Savers are important people in a successful economy. We should want more people to make provision for their own future. We should welcome them providing finance for others to use  intelligently to add to our national income and wealth.

            The present government says it wants people to be more self reliant in the future. It welcomes the idea of people saving more for their retirement, putting aside more for bad fortune or ill health, buying their own homes and investing in their own business. A more self reliant enterprising society based on more personal ownership should be richer and happier, with more tax revenue to help those in need who cannot fend for themselves.

           The problem is the inherited deficit and the planned way to reduce it are getting in the way of really helping actual and potential savers. The wish to raise more in tax revenue than people are prepared to pay, has already led to new raids on people’s pension funds. Whilst they have been mainly at the higher end, many more savers fear there could be further tax changes that will adversely affect them

            Pension funds too have been undermined by the ultra low interest rates on government debts, thanks to Quantitative Easing. This has left funds with large deficits, and forced many companies to close their funds completely. Many people now in the private sector have no access to an employer fund anymore as a result.

            The same ultra low interest rates hit the living standards of all those seeking to rely on or augment their income from interest on savings. People contemplating a cash ISA or a safe investment of a cash lump sum they have acquired face very poor returns.

           Savers have then been hit by a higher rate of inflation than the Bank planned or promised. When inflation gets as high as 5% it eats away the money of the prudent at far too fast a rate.

           The Chancellor would be well advised to make things a bit fairer for savers. Saving and making provision for your future is a good idea. Too many tax changes, too little return, too much inflation put people off saving or make it difficult.

         We will need to study the small print of this late night agreement. Meanwhile I thought it would be useful to remind readers of some of the key calls made by all three main  parties agreeing, before we celebrate too much:

Joining the EEC

Joining the Exchange Rate Mechanism

Setting up an independent Central Bank to ensure “no more boom and bust”

Various United Nations military interventions

Climate change policies

 Some things most parties and politicians agree on.  Most of the politicians I know want to eliminate or reduce poverty. The new Pope has decided he too will be an advocate of the poor, bringing further media attention to this perennial all consuming issue.

Most parties also agree with the obvious point that poverty is a shortage of money to spend on their own lives.  The disagreement comes over how to supply the shortfall.

On the “caring” side of the argument are those  who think the answer is simply for richer people through  the state to give them more money. On the “tough” side of the argument are those who say we need to do mroe to promote better paid jobs for the poor which they should take to earn for themselves.

The divide comes down to the old adage – is it better to give a hungry man a regular supply of fish, or to give him a rod and teach him how to use it for himself?

Maybe the answer is you need to do a bit of both. You should  not let the man starve when there is a spare fish available to give him. You should not want him to rely for the rest of his life on spare fish won from the sea by others.

Mr Osborne has a chance in his forthcoming budget to make tackling poverty a central issue. He needs to make it more worthwhile to save, to go to work and to take responsibility for your own life. He could start by pledging to do better at controlling inflation with his new Governor of the Bank. We do not need a relaxation of the already lax approach to price rises.  He could make his own contribution by cutting energy and carbon taxes to make fuel more affordable. He should  cut taxes on working , saving and venturing, so the message is clear. We will help those in need, but the best help is to assist them tAke care of themselves.

 Heavily indebted governments regularly pillage the money of savers. The reason is simple. Savers have spare money and governments don’t. So many governments want to live well beyond the means of their taxpayers. Some rob savers by inflation, eroding the value of their savings. Some do it by special savings taxes. Some do it by controlling interest rates, to ensure the government can borrow cheaply at the expense of the savers return. Some do all three of these things.

Now the EU and Cyprus are simply going to confiscate part  of a person’s savings away for being in a particular banks. That looks like a great way to encourage the mass migration of savings from weak banks in the Euro area to stronger banks somewhere else.

On Thursday I was debating the Blair years at the Cambridge Union. Hazel Blears put up a spirited defence of the Labour government. She said that when Labour arrived in power her own town was run down. By the time they left office it had new schools, a better hospital and other improvements from enhanced public sector investment.

I am glad her town benefitted from some of the massive spending and borrowing Labour undertook in office. I guess if there had been a Conservative government they too would have spent a lot of extra money on her area. Conservative governments, like Labour governments, traditionally spend much more of our money in Labour areas as they agree there is more need there than in the more prosperous Conservative parts of the country. I also agree with Hazel, unlike some of the people who write in to this blog, that the public sector can and does contribute to national output and wellbeing. The output of a public sector hospital or school is as much a part of national output as the output of a private sector school or hospital.

The missing parts of the Labour discussion, however, revolve around two sets of issues.. Why didn’t the large expenditure of money in the poorer areas lead them to catch up with the richer areas? Why did inequalities expand rather than contract? Why did London continue to outperform the areas attracting the most public spending? Secondly, don’t we need a bit more balance in public spending?  Whilst I do not begrudge Hazel her new schools and better facilities, there was no evidence of anything similar in my area. By end of  the Labour years we had grossly overcongested roads, and a shortage of school places, with a large backlog of building maintenance and replacement in the public sector.

The truth is the Blair years lived on credit too greatly, leaving us with a huge problem of paying the bills and repaying the debts which will continue to haunt us for some years to come.  The Blair model of public sector led spending gave some help to the areas that  benefitted most from it, but failed in the main to encourage a productive private sector to take  off and generate lots of new private sector jobs in the poorer areas of the country.  The public sector was not uniformly favoured either.

We are entering the long rebalancing. To make other areas as rich as London will require much more private  sector led growth in them. To regenerate the whole public sector, and not just favoured parts of it, requires reform as well as fairer funding.

I am all in favour of a free press. There will be times when they get it wrong, and will need to apologise. There may be times when journalists break the law. They should be punished like anyone else. There will be many times when they publish the inconvenient, the badly spun or the difficult to take. But I would rather live in a society where there is a free press than one where there is not. Sometimes they get their facts wrong, sometimes they express opinions I have good reasons not to  agree with, but that is no case for regulating them.

Labour and Lib Dems are now keen to set up statutory regulation for the press. I do not like that idea. Labour’s excessively complex and extensive regulation of banks and financial services did not prevent the worst crash of the last eighty years occurring on their watch. The EU’s excessive regulation of our energy does  not deliver enough cheap energy to homes and factories. No amount of health and safety regulation can prevent all untimely and unwelcome deaths in our hospitals. We need to be realistic about the limits of what regulation can achieve.

We also need to recognise that too much of the wrong kind of regulation can divert attention from regulators and governments doing what only they can do. The excessive detailed regulation of the Brown era meant they did not regulate the quantity of money, credit and capital that needed controlling to prevent boom and bubble, though they had  powers to do so and were advised to do so by some of us.

So why do Labour think they would be any better at regulating the press? What action would they have taken to stop phone hacking in  its infancy? How could a government regulator be truly independent of the government which has such a close relationship with newspapers? I will vote for the least intrusive regulation on offer, as I am suspicious of the motives behind the wish to regulate, and sceptical of the ability of any new regulators to get it right if appointed.

          Mr Cameron set out a good vision of the UK negotiating a new relationship with the EU. He does recognise that the Euro area is rushing on to full political, monetary, banking, and economic union. He has no more wish to belong such a union than many of you or me. He is in Coalition with a party which does welcome the current unacceptable level of European authority in the UK, and would happily accept more. There is little chance of the Lib Dems in the Coalition agreeing to early action to negotiate a new relationship or to hold an In/Out referendum.

         The policy of negotiate and decide for after the next election is fine. Those who claim the EU will not negotiate or will not offer anything we could accept will have their chance to vote for exit should that prove to be the case. The problem is many do not want to wait another two years before we start this process. Some want proof that a future government will deliver the In/Out referendum, whilst others worry that there could be another federalist Lib/Lab government elected instead.

           That is why some of us favour the Mandate referendum soon. This would ask the question Do you want the UK government to negotiate a new relationship with the EU, based on free trade and political co-operation? This might get through even the current House of Commons were the Conservative leadership to adopt it. It is difficult to believe Labour would join the Lib Dems in wanting to vote this down.

         If it did take place it is likely a very large majority of the British people would vote Yes. This would strengthen the Prime Minister’s hand with EU member governments, showing that he was speaking for the overwhelming majority of the British people and not just for the largest minority party in the Commons. It would also make it more difficult for other parties in the House to seek to block a renegotiation which I suspect is much sought after by the British people.

I have been very busy in Parliament this week. This causes delay in postings.

To speed it up it would help me if you did not

a) refer to other websites, apart from reputable official source websites or well based publications that I know

b) splash unsubstantiated allegations around about individuals and organisations. I do not have the time or investigative resources to check them out. The general criticism can be made without calling people names and using provactive adjectives.

In future I may just not post contributions which persist with difficult material.

            Whilst I believe some tax rates are self defeating, raising less revenue than lower rates, I do not think cutting the main rates of Income Tax or even Corporation Tax would lead to a surge of revenue in the first couple of years. Clearly VAT cuts would lose us revenue, just as a VAT increase was the one rate rise which did bring tax revenue gains. A lower tax economy will in the longer run be more successful, and will bring in more revenue as the growth accelerates.

          Mr Cameron in his recent economic  speech argued that the 50p to 45p tax change will bring in more revenue. I agree. I suspect lowering the rate ot 40p would bring in more as well. The current CGT rate is clearly counter productive, with a forecast fall in revenue this year. It is the most easily avoided tax, as people do not have to sell and realise gains, or they can sell something at a loss as well to offset. Why impose rates that lose revenue?

          This leaves the government and its tax cutting critics at odds over the main case. “Cut tax rates”, say the radicals, “to energise the economy. In due course it will pay off, but in the meantime we might have to borrow more”. Keep rates high, counters the government. We need to show “we are all in this together, so we need to tax hard anyone who does work and invest. Try to keep the borrowing down, as otherwise we might lose the markets confidence”.

           There is a mid point between these two. The tax cutters are right, that lower tax rates would stimulate more growth and create more private sector demand. It is tempting to try it. Give tax cuts to all. However, state  borrowing is too high and it would seem perverse to want to increase it. The government is right that it needs to get the deficit down.  So find some popular cuts in public spending that would pay for the tax cuts in the early stages, before the growth generated the extra revenue. I have often set out here easy or popular cuts. Start with getting our troops home, cutting overseas aid,  sell some state owned banking assets and stop Network Rail dealing in derivatives for starters. Cutting out expenditure abroad by the UK state is doubly helpful, as the money spent does nothing to stimulate UK demand at the moment, and having to buy foreign currency when exporting the money is another force selling the pound and driving up UK inflation.  I will look in more detail at this in due course.