I am often asked how bad would a Scottish exit be for the UK economy?

I reply by stating that I would like Scotland to stay in the union. It is important it is their choice, and even more important that they then unite behind the democratic decision they are about to make, whichever way it goes. I still expect Scotland to vote to stay in.

The facts are straightforward. Scotland has 8.3% of the UK population. At current rates of economic growth it would take three years to replace the lost Scottish output. At current rates of inward migration it would take  a generation to replace the lost numbers of people,  but as the aim is to bring the rate down more it would take a  couple of generations. I am not recommending that we have to seek to replace the lost people, merely trying to give a sense of relative size.

Scotland receives 9.3% of total UK spending. Whilst the Scottish government and the UK Treasury disagree about some of the detail, they say that Scotland receives somewhere between 122% and 116% of the public spending per head of the rest of the UK.

Scotland contributes 7.3% of the Income Tax revenue of the UK, 2% lower than her share of the public spending. Other taxes are variable, from the 14.1% of total UK spirits duty the Scots pay, down to  5% of Stamp Duty.

The SNP point out that Scotland contributes the lion’s share of production and company taxes on oil and gas output. As we have seen , these tax revenues are now in decline, reducing the Scottish total tax contribution.

One of the big arguments is over how quickly this will decline. If it does so with no obvious replacement, then Scotland in the UK will need to draw more money from the rest of the UK to make up the shortfall.

The English case to keep Scotland in  the Union is based on history, politics and sentiment. It is not an economic necessity from England’s point of view.

The sudden deaths of the passengers on the airliner over the Ukraine has come as a dreadful shock. If it was mass murder we need to know who did it and why. The families of those who have lost loved ones have our deepest sympathy.

The first requirement is for the establishment of an authoritative and independent enquiry to see if the airliner was shot down as most assume and if so how it was shot down and by whom. If not we need to know why it crashed.

This is a dangerous situation which will only be made worse if states comment and act on rumour or suspicion before we know the truth of what happened.

Lord Hill has to run the gauntlet of the European Parliament endorsement hearing. They will want him to be loyal to the Treaties Conservatives have opposed, loyal to a federally inclined Commission which we oppose, and keen on the project of ever closer union which the UK cannot accept. He will doubtless use language to get through his test which will upset Eurosceptics.

As Commissioner he will lead a split life. One part of him will have to judge, decide and discuss policy and actions from a federal viewpoint, carrying out the wishes of the majority  in the EU. The other part will have to remember that the UK wants none of this remorseless drive to greater union and has different interests and a different viewpoint. It’s becoming an impossible job, as the UK slips away from the EU in mood and rhetoric.

He has to help the UK government  secure him a decent job within the Commission. I think there is too much emphasis on this issue. Many of the EU Commission jobs are important because the EU now has so much power. The UK Commissioner is only going to be able to do one of them. Within reason it does not matter that much which it is.

Thereafter, what matters is how strongly and well our Commissioner represents the UK case. Whilst under the theory of the EU he has to swear an oath for the great good of the EU and co-operate with the federal drive of the institutions, in practice he will be judged at home by how well he defends the UK’s interest and  prepares for the UK renegotiation. He is unlikely single handedly to turn the rest of the EU round to the UK’s view that it should be a trading arrangement and not much else. Instead he should concentrate on getting a new relationship for the Euro permanent outs as the greater Euro zone presses on to political union.

Of course, were Labour to win the Election rather than  the Conservatives, his brief from the UK would change. I think whoever governs the UK  after 2015 will be forced to seek a new relationship, but Labour will not offer a referendum so they have taken away the UK’s main negotiating card that any new relationship has to pass a public test of acceptability.

This week Parliament has tried to sort out a serious legislative mess of the EU’s making. This is no way to run a serious country.  The European Court of Justice recently struck down a European Directive on Data Retention. This Directive, agreed to by the last Labour government, had been faithfully transposed into UK law. The ECJ left us not knowing what the law now is, as the UK’s enactment of EU law can itself now be challenged.

All three main parties rushed to agree a new Westminster law which they hope will now be compatible with EU law as redefined by the Court. There is, of course, no way of being sure it will do this. All the time the European Court is at war with the EU legislature we will live with an uncertain law. In addition, as the Home Secretary confirmed to me, the EU itself may have a go at new legislation, which would then require the UK to start all over again with its implementing legislation.

Civil liberty campaigners think the new law goes too far in allowing the authorities access to records of people’s phone calls and messages. The government  and Opposition point out the UK put more safeguards in our implementation of the EU law than they need do. The latest attempt to implement adds additional safeguards and requires new legislation in two years time, along with a major review.

Whatever the rights and wrongs of the judgements made about how much we need to authorise to keep us safe, surely more people can agree this is not  the right way to legislate in a democracy. Parliament should decide these matters, not the EU and the ECJ. Parliamentary law could then be more consistent, and not subject to sudden reversal by a court, which just serves to undermine the law and make enforcement difficult if not impossible.

There was some good news in the reshuffle. Mr Hague’s decision to leave Parliament next May means we now have a Foreign Secretary who has stated he wants out of the EU if we do not get a much better deal. That is a better stance for our negotiation, and encouraging that he agrees with many of us that the UK’s current position in the EU   is unacceptable.

The decision to replace Mr Grieve as Attorney General suggests  according to some of the accompanying briefing that the government is planning to change its approach to the European Convention on Human Rights. Many Ministers and others are frustrated that the Convention and Court gets in the way of the UK seeking to extradite certain criminals and run the borders  policy it wishes to run.

Mr Gove’s arrival as a speaking Chief Whip with wider duties than a  traditional Chief Whip makes sense in the run up the General Election. Nikki Morgan as the new Education Secretary needs to push ahead with reforms that Mr Gove has instigated.

I invite your thoughts on the whole package.

In 2008-9, well into the financial crisis, the UK state raised £22.5 billion in Self Assessment Income Tax, with a top rate of 40%. The following year, the last year at 40%, saw another £21.7bn collected.

The 50% rate then introduced was assumed by the Treasury to yield a lot more self assessment income tax, as high payers usually  have to complete the self assessment process and are an important part of that total. In the June 2010 forecast the Treasury looked forward to raising £29.2 bn from self assessment in 2012-13, and £32,5bn in 2013-14. These forecasts were reduced steadily in successive years. So what actually happened?

In 2012-13 the Treasury collected just £20.6bn in self assessment Income Tax. In 2013-14 it managed £20.9bn. In  other words, the  Treasury collected 4 -5% less  in those two years than in the last year of 40% tax, despite the inflation in the meantime.

More worrying is the gross inaccuracy of the forecasts. Revenue in 2013-14 was a massive 36% down on the June 2010 Budget forecast in 2013-14. It was 32% down on  the Budget 2011 forecast.

Much of the debate about optimum or desirable tax rates in the UK is conducted without reference to any of these outcome numbers. Too many people assume the Treasury model and official statements about the impact of higher rates are correct, where the official word is they do not have a lot of effect either way.

People interested in this topic  should instead study the outturn figures. They are markedly different from the forecasts. They show that self assessment Income Tax was hit badly by the 50% tax rate, and has been running a huge one third below forecast.

Past Prime Ministers have often been damaged by their  reshuffles. The reason is simple. There is no sensible personnel function for Ministers in modern government.

It begins with the failure to map the interests, experience and qualifications of the talent pool, the MPs and peers available for appointment. It is worsened by those who may include friends and spin doctors of the Prime Minister who think the best way to conduct the run up to a reshuffle is a discussion of the merits and especially the  failings of the candidates in  the press without involving them. It can reach a climax with job offers to people who have no wish to do the job in question, allied to attempts to sack people from office who had no idea they were likely to lose their job and who are most reluctant to leave.

A badly conducted reshuffle ends with the Prime Minister having more unhappy colleagues. Those outside the tent who wanted to be Ministers have been passed over again, often with no explanation. Former Ministers have been bruised by the sacking and the unpleasant briefing that often accompanies it. Some Ministers who have been moved or kept in place remain unhappy because they are not doing the job they want or even deserve. So how could all this be changed and improved?

The first thing that needs doing is a Prime Minister needs to upgrade the Whips office to be more of a modern personnel function. Whips should know more about MPs’ past training, experiences and abilities. They need to have a way of keeping the PM informed of the talent available. They need to know what individual MPs and peers would like to do, and they need to manage expectations where these are unrealistic. In cases where they are possible they could guide the individual into what actions would be helpful for that MP or peer to take to make their appointment more likely. Proper mapping of wishes and skills might find many MPs and peers will be able to have a job they would like and is suited to them. Not all MPs want to be Ministers. Some want to be Select Committee Chairmen, or Deputy Speakers, or strong minded backbenchers. In my time as an MP I have only once been asked what job I would like to do. I made three  suggestions. I was never told why I did not get any one of them!

The second thing that is required is better management of Ministers in post. I put in place a system of regular meetings between directly reporting Cabinet Ministers and the PM when I advised Margaret Thatcher. I felt it was important that a senior Minister should hear from the PM about what she wanted to see and what she thought of his department’s work, and that the Cabinet member should get a private opportunity to criticise what Number 10 was doing, or to ask for more help, or to warn where things might be difficult. I wanted to make sure there were no surprises either way. The PM needed to know the truth about the big picture in each department, and the Minister needed to know if he was supported or was expected to raise or change his game.

Cabinet Ministers should do this for their junior Ministers. I worked closely with junior Ministers when they reported to me, using a system of regular  review of the progress they were making through weekly meetings and informal discussions. Cabinet Ministers should be consulted on the junior Ministers   reporting to them  before they are reshuffled.

The third thing  that would help is to do more to mentor and train Ministers. There should be a  course for those who want to be Ministers which most MPs could take whilst hoping for preferment. This would cover the law as it applies to Ministers, Ministerial powers, collective responsibility, handling the workload, managing the diary, relating to the public and media and working through Parliament. Doing the course would also  be useful to MPs seeking to hold Ministers to account. Completion of it would not guarantee  promotion.

The fourth thing is to manage retirements or “resignations”. Where the PM wishes to get rid of a colleague they should  be given warnings of what is expected of them and what they need to improve before being sacked. If Ministers understand that positions generally are 2-5 years in length there should be no shame or bad briefing if their tenure is terminated, as there can be no automatic right to promotion.  Some people will do a good job as junior Ministers for a period of years, and should be allowed to retire from the Ministerial role with thanks for their service. Entry into the Cabinet needs proof that the individual has a wider political pulling power, support within the Parliamentary party and the wider public,  a strategic sense and an ability to manage a large organisation, amongst a range of requirements.l

Today I want to concentrate on the narrower definition of the nation’s debts – the £1300 billion of official borrowing in the name of the nation that gets measured in the international comparisons, some 80% of GDP. This excludes the  public sector pension deficits, the semi nationalised bank liabilities and the private finance guarantees.

80% of GDP is a comparable level of indebtedness to Germany, the USA and France, and well below Japan. Markets are getting used to highly leveraged states these days.

29% of this state debt is now owned by the state. We have bought it back from the people who originally lent it, using created electronic money from  the Bank of England. It means as of today we only owe 57% of our national income in this core borrowing.

I raise this because we have ahead of us a decision to make about what we do with this self owned debt. Currently we pay ourselves interest on it, and recoup much of that one way or another. The Bank tops up the amount of government debt it owes as repayments come due. There are three main options from here:

1. Sell the debt back to the private sector, destroying the created money as we do so. This would drive interest rates higher, improve the position of savers and worsen the position of borrowers, and would lead to a monetary tightening. This seems an unlikely course of action for the authorities to pursue any time soon.

2. Stop replacing the debt we owe as debt is repaid. Over a period the state holdings of debt would be run down, and the Bank of England balance sheet gradually deflated as this happens.

3. Cancel the debt as we owe it to ourselves, creating an accounting transaction to sort out the Bank of England balance sheet when this happens.

Which of these would you like to see happen?

Many parts of the private sector are being changed dramatically by digital technology. If you want to buy a house you can now visit a range of properties on line and see their floor plans and their inside and outside appearance from your home computer. If you want to buy any good or service you can google it and see a list of competing offers, usually with prices. You can order on line from your armchair. If you want to find a new job there are electronic jobs boards with choices of openings on offer. You can bank online, insure your car on line, undertake a study course on line. The opportunities are endless. The role and nature of the estate agent, the insurance broker, the bank clerk and the employment agency have altered substantially.

As a result of all this change the private sector is rapidly having to adjust its staff and property to accommodate the new way of doing things,. Will we need a many shops when people shop more on line? How many bank branches and insurance broker high street outlets do we need when more is done on the home computer or on the mobile on the move?  Does the Town Centre become more of a leisure and entertainment destination. with much higher proportions of restaurant and leisure facility space? I sense we have only just started to see wide ranging changes this technology has unleashed.

The public sector has been slower to adopt the potential of this technology. Education is still mainly conducted by going to a school or college and sitting down to hear and be guided by a teacher. Health care still mainly involves going to visit a Doctor or dropping into A and E for triage. It is true at the edges you can now renew your road fund licence on line, and can file your tax return electronically. The new Universal benefit system is a massive investment in new technology to deliver people’s state financial support.

Today I am inviting you to comment on what new applications and changes you would like to see in the way we deliver the main public services. If we can no order our food shop from our own living room and pay all our bills from our phone, what more could we do in this way when meeting government requirements or accessing public services?