The Uk used to enjoy plenty of wage inflation. It was called the “British disease” and went with too many strikes, frequent devaluations to keep us in  world markets, permanent decline of large nationalised industries like steel, coal and railways, and  large accompanying job losses in those state leviathans. The cash pay rises were soon eroded by price rises.

After the Thatcher Union reforms and the privatisation of much of the old nationalised industry estate the extremes of wage inflation and the accompanying poor performance were eliminated. The UK entered a “NICE” period, when  cash wages rose modestly, productivity improved and former nationalised sectors like telecommunications and energy grew with more jobs being created. Real wages rose each year.

The Great Recession of 2008 changed all that. The UK lost 7 % of ts output in a year. A new era was ushered in with low cash increases in wages, and falling real wages. This was bad for the last two years under Labour and has continued at a lesser pace under the Coalition. Productivity has been weak.

Some commentators have called this the productivity puzzle. I have never thought it much of a puzzle. Part of the reason for the decline was the big losss of output, which makes companies less efficient. Many companies do not cut their workforce in line with the loss of output. Part has been the decline of North Sea oil output, a very high value added sector. Part has been the loss of high end profitable activities from the City as people have diverted high earning areas of their banks and businesses to lower tax jurisdictions in Asia, Switzerland and the low tax islands of the world in response to 50% Income Tax and 28% CGT rates.

There is one additional issue I have not so far raised, which I would like to ask about today. That is the decision of the past government to invite in up to  5 million new people to the UK over  little more than a decade. The UK has a workforce of around 30 million, so the increase in the potential workforce from large scale immigration must have had some impact on the UK labour market. More than 2m jobs have been taken by people born overseas.

Business likes the ability to recruit people from around the world, and likes a plentiful supply of good value labour. Employees of UK companies already settled here need income levels that sustain a reasonable lifestyle in one of the dearer locations in the world.

The issue is one of balance. Allow too little migration, and business might find it difficult to set up or continue here without access to the affordable skills they need. Let in too many new people, and you must depress wages and make it more difficult for unemployed people legally settled here to find a job. Part of the issue of wages is tied up in the potential supply of labour. Over the last decade the UK has had an unprecedented expansion of its labour supply, which is part of  the background to stagnant wages.

   Yesterday’s speech by the Chancellor rightly identified the need for more spending reductions compared to current plans, to eliminate the structural deficit during the next Parliament, following some reductions in this Parliament.

    The prelude to the speech was the Prime Minister’s statement that the triple lock will continue for another five years if a Conservative government is elected in 2015. This provides for an uprating of the State pension by prices rises  or wage rises  or 2.5%, whichever is the higher. As a result Ministers were naturally asked if the Pensioner benefits like free tv licences and heating allowances were also safe, and effectively confirmed they would stay.

     This leaves the Treasury with its aim of getting more of the reductions from welfare benefits having to do so by tackling non pensioner benefits. The Chancellor points out that the  big savings on pensions come from raising the retirement age, which needs to be done as people live longer.

            So today I want to ask for your opinions on what more could and should be done to curb the ever rising welfare bill? It has been going up by more than wages this Parliament, despite the fall in unemployment, as a result of upratings that have exceeded wage growth by a considerable margin, and by the continuing eligibility of a large number of people for various kinds of benefits.

           There are two big issues to consider. The first is eligibility. I would still like to see a longer time period that a new migrant has to complete before qualifying for UK benefits. I think more of the benefits should be contributory, where people have to demonstrate they have a contribution record to UK NI for a sufficient period, or have been in full time education in the UK as British citizens in the past to cover individuals who have been unable to get a job or who are incapacitated and unable to work.

           The government can also consider what range of benefits should be available to young people. At what age or point in their lives should young people qualify for state  financial and housing assistance to have a home of their own?

            The second issue is the rate of increase in benefits in payment. This government has upgraded benefits by inflation at a time when real wages were falling. Was this the correct approach?  Should benefits in future continue to  be protected against inflation?  I am not myself in favour of cutting the real value of benefits, but should there be any upper ceiling? Is a £26,000 cap fair, or is that too high?

          The BBC has been full of stories that last year was the hottest on record in Australia. That must have been a bit of climate breaking through. It has not been so full of the figures for England in 2013, which show we had a very cold spring, and an overall temperature performance down on previous years. That must have been a bit too much weather.

            The latest development of climate change theory appeared on the Today programme, with a scientist telling us there is a 20 year lag between generating more greenhouse gases and the frequency of extreme weather events. Apparently the latest storms are partly the result of greenhouse gases emitted in the 1990s, though the scientist agreed there have always been “extreme events” or bad weather. His concern is that extra past greenhouse gas means in 20 years time more frequent storms. He did not forecast future temperatures.

          Nor have we heard much about the continuing struggles of the scientists and journalists on the MV Akademik Schokalskiy, transferred to  a Chinese ice breaker. It has just been mid summer in the Antarctic. The party apparently  expected to find evidence of retreating sea ice as global warming takes hold of a once inhospitable and icy cold south. Instead they ran into record levels of ice, and the ice packed hard around their ship and then around the ice  breaker. It sounds as if the midsummer Antarctic is having a bad dose of weather as well.

           More interesting is the news that the EU is turning  against the green policies that are meant to provide the antidote to too much global warming. We read of a Competition investigation into German windpower, examining it to see if the subsidies are excessive and if  the exemptions for German industry unacceptable. This follows hard on the heels of the announced investigation into the proposed contract to buy forward electricity from a  new nuclear plant planned for the UK. Does this mean the EU itself is now no longer so concerned about greenhouse gases?

               The EU looks as if it is getting itself into the position where it places member states in an impossible situation. They are not allowed to continue with much coal or oil based generation of power under one set of rules, but are then challenged for seeking subsidised energy from dearer renewable sources in an effort to comply with environmental legislation. The UK too is going to have to look at the high subsidy levels paid for renewables.

          Energy is fast becoming the big issue which will cause electors to query their EU government, as well as condemning the actions of energy companies. The last Labour government welcomed the EU policies and put us under them. The Coalition has carried on with the EU requirements.

               Surely the message of the bad gales of the last few days is that we need to adapt  more, so that more homes and businesses are protected from tidal surges and from the bursting of  river banks.  Whatever the cause, all agree we have just had some bad weather and may well have more bad weather in the future. Where too many homes have been built on floodplain we need better drainage. Where the coast is subject to sea attack we need better defences. Where rivers can struggle from too much water we need better management  of where the excess water is run off or parked, away from homes and businesses.

            In UK politics you get used to being interviewed most of the time from the left. Those of us who believe that free enterprise can offer us more jobs, prosperity, choice, the chance of financial security through savings and pensions, are constantly made to answer questions about why we do not support higher taxes, higher public spending and more regulation of the private sector. The questions are often dressed up as wanting us to take more from the rich, but in practice the schemes require taking more from the prudent and those in the middle of the income bands as well as those at the top. They can also cumulatively act to limit entrepreneurship and divert jobs abroad.  There is an undercurrent in some  public debate that if you do not support a bigger role for the state, whatever the current size of the state might be, you are not a caring or understanding person.

             In practice most of us on the Conservative side of the argument want to live in a society where there is decent state provision for those who are unable to work to support themselves, or who are going through a bad patch in their lives and need help. The issue between the Conservatives and the two main left of centre parties is not over whether to have a welfare state or a health service free at the point of use. It is over the extent, the best way of getting value for the money spent,  the eligibility, and the best way to help more people to support themselves.

            On this site one of the refreshing things is that much of the criticism of me comes from the other side of the argument.  It is refreshing if it is fairly put and not labouring points that have already been answered long since. So today let me explore what limits I think the UK wants and expects to be placed  on a free enterprise society. I do so as an MP who has a duty to represent all my constituents and to understand where a large majority  wish to see  limits imposed on markets and freedom.

            The first constraint on free enterprise and freedom which we all agree is the rule of law. I think all accept that individuals and businesses have to work within a framework of law, that condemns theft, violence, fraud and other malpractice.  You cannot have a flourishing free society paradoxically without a system of criminal law,  and without enforcement and punishment for the minority who want to undermine a free society  by misbehaviour.

           The second demand on free enterprise is to pay some tax to provide for common services which individuals and companies would not supply for themselves – like police and defence – and to pay for welfare for those in need. I accept the UK choice and tradition that health care is supplied free at the point of use and have always spoken and voted for it. I want the country to be generous to the disabled and those in real need.

              The third constraint on free enterprise which some criticise me for supporting is to have border controls to limit the numbers entitled to come and live and work here. My main reason for this view is the existence of a decent welfare and benefits system. If we have an open door policy towards countries that have much lower incomes than the UK average we run the risk of imposing too much strain on our public finances and welfare system.  In a welfare state with reasonable benefit levels it is also important  to maximise the number of locally created  jobs that go to established residents here, to keep the welfare bills under control. In summary, I do not think you can run an open borders free labour market with the rest of the world if you wish to run a welfare and income top  up policy that is generous by world standards at the same time.

             A difficult fourth constraint is the range of measures government does need to take to prevent private interests  doing damage to the wider public interest. Like my socialist critics I of course recognise that some businesses can profit at the expense of their neighbourhood or customers. Much of the potential damage can be taken care of by a strong competition policy, giving customers more choice to avoid companies that behave badly. But it may  also require planning, environmental, health and safety and other  legislation as well to tell business what is expected and to offer some sense of security to the public.

            Again the debate here between Conservatives and socialists is not an all or nothing debate. It is a debate over how many bad things do need specific regulation or law, and whether individual regulations are effective. It is often a debate over both the total volume of these instructions, and the way some regulation can achieve the opposite of what was intended. More box ticking and form filling does not prevent financial crashes, as Labour found out to our cost.  

           Yesterday the media took me on a trip down memory lane. The past is a different country.  1984 was a year of struggle. Mr Scargill forced through a miners’ strike seeking to stop the Coal Board closing pits when they judged them to be uneconomic.  Mrs Thatcher saw the challenge as a continuing one from the Union movement to an elected government.

        It is difficult from today’s vantage point when there are different demons and tensions, to remember the intensity of the fears and worries on both sides of the Union dispute. Union action had prevented the 1960s Labour government from reforming industrial relations as they saw fit, and had helped speed the end of that government. A miners’ strike had finished off the Conservative government of the early 1970s prematurely. Finally, public sector unions brought down the Labour government of the 1970s, ending its authority and its mandate through the winter of discontent, 1978-9.  Margaret Thatcher had no wish to confront the miners, and backed down from doing so in her first Parliament as PM. By 1984 she decided there was no choice but for an elected government to make a stand against union power. If the choice was Mr Scargill dictating terms or the elected government making judgements, most people knew where they had to stand.

          In my role as her Chief Policy adviser I sought to prevent the use of troops to move coal or otherwise be involved in civil matters. I advised  to keep the Cabinet out of negotiations with the miners. The dispute had been framed by Mr Scargill, who insisted the Coal Board should have  no right to close pits on economic grounds, and by Mr Macgregor, the Coal B0ard Chairman, who insisted management had to be able to manage the industry as they judged right. I felt that if Cabinet members became involved in detailed discussions between employer and miners it could intensify the bitterness of an already very bitter dispute and lead to more muddle and threat for the country. The issue of closing uneconomic pits was not one for politicians, who rightly delegated commercial decisions to the NCB.  My hope was enough miners would see that Mr Scargill had chosen the wrong issue at the wrong time of year to inflict another defeat on the Coal Board and indirectly on the government. Instead the bitterness increased as some miners went to work and others did not.

         I was able to offer some help to the government as they sought to keep the lights on, by working with the electricity industry to maximise the use of nuclear and oil to reduce the claim on coal stocks. I  wanted to avoid a three day week or mass lay offs of people in other industries owing to a shortage of power. There were enough miners families in misery without plunging many more workers into the same situation. The sad truth of the industry was a long continuous decline under Labour and Conservative governments. 410 pits were closed between 1960 and 1971-2, mainly under Labour.

               At the end of the dispute I tried to get the government to offer the miners the right to work a pit the Coal Board claimed was uneconomic for themselves, as I was suspicious about some of the pits the Coal Board wished to close. I wanted a magnanimous aftermath. John Moore the privatisation Minister worked up some proposals but they got into the press before they were fully thought through or cleared with the PM, so the whole  idea was lost.   It was not until I was in the Cabinet myself that I was able to help one group of miners do just that, at Tower Colliery. They demonstrated that free of Coal Board control it was possible, at least in their case, to run the pit for longer .

           During 1984 I offered Mrs Thatcher direct advice on a wide range of domestic topics, sending her papers to help with each day’s meetings when she was in London. . It is curious that the  memo I wrote which has excited attention was not designed for the PM herself, but for the Policy Unit members. It was a fairy tale version of what I thought would happen to the Stock Exchange once the government told them they needed to reform themselves and remove their restrictive practices. The official advice I gave on the topic does not seem to have seen the light of day, probably because it was  not  written mainly  for fun as the fairy story had been.

         Peter Oborne in his column  has referred to the absence of a piece of advice on the main privatisation programme. The principal paper which got Mrs Thatcher interested in a substantial programme was retained  by her and not filed with the official papers as she liked the paper I wrote and wanted to keep  it as a reference. It has found its way into the Churchill College archive in Cambridge directly from her own papers. There was plenty of other advice offered by myself and other Policy Unit members on the general privatisation programme.  but that will need researchers to find it amidst the voluminous papers of a busy government.  

          I see that in Scotland there is criticism of so called “secret cuts” to the Scottish block grant. There were no secret cuts. The Treasury proposed a cut on  the grounds that Scotland got favoured treatment, which the Prime Minister rejected. The Scottish block grant that was agreed was reported and debated fully in the normal way!

The Prime Minister’s favourite phrase is that we are in a global race.  It’s not a phrase I would have chosen myself,  as images like this can bring in irrelevant or misleading thoughts to people’s  minds. However, his phrase does get across two very important truths which do have a big bearing on our situation. I support the intentions behind the use of the saying.

The phrase reminds us that if we want to carry on enjoying  the first world living standards we are used to, we have to compete successfully in the global marketplace. It reminds  us that the world does not owe us a living. There is no global social security system to top up our incomes to the levels we want. We have to earn our lifestyle in an increasingly competitive world market.

The message is usually tempered by more positive and helpful messages, and needs to be.  If we are all in this race, people need reassurance that the government will be on their side and will help them to win it. The purpose behind policies to promote better schools and better training is to equip more of us to find productive employment at better salaries so we have a better lifestyle.  The idea behind welfare reform is to ensure people who cannot get jobs are looked after, whilst there is a better incentive for the many who are capable of work to get a job and contribute to producing the output the nation needs to earn its living standards.

The Prime  Minister has been especially active in helping the business community to export. He has led the way in showing the opportunities in the large Asian markets, at a time when the UK’s traditional goods markets in Euroland have been under pressure from falling demand. He wishes to get across the need for the UK to widen its base of goods and services for sale, and widen its markets abroad so we  tap into the faster growing emerging economies.

The problem remains that the UK’s ability to compete properly in  this global race, particularly in the production of goods, is being impaired by high energy and other costs imposed by the EU government as well as by domestic policies adopted in the previous decade. The UK is also having to battle against heavy handed but unsuccessful EU regulation of services  pushing more of the UK’s success story in global markets offshore from the EU.

The UK also suffers from the political attacks of those who dislike any success. Now the economy is recovering critics are out and about condemning the rise of London, disliking the recovery of financial and business services, and objecting to any house price rises.

      Today’s guest editor of the “Today”  programme produced a series of items where she required the interviewee to speak or sing or recite poetry as they wished to get their points across without the tedium of having to respond to a probing interview.  This might have been interesting if the items chosen had shown range and different viewpoints, or if normal journalism had required a right of reply or an alternative voice to follow the monologues. Instead we were treated to a series of  her prejudices.

          Government was given no right of reply for alleged torture in a past decade, nor was it cross examined to see if it were true and why it happened. No-one was asked to make the case for running the risk of some soldiers being badly injured because the national or international interest required military engagement and more lives could be saved – and I speak as one who has often opposed us using military force as often as we do.  No-one was brought on  to expressly make the case for the City of London and the tax revenues and jobs it brings after a piece knocking it. Instead the Business slot had to be taken over in a poor attempt to provide a little balance.

             I doubt if any Eurosceptic or free marketer will be offered  a Guest editorship to provide some balance to PJ Harvey. If they were I trust they would wish to observe the rules on balance, and would interview people who disagreed with them to explore their different position, and would submit themselves to independent interviewing by a professional journalist. This was a new low for the Today programme.

How would sharing and trading more electricity with the rest of the EU help us, when all the EU is under the same regulations insisting on dear power? I could understand how importing electricity from the USA would help, if only we could build a long enough interconnector and if they were willing to sell at their cheaper prices, two very unlikely developments. Having the chance to buy more dear European power from the continent will not solve our problem. It would also be good to produce our own power, as that way we minimise transmission losses and maximise jobs at home. The problem Mr Davey is not a lack of a European market, but the presence of EU laws which drive the price of power too high.

      We need to deal with the big lie of the federalists, that the EU supports or creates 3 million jobs in the UK and the single market is an enterprise friendly job creating bonus to us.

       The single market may have started out as a well intentioned project to allow freer trade between EU member states, but soon became a power grab by regulators and governors out to limit and control economic activity from the Brussels centre of the emerging European government.  The lie of the 3 million jobs is so obvious that it is amazing how many commentators and media interviewers still allow the dwindling band of Europhiles to trot it out as fact.  If the UK was not in the EU we would still be exporting to the continent, because they would still want to export to us and would have to reach a sensible arrangement on terms and tariffs. It would also be regulated by international trade rules anyway, preventing retaliatory tariffs and other impediments to trade.

           Worse than the lie is the deception over the single market. The EU’s economic and business rules now have destroyed and will destroy a large number of jobs in the UK. They do so by four main routes.

1. The imposition of physical quotas or restrictions on what the UK can produce. Thus we are prevented from producing all the milk we need, British b0ats  are prevented from fishing above a certain quota, and we are limited in how much electricity we can generate from carbon based fuels.

2. The enforced closure of UK plants that do not meet specified standards. We are in the process of closing eight power stations owing to an EU Directive, even though these stations produce cheaper power than their replacements. The slaughterhouse industry was subject to a large number of closures under EU rules.

3. The insistence on dear energy. This is probably the biggest single job destroyer the EU has so far come up with. We are living through a closure programme affecting petrochemcials, aluminium, steel, and other high energy using industries.

4. Banning or over regulating particular products. For example,  the herbal medicines and food supplements industry and retail  has been hit by the application of much more expensive regulations affecting these businesses.

           You could have a successful free trade area between the leading members of the EU. All you need is the simple rule that if something is of merchandisable quality in country A it can be offered for sale in country B.  Thus English cheeses, regulated by the UK authorities, can be offered for sale as English cheeses in France without additional French or EU regulation, and in turn French cheeses can be offered for sale in the UK without additional UK rules. What more do we need? Customers should decide what they like, based on reading the label which should include the country of origin.