That was quite a storm. After years of rising standards, with each year showing an improvement, we reach a year when fewer young people are awarded A* to C grades.

                Some  teachers complain that good pupils have been marked down. They say that if they had been told what the new higher standards were, they would have prepared their pupils to achieve them. They say the marking has been too tough. It was, of course, teachers undertaking the marking, with other teachers advising the Exam Boards on the papers and the marking system.

                Other teachers say it is important to arrest grade inflation. They think it had become too easy to get an A or A*. They hope this latest set of results marks a turning point in establishing and maintaining standards of achievement.

                There seems to be some uncertainty about whether the current system is trying to establish an absolute standard of achievement which stays the same year after year, or whether they wish to have a similar proportion getting higher grades each year by fixing the pass mark through keeping the proportions of the different grades the same.

                 It is unfair on those taking the exams if they do not know what is expected, or if the standards change between the time they start and the time they finish without them knowing it. It is particularly unfair if  someone needs a C or higher in a GCSE to go on to further study, and has just failed to get this through some unannounced change in the standard required.

                  A case can be made for a different approach to exams, and reconsideration of what is expected. Some older people who did O levels think a return to their virtues could help. I am not  sure. O levels required a lot of learning by rote, where the information is now easily available to anyone who wants to look it up. O levels did also require some different levels of thought and attainment from GCSE, which might be worth considering as part of a new GCSE syllabus. Some GSCE syllabuses include items which are good additions to the old O level.

                 I am myself now unsure of what is going on and what is needed for 16 year old qualifications. To do well in the 6th form students should need some basic knowledge, good skills in maths, English and foreign languages depending on their choice of 6th form course, and a capacity to study independently. How far does GCSE prepare young people for that? How could it be improved? I look forward to your views.

 

              I find it difficult to do interviews on the state of the economy. The BBC interviewers all think there have been large cuts in public spending. They want to debate the question should the state spend and borrow more to lift the economy out of recession. I always have to start with explanations of just how much extra the state is spending and borrowing. They cannot point to anyone recommending a  large figure for extra state spending and borrowing,  who thinks deficit reduction is not important. They cannot explain why so much state spending and borrowing so far has not produced the growth most of us want. Under the Coalition government  an expanding state sector has increased national output, but not by enough to offset declines in the private sector.

               I am a strong supporter of the government’s Plan A. That Plan was stated in words. It was to remove the structural deficit by 2015. 80% of the work would be  done through spending cuts, and just 20% through increased tax revenue. It would actively promote a private sector led recovery by supply side measures. That was a good plan, and would probably have worked fine. The trouble is they never implemented that one.

               The embarked on Plan B in their first budget. This kept the sensible idea of eliminating the structural deficit by 2015, but decided to do it by a huge forecast increase in tax revenues, whilst allowing public spending to rise. At the time I suggested the tax forecasts were too optimistic, as the higher rates were always likely to lead to revenue shortfalls.  I also suggested that if they simply froze public spending  for the first year, they would borrow £160 billion less over the 5 year period of this Parliament. That would have given them more leeway and help secure success. They opted for a plan which proposed borrowing an extra £451 bn over five years instead, to allow a substantial spending  rise in the first year.

               Now we are on Plan C. Plan C delays eliminating the structural deficit until 2017 or later. It is seeking to reinstate some of the cuts in public capital spending made by Labour and included  in Plan B. It recognises that revenue will be lower than forecast in Plan B. It is, if you like, a massive fiscal stimulus plan, based on borrowing  £556 billion  extra between 2010 and 2015. Latest figures imply they may well add additional fiscal stimulus to this package, as so far this year they have borrowed £9 billion more than budget. How much more borrowing do the additional  fiscal stimulus enthusiasts think it takes? Why hasn’t the huge fiscal stimulus administered by the current large structural deficit done the job?

           State borrowing is simply deferred taxation. It all has to be paid back, with interest, by taxpayers. Too much deferred taxation is as damaging to enterprise, incomes and prosperity as taxation itself. The government has increased planned borrowing by £105 bn for the period of this Parliament when shifting from Plan B (Budget 2010) to Plan C (budget 2012).  How much more deferred tax do people want?  This autumn will probably see a further rise in the official forecasts for the borrowing total.

 

              People on this site love to knock the Coalition. As host I don’t censor  your criticisms  or even censure you  for doing so.

              In the interests of democratic debate and fair presentation, I thought today I would ask if any of you did like some of the things the Coalition has done. Someone the other day said they did like the ending of the M4 Bus lane, and the abolition of Home Information packs, though they would have liked the Energy reports to have gone as well. I agree that I thought those two items were good.

              I might add that I have  liked the ending of long detention without trial or charge, the increase in Income Tax personal allowances (any income tax cut is a good thing), the cap on Housing benefit claims, the stated intention to get the deficit down, the one million new jobs which the private sector has generated so far and the veto on the new financial Treaty to stop the UK being dragged into it.  Abolishing the South East England Development Agency was also a good moment. Some of you are doubtless benefitting from the more generous state pension payments.

                  On Monday the Times published a list of 50 areas where they expected disagreement between Lib Dems and Conservatives in the Coalition. They asserted that many Conservative Ministers have come to the conclusion I advanced at the outset, that a minority Conservative government would be easier. Then  people could see which things the Lib Dems blocked in Parliamentary votes.

             However, the Times  list did not always reflect the feelings of the respective parties and made more of the disagreements in some cases  than is warranted. They argued, for example that Conservatives were against sorting out the lop sided extradition arrangements with the USA, when many of us have pressed Mrs May to do just that. They say Conservatives want to hold internet service information for police use, when many of us are worried about the impact of that on freedom. They suggest Conservatives are keen to push up rail fares – not the ones I know. They argue the Lib Dems want income tax cuts. I can assure you so do Conservatives.  They see Conservatives as resisting bank reform. Many of us have been going hoarse demanding it. The picture is more complex than the Times suggests. Their list also repeated items to make it look longer. 

           The one major area where the difference is large and important is over the EU. Several of the items related to EU powers and policies, where there is one Eurosceptic party and one pro EU party in the coalition.

 

                  The July  figures for public borrowing were disappointing.  The government borrowed an additional £600m in a month when revenues are traditionally strong. The deficit in July 2012 was  £3.4 billion higher than in 2011.

                    There are two very simple reasons why borrowing was up. The first is  a fall in tax revenues.  They collected £0.4 billion or 0.8% less than in July 2011 in cash terms. Allowing for the current inflation rate of 3.2% (RPI) this is a considerable real fall.

                    The second is the continuing growth in spending.  Current spending was £2.4 billion or 5.1% higher than in July 2011. It confirms the pattern of considerable real increases in current public spending, even after allowing for 3.2% inflation. Given the  fact that a public sector pay squeeze is in place, the real increase should be more than this implies. Government investment spending also rose by £0.6bn or 33% on the low July 2011 base.

                     If  the government keeps increasing spending at this rate, there will be too much borrowing. Tax revenues from  self assessment income tax  and capital gains tax are falling because the government has set uncompetitive rates. The Chancellor wisely changed his tax regime for oil and gas in the latest budget, following the fall off in activity  last year from higher taxes. He needs to review all taxes with a view of maximising revenues by setting competitive rates.

 

          The Housing Minister has said he thinks it is sensible to sell social homes when they become empty in expensive areas, and use the money to build more social homes in less expensive streets not too far away. His critics say this amounts to “social cleansing”, driving social housing tenants out of fashionable areas.

          If the state does  do this, it will be behaving like the rest of society. The high priced parts of central London have already been awarded to the rich  by the market. Most people paying UK taxes  even on well paid jobs are priced out of the central districts. If they want anything other than a very small flat they need to buy elsewhere, so high are house prices.

             You could argue this either way. Does that it mean it makes sense to sell social homes when they become available, in an effort to try to get the prices down a bit in these very dear areas? Wouldn’t it free much needed state money to do more good at a more sensible price nearby?  Or does it mean you just add state “social cleansing “to market “social cleansing”?

                Maybe the idea of social cleansing is a silly one. All my life Mayfair has been very expensive, banned to most of us as a possible place to live. Just as you have to be very good at football to play for Manchester United, or have to pass elite exams to be an NHS doctor, so you have to be very rich to live in a house or large flat in central London. It was ever thus. One way or another you have to ration access to Mayfair housing, as there is not enough for all who would like it to have it. I cannot see that state allocation would be better than market forces. What are your thoughts?

            The idea that social housing landlords can sell high priced property when empty to pay for more replacements in cheaper locations is not a new one. It also rests on the assumption that sufficient high value property becomes available, as the scheme rightly assumes the social landlord can only sell once the property has been willingly vacated by the former tenant.

 

          In the Economic Policy Review  presented to Mr Cameron and Mr Osborne in opposition, we  recommended 33 specific items of deregulation. We also recommended that a Minister be responsible for constructing regulatory budgets, with a view  to cutting the total cost of regulations for business by £14 billion a year by the fifth year of a new government. To do so meant tackling some large areas of regulation like data protection and working time, and accepting that some of the dearest regulations were EU in origin which needed amendment or repeal.  So how has the Coalition government got on?

           They have appointed a Minister, and they do now keep and publish  a score of the costs to business. Each new domestic regulation has to be costed, and the sponsor department has to explain how it will offset this cost. According to the Minister, the government has so far saved business £850 m a year on domestic rules. However, without knowing the costs of EU rules this is only part of the story. They require every department to remove at least one regulation for every new one introduced, which they have been doing. Quite a lot of those removed are on examination  no longer effective or have been replaced by some other measure.

          This £850 m saving rests heavily on one measure, the changes to indexing pensions rules which companies are using to cut pension cost. This large saving of around £3.5 bn has been substantially offset by a more recent requirement to automatically enrol employees in the new pension scheme, which is estimated to cost £2.8 bn extra each year. As Mr Prisk, the Minister, says “Excluding private pension reform, regulatory savings to business since 2011 are expected to be at least £160 m” (He actually  writes -£16om but think he means positive savings of £160 m).

          The government has ended the bulk of the Home Information packs which we proposed for abolition, but had to keep the energy part of it to comply with the EU. They have announced some changes to employment law. They are still consulting on how to make money laundering enforcement proportionate and sensible, where we recommended removing the need to make checks where the money was coming from an account in a UK, EU or US regulated bank. They have scrapped the Comprehensive Performance regime for local government and made changes to the Best Value regime as recommended.

             As a result from January 2011 to the end of December 2012 the government has or will repeal 77 measures whilst introducing 40 new ones. The Business department and Defra (after DWP’s pension changes)  have made the largest reductions in regulatory cost.  The Climate Change Department, Transport, Health and Home Office have all increased the costs on business from their activities.

 

          In the post Olympic euphoria about team games and individual sporting achievements we have become fixated by school playing fields.

          I am all in favour of schools having good playing fields. They need space to allow team games like football, cricket, netball and hockey. They need space to permit summer track and field events. A school set in fields offers a more pleasing environment in many ways, though this may not be possible in city schools where land is at a premium.

           Nor do I favour selling off good playing fields to make money from housing development where the school is then left with inadequate facilities or a cramped environment. I went to a state primary which had a modest field behind the school which permitted some team games and a green lung at play time. I appreciated that at the time.  My secondary school did have playing fields, though I remember the school often preferred to make us run a cross country for exercise which took us way beyond the grounds of the school. Local lanes became improvised playing fields. Not all sporting facilities have to be on school land.

             What is curious about the latest debate is the assumption that only the Secretary of State can be trusted to make the decision to prevent the sale of playing fields, and the implication that when he allows local people to sell a playing field this is always a wrong decision.

              I think Secretaries of State should be careful before using powers to block local people, Governors of schools, Headteachers and Council Committees, from doing what they think is in the best interest of their schools. The Secretary of State is a busy individual, and may not be able to go and visit and see for himself the circumstances on the ground. He rarely gets to talk the various interested parties.

               There may be good reasons why a playing field should be sold. If a school is closing, and future local students are going to other local  schools, there should be no objection to the sale of the playing fields if those other schools already have good provision. There should be no objection if a playing field is being sold because it has high development value, and the school concerned is picking up another local field to replace it. There should be less objection if the school selling still retains substantial land holdinsg to provide the space needed for all reasonable games use. There might be no need to object if a school is selling fields because the local authority is providing better sports facilities nearby which the school can use. Joint use facilities have a lot to recommend them, as school facilities often get closed throughout the school holidays, limiting their utility. More use of the available facilities throughout the year would be welcome.

   If we get ourselves into a world where no playing field can ever be sold we run the risk of setting educational  property in aspic and make improvement and development more difficult. If sports facilities are ony for the use of one particular school in term time we do not get full value out of them.  I have no idea of the wisdom of the various cases where Mr Gove has allowed a playing field to be sold. I assume in each case the leaders of the school and local community thought it a good idea, which is a good start. There may well have been sensible reasons in each  case. Maybe Mr Gove’s critics should wait and see more of the detail of the decisions. Or maybe they should set out some live examples, if they think they have a case where they think  he has got it wrong.

 

           I was an early moderniser. In the  mid 1990s I felt the Conservative party needed to change.  The old fashioned approach based on supporting the pro European UK establishment in conjunction  with Labour and the Lib Dems  had led to national economic crisis  with the Exchange Rate Mechanism. The Tory brand was damaged by association with the high interest rates, decline in output and the boom and bust which our membership of the ERM caused. Far from being too detached from the EU by the Eurosceptic wing of the then Tories, the party had come too close to the EU sun and its economic wings had melted. The Conservative party allowed its opponents to tell a story as if Conservatives revelled in making economic life tough, instead of the truth that the whole UK establishment  including the leaderships of all three main  parties had just made one of their worst collective mistakes which had cost us dear. It was the ERM, Euro ideology, which caused the high interest rates and the damage of the early 1990s recession. Once we cut free we ushered in a long period of expansion.

            With some others I began to seek change and modernisation. We fought and won the battle to keep the UK out of the Euro. Maastricht was the first EU Treaty the UK signed where we managed to keep out of the main point of it. I felt we needed to go further, and show that if we kept or restored more of our economic independence from the EU we could use the powers wisely, in the wider interests of the people.

            Of course I agree that Conservatives should be proud of the UK as it has become, and keen to unite the people who now share the fun of the Olympics and wish this country well. I do not think the Conservatives ever had the problem which Labour tried to pin on them. Conservatives do not wish people ill or seek to make life less pleasant. There is a long tradition of Conservative welfare policy to help those in need.   Many Conservative members have long had a proud tradition of being volunteers in other causes and charities. Mr Cameron’s Big Society is just recognising an old truth about Conservative concepts of public service and volunteering. Conservatives are often the ones who will roll up their sleeves and get on with whatever needs doing, instead of demanding a grant from the government.

           To me modernising is spreading the word that greater freedom can bring greater happiness and prosperity. The message should be that we want more self employed owning their own businesses, more successful small businesses, more people owning their own homes and other assets. We want a country of owners, a country where most people have a stake in our society, a country where hard work and enterprise are rewarded and risk taking admired, not condemned. Modern Conservatives need to be freedom loving, and to encourage individual and family enterprise and responsibility.

The government is said to be  working on measures to speed growth and raise economic performance. One of the worrying features of recent economic figures is the apparent poor showing of productivity.

 

I have been working on how the UK considers and provides  public service. This builds on a book I wrote entitled Third Way Which way? under Labour.

 

To improve the performance of the Uk economy we first need to  widen the definition of public service. I regard the bread supply as a public service as well as the water supply. I regard scheduled airline services  as public transport, just like train services. I see the internet as a public service, just as the post is a public service. A   public service is not limited to a service provided by public sector employees, or provided free at the point of use, or heavily subsidised. Some of the best public services are provided with user charges by competitive private sector companies.

 

I have identified a spectrum of ways of delivering public service. It is not a simple public sector good , private sector bad (Labour’s view) or vice versa (Some conservatives’ view). There are 8 different types of public service:

 

1. Public sector monopoly provided free at point of use by public sector   e.g. Roadspace
2. Public sector provision free at the point of use with some competition between public sector providers – hospitals, schools
3. Public sector monopolies provided free at point of use by private sector contractors  e.g. domestic rubbish collection
4. Private sector monopolies provided free at the point of use  e.g. free local newspapers, certain types of internet service, ITV
5. Monopoly activities provided by the public sector but paid for by users – e.g. Planning and Building Regulation services, passport issue
6. Competitive services provided by the  private sector but paid for by the state e.g. care homes for people without capital
7. Competitive services provided by the state but paid for by users – municipal or state trading – e.g. public leisure facilities
8. Competitive services paid for by users and provided by private sector – this is most public service in a free enterprise economy – everything from food to most  professional services

 

             All public service can be grouped according to whether the service is a monopoly or subject to competition, whether the user pays or the taxpayer pays, and whether the service is run with and by public sector or private sector employees.

 

            The importance of this understanding is to boost productivity, encourage new investment and innovation and raise growth. This can be done by moving more services from monopoly to competitive models, whether they be in the public or private sectors. It can be done by moving more services to user charges, allowing more private finance and providing a better market test of the efficiency and value of the service. That can only be acceptable if there are offsetting tax cuts, so people pay less, not more, overall.   Moving from public sector employment  to employee buy outs or other ways of organising effort  is often a good way of boosting performance.

 

            It would be good to make more progress in shifting services in these directions to achieve better outcomes. Some suggestions include:

 

1. Moving to competition for all users of water services when the government  take powers to introduce some competition into the industry. It is a prime candidate for new models and new investment. It can be allied to switching to meters when people change house as well as letting them switch if  they choose to do so.
2. Launching a series of new toll road projects to start to bring user charging into roads. You would only pay for a new road that the company was providing, not for existing ” free”  roads.
3. Reducing the number of areas where the private sector has to buy licences and permits from the public sector to operate
4. Allowing  profit making companies to provide schools and Colleges
5. Breaking up Network Rail and returning it to the proper private sector, with competition allowed between the differing regional railways that could create. Where train companeis wanted to  it could  reunite trains and track.
6. Splitting RBS into competing UK clearing banks and returning them to the private sector

       Improved performance in big areas like banking and water, where there is a substantial government involvement, would boost general productivity. The heavy loss making businesses like Network Rail and RBS are not contributing to our national wealth and prosperity as we would like, and are a drain on taxpayers.

 

 

 

 

 

             I want to return today to freedoms lost. Many of us feel we now live in a surveillance society. Some would add that now it feels as if we are in the EU prison camp, made to dance to the tunes of Brussels regulators in so many areas of our lives.

             I have recently enjoyed a few days holiday in the Scilly Islands. I returned there partly because the worst features of our bossy boots society have not yet spread to this English haven. I like to spend my holiday pounds at home.

              For me the holiday begins the moment I step onto the small Twin Otter plane at Southamptom for the flight to St Mary’s.  This year I was struck very forcefully by the contrast between the Scilly way and the Southampton way, and was so grateful the clumsy surveillance and security society has not yet caught up with St Mary’s airport.

               At Southampton now, so much money has been spent on “security” that the passenger experience is no longer easy or enjoyable, in a way it could be at a small airport. You are no longer able to drop your bags or passengers off from the car outside the airport door. Someone has decided that a 20 seat plane flying English people within their own country is some kind of terrorist target.  Why? When was there ever any intelligence to suggest that the 10.30 am from Southampton to St Mary’s was a number one target? Now we have to go through the business of taking off belts, putting everything through scanners, throwing away any bottles or tubes with more than 100ml of fluids, as if we were  wanting to go on a jumbo to a  high risk destination.  There is no sense of proportion, no exploration of the risks.

               It is made to look silly by the return flight. At St Mary’s there are no security scans, no lectures on water bottles. You can keep your jacket and your belt on. I doubt anyone suspicious or anything worrying would escape the experienced eyes of the people handling the tickets and baggage. It is refreshing to deal with people who want you to enjoy a good holiday and who send you back home with happy memories rather than with a security lecture ringing in your ears. They make commonsesne judgements of risk. There has been no terrorist attack on a flight from the Scillies.

                      My fear is that the new Southampton is the future, not St Mary’s. If they need more money to improve St Mary’s airport doubtless the security people will crawl all over them,making the project dearer and the experience less enjoyable for holiday makers. There is already evidence of the bossy mainland society imposing its will on the islands. Two improved quays have appeared. They had to have ugly metal fences to segregate motor vehicles from pedestrians, on small islands with practically no cars. They have painted signs to tell you exactly how you have to walk down to the quay and get onto the boat, on a quay where the boat will nonetheless tie up at different points depending on the state of the tide. If you follow the painted signs you can end up unable to get on the boat! I wonder who thought that nonsense up and made us pay good money for it.