English nationalism is not defined by attitudes towards other parts of the United Kingdom. Indeed most English nationalists are relaxed about belonging to the union of the UK. Most accept that it is Scotland’s call whether to stay or go from the union. The defining characteristic of English nationalism is dislike of EU power, a sense of shame or anger that a once great free country is now bossed around by the institutions of Brussels. English nationalists are not allergic to the Scottish saltire, but to the twelve stars.

It is true that English nationalists now think the deal within the UK union is unfair on England. They want as much self government for England as Scotland enjoys for Scotland within the union of the UK. They want a fair financial settlement between the differing parts of the UK union. They either want English votes for English issues, or a new English Parliament.

All of this argument is second order compared to their overriding wish to be rid of EU interference in our law making, budgets and general government. A true Scottish nationalist wants for Christmas to be free of London control. A  true English nationalist wants to be free of Brussels. Eng,lish nationalists also want their country to be allowed to exist, instead of continually wiped from the Brussels version of the map. The aim of balkanising England into unloved regions has been defeated. Now we need to rebuild England.

          Coming to this blog for the festive season:

A modern fairy story,   “Dave, George and the magic lamp”

and the latest leaks from the heart of government, as we discover what Dame Lucy and Dr Roy are up to.

What else do readers want to hear about?

             We saw yesterday that the OBR forecasts a gently rising recovery from here. People’s real incomes will go up modestly, share and property prices will rise  a little, more people will get jobs.  The trouble is the OBR have been too optimstic before about this economy.  It would be wise for the government to take more action to try and ensure a faster recovery, and head off more bad news and downgrades like the ones we have experienced for the last two years.

              I want people to be better off. I extend that wish to people at all income levels.  Lower tax rates could help. So too could a faster rate of economic gr0wth, generating better returns for savers and higher incomes for those in work. Breaking up the state banks, writing off bad debts to speed the day when the banks have good enough balance sheets to lend more against decent projects, is central to making progress. A new generation of would be home buyers and entrepreneurs are being denied access to proper credit facilities thanks to past errors, weak bank balance sheets and now super prudent regulators who cannot resist getting the cycle wrong both ways.

             I do not wish to hit people on low incomes by being mean on benefits for those who need them. The government is right not to hit the pensioners and the disabled with increases in pensions and benefits below the level of price rises. I have no wish to cut important public services. I do, however, think the government is correct in saying it must get the deficit down, and make progress in limiting the build up of debt. The Opposition too agrees with this, though there are still rows over timing and extent.

            So how can you square the circle? The answer surely is to be generous to those in need, but to be firmer over eligibility for state help. Many of us wish to be generous to pensioners, so maybe as longevity rises so we have to make further increases in the age of retirement to help balance the books. A 60 or 65 year old today is on average fitter and likely to live considerably longer than the equivalent twenty years ago.

             We should speed the moves to control our borders better. We should not extend out of work benefits to people who recently arrived in the UK and are not UK citizens. If they come here under the free movement of workers they should not be entitled to out of work benefits for doing so. The availability  to  work test should be applied to ensure that those who can work do work when work is available.

               The introduction of a high cap for housing benefit in understandable, as the government does not wish to destabilise families living in dear to rent homes . There could be a much tighter cap for new claimants.

                The UK could have a couple of years off from meeting the 0.7% target for Overseas Aid whilst we are sorting out our large budget imbalance. There are still items in the Overseas Aid budget that do not represent value for money, or further the noble aims of relieving poverty and disease in the poorest countries. Mr Cameron could dig deeper over the excessive contributions  we currently make to the EU budgets. Why not tell them we do not wish to contribute to the EU regional aid and agricultural programmes? it would be cheaper to do our own.

              There is universal acclaim for more public capital spending. We need to remember that these are often growth projects, which then need revenue finance to keep them running once built. When trying to reduce public spending, you do need to limit new capital works. If we gain better control over our borders then we will cut the need for extra schools, hospitals and social housing, which will represent a substantial saving to the taxpayer.

              Let’s have lower more competitive tax rates, better working banks, and more realistic public spending. Then we could match or probably exceed the OBR’s forecasts for rising incomes and a more successful economy.  Some seasonal cheer is better than more gloom about austerity.

          The briefing that we are in for several more years of Austerity Britain was curious.  How does this square with the more optimistic forecasts from the Office of Budget Responsiblity, the official forecaster?

          The official forecasts do not think we are in for more years of austerity. “Whole economy earnings” grow at 2.6%, 2.2% and 3% in the three years up to the election.  Wages and  salaries rise by more than inflation this year and in 2014-15,  and go up by 2.5% in the middle year when prices are forecast to rise 2.6%.  In their graph the OBR shows real wages increasing   just above zero next year, rising to a 2% annual  gain by 2015. The OBR forecasts rising share prices throughout the period and small rises in property prices. There are too many people in the UK on low incomes, and have been for many years. At least the forecasts say more will have jobs and wages will start going up.

            Current public spending rises every year in cash terms, and public sector investment spending also rises next year and the year after. The OBR confirms that in the period Quarter 4 2011 to Quarter 3 2012 the public sector has grown overall in real terms, contributing 0.4% to total economy  growth, which came in at just 0.3%.  They forecast small real declines in public spending hereafter, but that of course depends on how inflation turns out.  With a pay freeze in place, if it were effective, the cash rises in spending should allow some growth in service provided.

           The OBR forecasts 1.2% growth next year, 2% in 2014, 2.3% in 2015, and higher rates in the following two years. All this could better be described as “gently recovering Britain” rather than “Austerity Britain”. The number of jobs has outperformed their past forecasts by a wide margin, which is the one bit of good news.

           The issue, however, is will these latest OBR forecasts be any more accurate than the ones they issued two years ago?  Now they have slashed the 5 year growth figure from 13.2% for 2010-15, to under 6%, maybe they have cut it by enough. They do, however, still offer us the same profile of growth as before, with the fastest growth forecast for the latest years of the forecast. As the OBR say in their document  “A key risk is that potential output turns out to be lower at the end of the forecast period than we currently assume”.

            Indeed. The OBR’s gently recovering Britain could become  Austerity Britain again, if inflation is not controlled, and or if output does not expand as planned. We need more growth and faster growth. The aim should be to help many more people enjoy rising and higher living standards.

           I will look tomorrow at options to accelerate growth more, to make it less likely we have another disappointment.

The politics of the Autumn Statement once again are about fairness. The Coalition points out that under their plans the top 1% of earners will pay a quarter of all the income tax, and the top 5% of earners will pay 45%, more than twice their share of the income earned. The Coalition has raised taxes on the rich by more than taxes on other income groups. Labour says this is not enough, the richer people should pay more.

The Coalition counters by pointing out that the higher rate of Income Tax aimed at the top earners has so far caused (or coincided for those of you who still deny Laffer) with them paying much less total tax, a blow to a Treasury in need of more income to pay all its bills.

The Autumn Statement also reveals that since 2007 average earnings for those in work has risen by 20% (in cash terms – not real) whilst benefits for those out of work has risen by 24%. The Coalition as a result wishes to limit future rises in out of work benefits to 1%, likely to be below inflation. Labour is not sure it will support this, and asks to see the small print as to how many benefits are affected and if some of them are paid to people in work.

The best way to get the benefits bill down is to get many more people back into work. The UK state is still spending too much. Economic success will produce a more affordable state, and a more affordable state is necessary for economic success.

The latest forecast for the UK economy thinks there will be growth of around 6% for this Parliament, compared to the 13.2% the OBR forecast in June 2010. They attribute the worse performance largely to the weakness of the European economies, and slower growth world wide.

As a result of the slow down, they now forecast tax revenues some £50bn a year lower in 2014-15 than their June 2010 forecast. I have long argued that the forecast big surge in revenues looked problematic, especially given the higher rates. The Chancellor confirmed with some arresting figures in his Statement that the 50p tax band has cost the Revenue £7bn of tax income, as rich people have gone elsewhere to earn.

Total additional borrowing for the five years now comes out at £565 bn, not such a bad figure as feared. It is lower thanks to the large savings on interest payments, now amounting to savings of over £30 billion over the planned period. This compares with original forecasts of £451 billion extra borrowing this Parliament in the June 2010 figures. The extra borrowing has been brought on by loss of revenue. The higher spending forecast in 2010 is staying close to the original budgets.

Future growth rates depends crucially on changes in credit and money in the private sector over the next year or so, and over demand levels which will be affected by inflation. The future growth rate will be strongly influenced by progress in mending or bypassing the commercial banks. I will keep you posted of progress.

The best boost the Chancellor could give to the UK economy would be cheaper energy.

Uk energy is too dear for much of industry. As a result more goods are made abroad where it is cheaper, rather than here. More energy intensive industry is contemplating closing plants, or putting its new investment elsewhere. The government says it wants more manufacturing in the UK. It needs cheaper energy to encourage it.

UK energy is also too dear for consumers. As we experience a succession of cold winters, people need some relief from dear energy so they can keep warm at home and still have some money left over for discretionary spending. Cheaper energy would provide a boost to spending and therefore to jobs. It would come as welcome relief especially to people on lower incomes who see too much of their money gobbled up by energy bills.

The Chancellor needs to persuade the Energy secretary, Mr Davey. We want more exploitation of the UK’s gas and oil reserves. It will take more gas fired power stations. It means allowing shale gas recovery. it means a tax regime for our energy reserves that promotes more production.

Maybe Mr Osborne is now able and willing to do this. He should say “Drill Davey, drill”.

As politicians and some in the media work the country into a frenzy against tax dodgers, please spare a thought for all those politicians and commentators arguing for more tax breaks to promote good works, more gr0wth and healthy lifestyles. One man’s tax dodger is another man’s prudent individual taking advantage of strongly recommended tax breaks which have been carefully honed by government.

Some people pay less tax because they give generously to charity, some because they are making accelerated savings for retirement so they will not depend on benefits and taxpayers in their old age, some because they are investing in places and causes approved by politicians, some because they are lending their money to the government to spend on public services. Most people take action to avoid tax. If you have to drive into central London, if you do so before 7 am you avoid the Congestion Charge. I do not have a tv in my London flat in order to avoid having to pay a second BBC licence fee. If you do not smoke or drink spirits you avoid large amounts of tax on alcohol and tobacco. If you do not move home in recent years, you avoided the large Stamp duties now imposed. Tax is taxing. Tax has a direct and visible impact on what you can and cannot do. Tax is often designed to stop you doing things. In other words many taxes are designed to encourage you to avoid them.

The UK’s problem is not that we pay too little tax. It is that the country produces too little for its ambitious plans for public spending. We need to produce more to make our current level of spending affordable. The problem is our current level of tax gets in the way of growing the economy faster. As a country moves to taxing too much, as the UK is doing, so governments have to find more and more ways of getting more and more money out of the same people and companies . There is always the danger that more tax will put people off earning so much, or drive them to live or work in another country.

In the UK the motorist is one of the favoured groups to pillory. Many politicians make motorists out to be some kind of special group of planet wreckers and anti social people to start with. Out of taxed income a motorist now has to pay tax to buy a car, tax to keep the car on the road, special taxes to drive in London or over certain bridges in the national network, tax on the fuel in the vehicle, and car park charges in state owned car parks and to park on the state provided highway which he or she has already paid for.

If the government wants to stop people avoiding tax there is an easy answer. They should legislate for simple flat taxes, and abolish all allowances and tax breaks. Out should go the exemptions for charity, for pensions saving, for prime residences, for certain kinds of investment, for National Savings and all the rest. In should come lower tax rates that apply to us all however we choose to spend our money.

I doubt the government would want to do this, as each tax break is defended by armies of supporters and media commentators. In which case, isn’t there a danger in all these witch hunts against people who are just good at using the large number of legal loopholes and taxbreaks to pay less tax?

In recent years a depressing cry has gone up for more regulation of anything that goes wrong. Often the things that have most let us down are already heavily regulated. Then the cry goes up for more regulation, and different regulation.

Too many people seem to believe in the perfectibiltiy of man and woman, as long as they are strictly controlled by tough regulators. If we have more regulators banks will no longer lend too much and go bust, financial service businesses will no longer offer products which lose people money, journalists will no longer get stories wrong, employers will no longer be unfair to employees, trains and cars will not crash, people will not slip up on icy pavements. The list of wrongs that can be righted and accidents that can be avoided gets longer by the day.

Every disaster understandably brings forth a “Something must be done” crusade. Ministers of all parties solemnly tell the Commons that action will be taken to make sure it will never happen again. That tendency of human nature to make mistakes, to do things too casually and come unstuck, the criminal tendency to be greedy at others expense, will be miracled away by a new and enlarged generation of regulators.

All of us have long agreed and accepted that there are some types of conduct which are unacceptable. We make these offences under the Statutory criminal law. Businesses must not kill their customers. Commerce has to use fair contracts to supply goods and services. Theft is a crime. Most of the things that go wrong and most bug us are already crimes. They are therefore already under Statutory regulation. We more often have an enforcement problem than a shortage of rules and laws. We all want to know that if a major food company supplied food that poisoned us, or if a public transport company drove us recklessly on train or bus making an accident very likely, there would b e criminal sanctions against the management and perpetrators.

The Regulators come in both to buttress the police in enforcing the criminal law, and to impose a whole series of rules or mini laws on practitioners governing matters that fall short of being crimes. Before allowing such regulators access to our wallets and free rein over competitive busiensses, we need to ask what value do they add?

It is possible that allowing regulators to ask many questions of businesses, and to demand certain practices of businesses, they might cut the incidence of crime, or turn evidence of crime over to the authorities more quickly. It is more often the caee, however, that potential crime is unearthed by customers who report it. They could equally well report it to the police as to the Regulators. Regulators in general can be an expensive and cumbersome way of strengthening the police force and the capacity of the police to tackle business crime.

The main preoccupation of Regulators becomes the encouragement or imposition of best practice on their captive industry or regulated groups. This may ensure some of the poorer performers in the profession or industry do a better job. It also may limit innovation, prevent some from experimenting with better answers. It can ensure the errors of the majority are enforced on the majority. In Statutory financial regulation we saw this in the period 2000-2007 after its introduciton in the UK. The Regulators bought the common thesis of the day that new ways of spreading risk made massive gearing safe. They not merely allowed it, but helped spread the damaging doctrine.

We do need to ask who regulates the regulators. Parliament should do this. In its current mood Parliament is not that willing to question the need for so much regulation, its wisdom, or its consequences. Not all regulaiton is good. Much of it is wasteful. Some of it is positively harmful.

The EU is changing its attitude to regional and provincial government. It used to see it as an ally in attacking the powers of the member states. The EU offered more powers to the regions as it took more powers to itself, acting as a pincer movement on the authority of national g0vernment. They sought a Europe of the regions.

Now the EU is becoming concerned that fostering regional power centres is getting out of control. They do not welcome the independence movements in Catalonia, Scotland or Lombardia. They are happy for regions to have some devolved powers, but they do not wish them to press their claims to the point where they rupture the constitution of a member state. The EU would not wish to renegotiate membership with a smaller Spain and an independent Catalonia. It does not want to see the richer parts of Spain spin off from the Spanish state at a time of heavy indebtedness and substantial cross border liabilities extended through the Spanish state and Spanish banking system.

Scottish nationalists assume that Scotland could automatically become a member of the EU on the same terms as the UK currently enjoys. Even if the rest of the EU agreed, there would have to be Treaty amendments, as the MEP seats, the voting weights and other constitutional matters would need sorting out between Scotland and the rest of the EU. There would have to be a deal on both the rest of the UK and Scotland’s financial contribution. Would Scotland still enjoy the exemption from joining the Euro? Would it negotiate any part of the UK rebate? The rest of the EU might see Scottish secession as an opportunity to make Scotland join on more conventional terms.

What sort of a deal could either Catalonia or Lombardia do, should they fulfill their wish to gain independence following a referendum? How could the EU be sure residual Spain and Italy could honour their debts and liabilities?

It is facsinating to see the EU now becoming an advocate of the status quo on exisiting member states configurations. The early enthusiasm for stronger regional government, which may have stoked some of the mood for independence, is now coming back to worry them.

Meanwhile the EU’s refusal to recognise England along with its continuing wish to splinter England into unwanted regions, fuels anti EU sentiment in England.