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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Bilderberger plots?

I think the Speaker was right yesterday to allow a question in Parliament about what had happened at the week-end Bilderberg group. It gave Parliament the chance to explain why MPs do not see the Group as some rival power centre or government in secret. The pity was that Ken Clarke  did not deal comprehensively with what did get discussed at the Group, leaving it to Ed Balls to remind us of the agenda of the meeting which is published.

I do not myself hold the Bilderberg group responsible for the EU controls  placed on the UK. All those have been placed there by the UK Parliament following open debate. The chains of the Treaty of Rome were  originally approved by the electors in a referendum. Doubtless many of the people who go to Bilderberg are pro EU types, as it appears  Bilderberg does not invite and welcome vocal sceptics of the EU project. As a private organisation they do not have to balance their discussions.

Ministers who attend such meetings should have to explain what they said and why they went if MPs want to know. I am glad the Speaker allowed that to happen.

The German British Forum and the single market

 

On 6th June I attended the 18th annual conference of the German British forum.  I seemed to be the one Eurosceptic invited to put a different point of view. Most of the participants expressed views which were very positive about the EU in general and the single market in particular. Most wanted to get over the message that they would like the UK to stay in, and regard staying in as crucial for our economic well being and for the trade between the UK and Germany.

There were a few Eurosceptic noises from some of the Germans. They did not necessarily like the idea of a transfer union. Some seemed to side with those in Central banking circles in Germany who do not favour monetary looseness and adventurism. All seemed to think the single market was good for them and necessary for us.

I sought to explain to them why so many people in the UK are no longer happy with our membership of the EU on current terms. I explained the strong feeling that we need a new relationship with the EU without all the rules, regulations and qualified majority votes. I had to accept some of the usual unfriendly comments from a couple of  UK participants.

I stressed that  we do not see the single market as crucial to our trade with Germany. Indeed, I am sure they would want to keep selling us their BMWs and their Mercedes, so a way will be found to facilitate trade between us, even if the UK voters vote to leave the EU. The UK has no wish to impose tariffs or barriers against German cars or other products. Indeed, it would be against international trade rules anyway, even if the UK were outside the EU. We assume Germany would not wish to block our exports to them.

I take an optimistic view about modern democratic Germany and assume they would have no such wish. I asked them at the meeting  to tell me if  they would want to block our trade. None signified they would. There is the added security from the UK point of view that they sell us more than we sell them. Eurosceptics should unite to explain to voters that there is no threat to our trade with Germany if we seek to renegotiate, or if the decision is taken to leave.

I went on to explain why  many of us no longer believe the single market is the guarantor of our trade or prosperity. The idea of free trade around the continent was never fully implemented. Instead the single market brand was used to introduce a very wide range of  new laws and regulations. It means that UK companies have to accept all these requirements, even for good solds in the UK or to non EU countries. Sometimes these EU rules make us less competitive or get in the way of selling elsewhere. The dear energy the EU is imposing is especially worrying, at a time when the US and Asia is benefitting from much cheaper energy supplies.

The single market has also been stretched to give the EU control over our borders, immigration policy and even over parts of our welfare and benefits policy. This is making the single market the problem, not the prize. UK people do not want the EU interfering in these matters, and do not see the benefit from the interference.

Free votes

 

I do like the idea of more free votes. I explained yesterday why allowing free votes or encouraging more independence might make it impossible to construct a budget, get through tax increases or spending cuts, and do other unpopular things. There are many other issues where free votes are possible, because the outcome is not central to a government’s task or do not knock on to other policies and concerns.

Traditionally Parliament has most free votes in so called matters of conscience. These are issues where the splits are not on party lines, and where either result can be accommodated without wrecking government policy generally.   Parliament has kept the death penalty off the Statute books by free votes. Criminal justice can continue with or without it. Parliament has free votes on matters like gay marriage and abortion, where religious and  other beliefs are often passionately held and not on party lines.

This Parliament, with a Coalition government, poses the question of whether there should be more free votes on matters like the constitution. Given the level of rebellion on the issue of a referendum on the EU, the decison to whip the vote on the Conservative side did not have a great deal of traction with the Parliamentary party. Now the party is to be whipped to vote in favour of the Referendum Bill. However, you can also argue that big questions like the nature of the voting system and whether Scotland stays or leaves the Union are ones where a serious party of government should have a unifying position which most of its MPs can accept.

I would like  more free votes, but accept there do have to be sufficient things a party of MPs can agree so it can  be a governing or opposing force with some coherence on many issues that matter. The secret of leadership is finding those things, and offering free votes where unity cannot exist in good time. In a Coalition by definition there have to be more free votes for backbenchers.

Rebel votes and the whips

 

It is popular here to decry the whips and to claim that no MP should ever vote according to the whips’ wishes. Let me explain why I do not agree.

People in the UK usually vote for candidates representing the major parties in General Elections. I am not looking for a further debate on which parties are now the main parties!   Most independent candidates receive very few votes, and only rarely in a special circumstance is an independent elected to Parliament.

People understand that Independent MPs may not be able to achieve much. If they wish to propose something, no other MP may be willing to second it, let alone 325 find another MPs to support it to get it through. Many people wish to influence which party governs, and understand that there needs to be some party discipline to conduct a government. An independent candidiate is also unable to say how they will vote on most of the issues coming up before the Parliament, as they will not be making the proposals and will have to respond to what the main parties decide to table as government or Opposition motions. The main Opposition party has 20 days of time in Parliament they can fill each year. The government controls the rest of the time.  An independent has no such luxury.

More importantly, to be able to run a convincing government, Ministers need to be able to take decisions with reasonable certainty that the majority party will support them. Good Ministers consult widely with their MP colleagues before committing themselves, to avoid unpleasant surprises. The whips are two way communicators. Their role is not merely to tell MPs what the government would like them to do, but also to tell government Ministers what backbench MPs are prepared to do. A wise Minister does not rely on the whip to get through anything he wishes to do, but does expect the whips to help and to exert some influence, especially when the Minister has to do something which is right but not necessarily popular.

Any good party based MP will mainly vote for his party’s whip. He or she will do so because quite often the votes will be supporting things that formed their common platform at the election, or reflect their common principles and wishes as a party group. Sometimes an MP will do so on the law of averages. They may not have chosen the policy themselves, but accept all parties are coalitions where there has to be some give and take. An MP may vote for policy A which he is not keen on, to help secure a majority within the party  for Policy B which he does like.

A good MP will also rebel against  the whip where he has good reason to do so. Good reason can include a strong constituency interest that is damaged by the g0vernment or Opposition Policy. It can also include a wish to stick to Manifesto or election pledges if the MP thinks the leadership has wrongly departed from them, or to oppose matters which have come up since the election where the MP thinks the leadership has not been true to the principles of the party. An MP should certainly vote against the party whip where he or she has promised to do so by differentiating his personal manifesto on an important matter at the time of the election. I, for example, promised my electors to vote for an EU referendum in this Parliament, so I have done so  against a 3 line whip.

This Parliament has been a much more rebellious one than usual. The main reason is many Conservatives, elected on a Conservative Manifesto, have often not felt willing or able to vote for Coalition policies that are different from the Conservative policies candidates campaigned for and MPs believe in.There has also been an understanding on matters like the budget that Ministers have to be allowed some leeway, and you do have to vote through a budget for good order, even if it is not always the one you would have liked. A Parliament full of independents who all wanted to increase spending on their pet projects and never wanted to vote through a tax increase would not permit good government. It might be a way to speed us to national bankruptcy.

 

 

 

What else can the government do about house prices?

 

 I understand the critics of the current government Help to buy scheme, who think more needs to be done to lower home prices. Yesterday I was seeking to explain the thinking behind the government’s policy, which is enabling more younger people to buy their first home.  Sometimes it pays to understand where people are coming from when you disagree with them. The recent buyers  then, of course, have an interest in prices staying up. It is a difficult cycle to break into, and all too easy from an armchair to assert you want home prices to halve without thinking about how many people would be put out of work or into bankruptcy by such a move.

 One of the reasons homes are less affordable today than twenty years ago is the much costs of purchase. Successive governments have seen house buying as an easy means of collecting more tax revenue, by increasing Stamp Duties. It is another case of government taxing something they believe is a  good, with perverse consequences. If government wanted to do more about affordability, a cut in Stamp Duty would help.

At the very least they could consider only charging the higher rates on the amount over each threshold. So the 3% duty would not be charged on the whole transaction of a £300,000 property, but just on the £50,000 above the threshold. The problem with the current system is it creates a series of prices just above a duty rate threshold that cannot function as market prices, because people refuse to pay so much extra tax for a modest change in the price of the property.  If you move from a £250,000 to a £251,000 property you face a bill of an extra £5000  in duty, five times the price rise. If you are nearer the top end and move from a £2m property to a property just over £2m you face a total duty bill of £140,000 instead of £100,000.

Another reason is the fast rate of migration into the country, placing considerable pressure on the available housing stock. Under Labour the build rates were below the rates needed to keep up with the rapid rate of migration. The Coalition has brought net migration down by a third and plans further cuts, which should help ease the housing situation.

The build rate for new homes has been disappointing over the last decade. The government has taken action to allow more housing development. In hard pressed Lodnon, where considerably more space is required, there is a more permissive regime to allow high rise blocks of flats for private rent and purchase. There is also considerable work putting in basement and roof floors into the typical terraced housing in  many a London  Street, which allows more flats and maisonettes in each property. As someone who works some of the time in London and has a bedsit there, I am all in favour of more development in the popular parts of the city. Next to my flat they have just knocked down the old building of the government  offices of London – a good sign in itself – and are replacing it with a taller block containing  flats. That is good news.

A free vote on Syria

 

        I was delighted to learn this morning that Conservatives will be offered a free vote on any intervention in Syria. Many Conservative MPs are apprehensive about any plan to arm and train rebel fighters, or to contemplate western military action in this deeply damaging regional war.

The house price conundrum

 

Some people say we could solve our economic problems if the authorities engineered a house price collapse. They argue that current house prices, especially in London and the South-east, are too high for many to afford a home of their own. Those that do afford the rents and mortgages are left with too little money to sustain demand elsewhere in the economy and to enjoy a decent lifestyle.

We have just lived through a period of falling house prices in most of the UK as a result of the Credit Crunch and mortgage famine. Far from stimulating demand on other things, this just added to the lack of confidence in the economy, and removed income from the system as the housing market contracted. Whilst high home prices undoubtedly make  families struggle to afford a home of their own, they can also stimulate the income of others in the housing market. For every  new buyer suffering from the high price, there is a seller who may be trading down, taking a profit or benefitting from an inheritance, who should have more money to spend. Most especially they swell the government coffers from higher tax revenue on the transactions that do take place.

We have very high home prices in parts of the UK thanks primarily to the very easy credit conditions of the Great bubble prior to 2007. Banks lent ever higher multiples of earnings to purchasers. Banks willingly extended credit to property developers and housing companies. We also have high home  prices in the expanding parts of the country because demand from new migrants into these areas has outstripped the increase in supply of homes. This has been most pronounced in London, where the street pattern and dense existing development limits the scope for extra building. Some of the overseas demand in the centre has driven up  prices to levels UK taxpayers are unable to afford, both thanks to the devaluation of sterling and to Non Dom tax status.

I agree there is a problem of affordability for potential new homeowners. The average age of buying a first home has risen a lot in the last decade. The government is responding by making more money available to banks to on lend as mortgages at low interest rates, and by launching its Help to Buy scheme. Critics say this is stoking the bubble. I do not think deliberately engineering a further crash in home prices would be helpful. It is not just the mortgage banks it would disrupt who have lent against higher values, but also the many individuals who have bought at high pirces in recent years. Their confidence and even their solvency could be undermined by such a move.

 

Can we remodel the Middle East?

 

          The US and UK government passion to intervene in the Middle East was spurred by the murderous  events of 9/11. The US decided to hunt down their enemies, concentrating on Afghanistan. It was only much later that they realised their main adversary had moved to Pakistan.

           A theory sprung up from neo Con circles that NATO could influence the Middle East for the better, toppling a bad regime here, supporting rebels there, to nudge or force more Middle Eastern countries to adopt western style democratic governments. Mr Bush was keen on this approach, persuading many in the UK establishment including Mr Blair to back him. The UK, ever mindful of the need for the “special relationship” with the US, went along with these developments.

           The arrival of President Obama in office promised something different.  He announced his wish to change the US position and image in the world. He said he would close down Guantanamo Bay, as a symbol of what for some had gone wrong with the west’s wish to export its values. Instead Mr Obama increased the forces in Afghanistan and kept Guantanamo open. He did, however, show a marked reluctance to get involved in Libya, is stalling over Syria, and has now set a timetable for withdrawal from Afghanistan.

            The west has discovered that aiding and stabilising democratic regimes in various Middle Eastern countries is difficult. The Syria case has also brought the west into confrontation with Russia, who backs the Assad regime.  The west would be wise to withdraw from Afghanistan and return to diplomacy, trade and cultural links. There is no evidence that further m ilitary interventions can create happy and stable countries by the use of force from without.  It is difficult to see how the UK’s national interest would be served by intervention in Syria.

Let’s end our involvement in Middle Eastern wars

Time was when we intervened militarily we were defending a trade route to India or seeking to keep open the Suez Canal. Those interventions had mixed outcomes, but at least there was a defined UK purpose for them. Today we intervene because we think we should back some factions in a civil war, or because we do not like the autocrat in charge, without there being any express UK interest in change, and without any guarantee that the replacement will be better than what has gone before.

The Foreign Office seems to believe that we need to operate alongside the US for fear of losing the special relationship. The relationship has always been more special to the UK than to the US. After all, the US did not rush to our side during the 1939-40 crsis, when the future of democratic self government in these islands was directly threatened. It took Pearl Harbour to make us brothers in arms.

Nor did the UK’s sensible refusal to join the Viet Nam War end all military and diplomatic co-operation between the UK and the US thereafter. The US came to accept that Viet Nam was a war too far for us, and in due course for the US as well.

The Foreign Office also seems to think that to keep our place on the UN Security Council we need to be seen to be fighting wars on a regular basis. Yet Russia keeps her seat on the Security Council when she takes a very different view to the majority or to the US view. The only threat to the UK’s seat on the UN is the EU, not our war fighting practices. There has been no diplomatic movement within the UN to set the UK a war fighting target to stay on the top table. Many UN countries would be happy if we joined in fewer wars.

The UK’s stature in world diplomacy would surely rise if we did not automatically back the US, and if we fought fewer wars with greater moral purpose and more obvious military success. The Falklands was a successful campaign in a just cause which was worth fighting. Our Middle Eastern activities are altogether more problematic.

 

PS   There is a move led by Andrew Bridgen MP and Julian Lewis MP to make sure there would be a Parliamentary debate and vote prior to any supply of arms to Syria. There may be around 100 Conservative MPs, and possibly the Labour party, who take this view.

UK foreign policy has been based on two big mistakes for the last two decades

UK foreign policy is not fit for purpose. The Uk does not wish to become part of an integrated European Union with government from Brussels. For too long UK government has pretended we are not being dragged into a federal government, whilst the UK has accepted the Nice, Amsterdam and Lisbon centralising treaties. Let us hope the Prime Minister’s Bloomberg speech is a radical brak with the past, seeking a new relationship that gets us out of the common government.

Nor should   the UK   be involved in a series of wars to settle the future governments of the Middle East.

The Uk public is largely against both these major preoccupations of UK foreign policy under Blair, Brown and in part under the Coalition. The public wants a new relationship with the EU which allows trade and friendship, but gets us out of common government. The public did not want the Treaties of Nice, Amsterdam and Lisbon, but was denied a vote on any of them. The public was not happy about the Iraq war, wants our troops out of Afghanistan as soon as possible, and is strongly against any involvement in Syria.

What is odd about UK foreign policy in recent decades is both its continuity under successive governments, and its perversity in going against the grain of history and commonsense of previous centuries. The two main preoccupations of UK foreign policy prior to 1990 were to avoid any single power dominating the continent of Europe, and to intervene in the rest of the world only in support of  UK interests, especially to keep commercial routes open and free trade flourishing. These two preoccupations have been turned on their head, by a policy which has allowed or furthered EU integration under a single emerging EU sovereign, and encouraging UK military intervention where there is little or no national and free trade interest. I wish to explore the question of UK foreign policy in a series of articles, looking at past and future policy directions.

The policy of not allowing a single power to dominate the continent was  pursued for four centuries. In the sixteenth and early seventeenth centuries Spain was successfully opposed in conjunction with the Netherlands and other Protestant powers. In the eighteenth and nineteenth centuries France was prevented from military dominance, and in the twentieth century Germany was twice defeated by a grand coalition. The UK played a prominent role in each of these conflicts.

Whilst you can argue that the UK spent too much blood and treasure on preventing a single authority emerging In Europe, it does not make it a good idea to switch from such a policy to actively promoting the emergence of a single governing authority. As Europe continues with its relative decline (in population, in eocnomic and military power) the sensible response is to be relaxed about integrating moves some may wish to make on the continent, but to be clearly against forming part of any such single bloc. We should neither want to beat them nor join them.