The news of problems with Toshiba’s nuclear power generation investment plans will prompt some new thinking here in the UK. Some in the press are suggesting that in order to carry forward a programme of additional nuclear stations beyond Hinkley, the UK government will now itself have to venture into being a minority investor in these new plants. Private sector companies are finding it a stretch to handle the very high up front investment costs of a new nuclear station. They also have to worry about the long term nature of their commitments, and the eventual costs of decommissioning the facilities when they are worn out.

 

It is true, as the government argues, that nuclear has merits compared to wind power. It is much more reliable, and the plants can be run permanently without the same amount of back up power than interruptible renewable sources require. Whilst a nuclear plant is dear, you do not need an equivalent amount of stand by capacity, as you do for wind. The idea has been to supply unsubsidised power from nuclear plants. That means guaranteeing them a high and constant price for the power they will generate, given the high fixed costs involved. Some see guaranteed prices as just another variant of subsidy.

 

The enthusiasm for UK nuclear is based around the decarbonisation plans of Labour and the Coalition governments, in harmony with the EU requirements. The new government, leaving the EU, can rethink  our energy needs and vary the policy. The overriding objectives should be to provide a sufficient supply of affordable power. We need that both to pursue the new Industrial strategy,and to tackle fuel poverty. Building a new nuclear industry here may make sense, but only if it can be done in a way which delivers sufficient power at affordable prices. The government is pressing ahead with Hinkley and in Cumbria. It may be the case that a new fleet of gas powered stations will also be needed to ensure plentiful good value energy.

What is sure is that you don’t have a meaningful policy to fire up many industries we have lost or where there has been decline unless they have access to cheap power.

The CPI index fell 0.5% in January compared to December. Food prices also fell 0.5% over the same time period, despite the bad weather effects on vegetables.

Core inflation  over the last twelve months stayed at the same level as in  December, at 1.6%.

Overall the CPI  rose  by 1.8% over the last twelve months. This was a higher annual rate than December owing to the fall out of a very good month a year ago. The main factor, accounting for half the annual increase came from higher oil prices affecting transport. The UK inflation rate is mirroring the German and US rates, affected by the same world oil price rise. The other most buoyant item was the increase over the last year in restaurant and hotel bills, reflecting higher wages.

January’s figures were helped by falls in clothing and footwear prices, and by the intense supermarket competition which kept food prices down.

One of the more absurd analogies that pass for debate in the EU is that the EU and the UK need a divorce settlement. For a body which loves Treaties and lawyers it is bizarre. The Treaty makes no provision to require a departing state to pay an extra one off payment, nor does it seek or have any power over former states to carry on paying contributions. There is no need for lengthy negotiations on this obvious point. The answer to the request for a large one off financial contribution is No.

To make this a more interesting and longer article, I will however extend the divorce metaphor that so many like. Were this a divorce, it is between two high earning partners. The domineering husband, the EU, earns six times as much as his UK wife. He lives in a large suburban family home in Berlin, with a smart modern flat in Brussels. His wife has a country cottage in Wiltshire where she has retreated to as whenever they meet she just gets shouted at and told what to do. He has a large Mercedes. She drives a modern Mini.

Fortunately there are no children from the marriage. She is generously offering a clean break settlement to the husband to speed things up and to get on with her life, free of his endless demands for cash and obedience. It’s none of her business that he has run up huge bills with his Greek affairs, as she did not agree to any of those and made clear her wish to keep out of it all at the time.

As the husband wishes to undertake the divorce in a foreign court and she intends to live under UK law it is difficult to see how the husband thinks he can carry on with his demands once his foreign jurisdiction no longer applies.

It is fascinating to see the traditional media wrestling with other ways of looking at the world. They dont seem to like competitive opinions. It is high time some of their own alternative facts were exposed to criticism.

The media regularly tells us that the Conservatives in government cut public spending. If you look at the figures you find that it climbed in real terms from £249bn to £292 bn under Mr heath, from £326 bn to £437 bn under Mrs Thatcher and Sir John Major, and has risen again under Mr Cameron. (2011-12 constant price basis). The OBR forecasts further real growth this Parliament. The media instead usually takes a figure about the proportion of National Income, so that if the private sector grows faster than the state sector they can call this a cut! They never use the cash figures because these have surged.

The media also regularly tells us Sir John Major’s government fell because the party was split on Europe. If you look at the polls you see the Conservative ratings plunged when the economic damage of the European Exchange Mechanism became clear when we were forced to abandon that crazy policy and never picked up. All the rows over Maastricht and the Euro made no difference to the poll ratings.

The media often present Treasury and Other consensus economic forecasts as if they were reality. They rarely ask why these bodies failed to forecast the Exchange Rate Mechanism recession, the Banking Crash recession or the Euro crisis. Now they should ask why these bodies did forecast a 2016-17 recession for the UK which visibly is not happening.

The media love running Big business threatens to pull out stories about their presence in the UK if we resist features of the EU. They ran these stories when we decided to stay out of the Euro and were wrong then. Now they run them about leaving the EU, and were wrong about the short term impact and will doubtless be wrong about the long term as well.

It looks as if neither the Republicans (Conservative) nor Socialists (Labour) will have a candidate in the last two to be French President. It looks as if a third force party run by Mr Wilders will be the top performing party in the Netherlands election in March. Syriza came from nowhere to be the largest party and form the government in Greece. Pasok (Labour) have no seats in the present Greek Parliament. In Italy Grilllo’s 5 Star Movement is well ahead of the two old main parties in the polls. In Spain Podemos and Cuidadanos have made huge inroads into the traditional centre right and left main parties, making it impossible for either to form a stable government easily.

I find it extraordinary that these once great governing parties of the post war world in Europe have given up their pre-eminence so easily. It shows just how out of touch they have become. The main driver of their demise and of the popular discontent seems to be the bad impact of EU austerity economics and the Euro on their economies. When a country has half its young people out of work and around a fifth of its entire workforce laid off, it is no wonder voters seek a better way. The traditional parties are either deaf to the entreaties of those who want change, or impotent to change the things that matter because they have locked themselves into the EU and Euro schemes.

Whenever a country gets into a predictable governing crisis owing to its fractured party politics the EU proposes a technocrat led coalition government following the Brussels rules. When a country votes for decisive change, as Greece did when it elected Syriza to government, the EU works to ensure there can be no positive change and redoubles its efforts to enforce the very policies that have led to the political explosion in the first place. Economic failure can lead to a cry for strict controls on the movement of people, and a sharper nationalist rhetoric, as people hit out in search of a solution to a problem which their EU loving rulers scarce admit exists.

It is one thing for the traditional parties to decline, as they are. It is another for a single strong challenger party to emerge and take over government. That so far has only happened in Greece, though it could happen elsewhere this year. It is an even more difficult thing for that challenger party to break free from the shackles of conventional EU politics and improve the outlook. So far Syriza has been unable to do that, owing to voter ambiguity about the Euro project.

Marine Le Pen is made of sterner stuff than Syriza. Were she to win she would take France out of the Euro and run an economic policy she thinks would change France for the better. The AFD in Germany want to take their country out of the single currency, and have recently defeated the two traditional parties in Lande elections. They remain well behind Mrs Merkel’s party in polls for a national election.Sgnr Grillo is playing on the growing unpopularity of the Euro in Italy and may want to exit were he to win.

The ruling elite of the EU, with its single currency and panoply of Brussels controls, is on trial in this years elections in the Netherlands, France, Germany and probably Italy too. The triumph of Brexit and Trump show there could be an upset for the ruling EU group in one or more of these. Meanwhile the Euro elite fasten their seatbelts and proceed with the same approach.

There is a mood to sweep away the old centre left and centre right parties on the continent in a desperate bid to have something better . In the USA and the UK there is the wish to force change on the body politic by voting for Brexit and Donald Trump, within the traditional party structures. On both sides of the Atlantic and the Channel there is that same impatience with politics as it has been practised for the last twenty years, and anger at the way the governing corporate,civil service and Ministerial elites have behaved.

The anger is justified. The elites told us they knew best. They assured us they had the expertise. On the continent Tweedledum and Tweedledee parties alternated in government but little of substance changed. In the UK a puppet Parliament pretended to be in control whilst shovelling through thousands of pages of laws and many spending programmes that the EU required, with both parties claiming to support them without criticism or proper debate. In the UK we were made to live through the Exchange Rate Mechanism recession, the Banking Crash recession and the Euro crisis at one remove. The US was put through the Great Recession and the Iraq war. The Euro area had to endure the most economic pain with the ERM crash, the Banking Crash and the continuing Euro crisis.

People not very interested in politics, or pessimistic about their chances of changing anything for many years, have decided to take back control. In the USA Mr Trump first tossed aside all the serious professional well honed politicians of the Republican party to take their crown. He then went on to defeat the doyenne of political insiders, the darling of the elite, Hilary Clinton, who ran on a ticket of expertise and experience. The public said if it meant the expertise that had brought them the Great Recession and the Iraq war, they would rather try something new.

In the UK many groups of people with very varied political opinions united behind a campaign with the express slogan of Take Back Control. The more Remain paraded every great figure of the established governing and corporate bosses, the more the Leave case was supported. The experts who had led much of southern and western European economy into mass unemployment with their Euro currency were surprised when people did not believe their forecasts of gloom if the UK dared to vote Out. My belief Leave would win was strengthened at a big public meeting when many in the audience laughed and cried out their disbelief when the Project Fear forecasts were put before them.

If parties wish to run and support technocratic government it must at least be competent technocratic government. If they believe only they have the expertise to make the decisions and that the people just need bread and circuses, they must make sure everyone can afford the bread and get to the circus. The main reason the old establishment is being swept away is it failed to deliver.
Tomorrow I will look at the parlous light of the Conservative and Labour look alike parties on the continent.

The IFS tells us in their latest forecasts that we can look forward to more years of tax rises and spending cuts. They expect the UK economy to slow this year, and slow again next year.  They are out of touch with the mood to banish austerity and go for growth.

They are more pessimistic about the Eurozone than about the UK. They have lowered their 2017 growth forecast to 1.5% for the Euro area, whilst proposing 1.6% for the UK. They run one scenario which looks at what weak European banks and Brexit could do to their forecast – an unusual pairing with no explanation of why they are lumped togather or the relative contributions to their extra gloom on this basis.

They do confess that there are “increasing chances that the forecasts may be too pessimistic”. They accept that the UK consumer carried on spending post the referendum when most forecasters said they would not. They admit that business investment rose a little faster after the vote, instead of falling off the cliff as in many forecasts. They agree that trade which had performed disappointingly last year might add a bit to our economy in 2017.

They confess that “real levels of day to day public service spending have actually fallen very little overall in the last three years”. If they checked the Red Book figures they would see the cash growth in overall public spending actually rose faster than inflation over that time period.  They now think removing the deficit should be the priority, which leads them to conclude political parties have to offer some combination of higher taxes and lower spending.

Politically it is much more attractive to square the circle with more growth. More growth brings in more tax revenue without tax rate rises. It cuts the costs of benefits as people move from no pay to low pay, and from low pay to better pay. The issue before us should be what more can we do to promote growth.

I do not accept that growth will be as low as they say in 2017 or 2018. That still makes me keen to find more measures which can promote more growth. A tax rate cutting budget could help, especially if we cut those tax rates that are damaging the revenue collected. Spending enough on social care and health is a cross party priority, and we have to accept these services will continue to need  more cash in the future. Investing more when long term interest rates  are still so low should make sense, though the state needs to show commonsense over projects chosen and where possible harness the private sector to ensure a proper profit test on the project.

Parliament voted 494 to 122 to notify the European Union of our intention to leave.

Parliament voted to carry out the wishes of the people, as expressed in the referendum.

Parliament, after much debate, self examination and passionate exchange, voted to take back control.

The puppet Parliament of recent years, nodding through countless laws from Brussels, decided it must take responsibility again.

 

Over the last two weeks of debate, Parliament has come to life.

Many MPs wanted to be in the chamber.

Many MPs wanted to speak.

MPs who voted Remain in the referendum agonised over the conflict between their own view and the decision of the people which they had sought.

MPs who voted Leave spoke  to reassure their Remain voters that once independent the UK can thrive and prosper.

 

The decision of Parliament, backing the decision of the people, will be formally communicated to Brussels.

As lawyers on both sides in the Supreme Court case argued, once sent the country will leave the EU.

That is why the decision mattered so much.

 

I was impressed by the size of the vote to leave, and the scale of the majority.

It is true the Lords needs to do the same

But how can the unelected House reject the will of the people in the referendum and the will of the Commons by such a big majority?

 

The people are sovereign.

Parliament can be  sovereign between elections, once we are out of the EU.

It can only preserve the trust of enough people if it carries out their wishes.

After all the passion, the self doubts of individuals  and whole parties, after the technical arguments and legal sophistries

Parliament understood.

 

Tonight Parliament  has grasped that the once sovereign Parliament can be sovereign again.

It has understood that it can only hold that power if it pleases the people.

All UK democrats can sleep well in their beds tonight.

The people’s will has prevailed.

Parliament is ready to serve again.

Parliament voted to take back control.

 

 

 

 

Yesterday the various amendments proposed to the Leaving the EU Bill were voted down. Labour decided not to press one of their main ones to a vote because the government offered assurances that Parliament will get to vote on the final deal, to be held before the European Parliament votes on it. That vote will be about whether to accept the new Agreement or to leave without one.

During the exchanges the fundamental question of whether sending the Article 50 is irrevocable or not came up.  I argued it is. The Treaty makes no provision to withdraw the letter or to cancel exit two years later, which is automatic with or without a deal. The Treaty says if you start to leave and change your mind you need to reapply for membership. You do not simply keep or reinstate the membership you proposed to quit.

I reminded the Commons that both the Attorney General and the Remain lawyer in the Supreme Court case argued that the  notice to leave is irrevocable. In finding against the government on one count the Supreme court had to rely on the irrevocability of the process. It is only because the change of leaving becomes inevitable when the letter is sent that allowed the Court to say Parliament therefore had to pass an Act and could not just do it by debate and vote. Predictably the Remain side who were so keen to use this argument to win in court now have changed their mind and say it may not be!

I will post the exchanges later today.

The government’s White Paper today needs  to look at ways to provide more homes, all the time we remain in the EU and have to accept more than 300,000 additional people each year coming to stay in the UK. Even after we are out it is likely we still want to invite in a large number of people. Ministers have made clear we will still welcome talent from around the world, whilst controlling the numbers seeking low paid employment. It’s no good inviting people here if we do not provide homes for them to buy or rent, and if we fail to provide all the other public services people expect in a rich country.

Much has been made of the need for more homes to rent. We should not forget that there are many more people wanting to buy who currently rent, than there are people who currently own who want to become tenants. Many of the people who now settle for the rented option do so because they cannot afford the deposit or think they will have problems getting the mortgage to buy.

Nor should we forget that it is much dearer over a lifetime to rent than to buy. If someone needs a home for 60 years as an adult, it will be much cheaper to take on a 25 year mortgage and pay it off over the 25 years, leaving you free of any rent or mortgage costs for more than half your life, than to have to pay rent for all 60 years. The joy of owning comes in retirement when you have no rent or mortgage payments to make, and when you also have a capital asset which you can sell to pay the nursing home fees in a home of your choice if need arises. In rented accommodation you will be paying the highest rent of your life as a pensioner, because rents always seem to rise. You have no asset to fall back on if you need to move to a care home.

The good news today is more mortgages are available and mortgage rates of still very low  by historical standards. The bad news is house prices are high, and saving for the deposit even with the help of government schemes can be difficult.