, the NHS and schools budgets.

The argument over the budget is less about the need for some more spending on priorities than on how this will be paid for. Some of us say that as the Treasury will be able to report stronger revenues than the Autumn Statement there is no need to hike individual tax rates or find new taxes to impose. Indeed, some selective cuts in rates on enterprise would be welcome, and likely to augment the revenues. Mr Osborne’s  Spring budget last year slashed property transactions with higher Stamp Duties. The revaluation of Business rates will damage some smaller businesses that face high increases with no small premises exemptions.

It is most important that the budget promotes growth, investment and more productive working, rather than taxing it more. Treasury officials are ever minded to look for new sources of income, but the Ministers are there to protect taxpayers and to be a voice of commonsense about how far we can go with increasing tax rates. The UK economy has done relatively well in 2016 and so far this year, but could do better. It will need substantial new investment in broadband, water, electricity, and transport to overcome obstacles to growth and to lift it further. Anything the budget can do to speed these ideas, the better.

With the USA planning major tax cuts and with places like Ireland and Luxembourg also offering an attractive tax package to investors and business, the UK must stay competitive.