I have repeated many times the likelihood that the economy will grow much more slowly than government OBR forecasts. I have said the government will borrow more than is desirable. I have called for a stronger growth strategy.

                 Last year’s figures showing just 0.8% growth were disappointing to the official forecasters. They expected 2.4% growth for 2011-12 in June 2010, reduced that + to 1.8% in March 2011 and to 0.6% in November 2011.

                They are forecasting 0.9% growth  in 2012-13 and 2.4% in 2013-14, down from 2.9% and 2.8% forecast in June 2010. The IMF has now downgraded its forecast for the UK to a lower figure for 2012. If 2012-14 growth is still overstated by say 1.5% over the two years, that adds another £10 billion to the deficit in the second year.

                 The government knows it needs to do more. It is still working on  the credit easing scheme promised in the Autumn Statement. It has relaxed its borrowing limits to accommodate cash increases in public spending in every year despite the shortfall in revenues compared to  budget. The government needs to intensify its search for better value for money in what it spends, and for less desirable budget items that can be removed or delayed.

                   It needs to relax the squeeze on the private sector which we have often discussed. Falling inflation will help. So would some reduction in tax rates, as we have argued before.

                    Above all the government needs to understand that it has to tackle the problems of the banks. There is not enough competition or capacity in HIgh Street banking in the UK. The government owns many of the important banks that service the businesses and public. It needs to split them up, create new competing banks, and float them off with sensible balance sheets so they can get on with the task of financing the recovery.

 

           Over the last quarter UK output fell by a small 0.2%. These preliminary figures are often revised upwards later. For the year as a whole the economy grew at just 0.8%.

           All this was well known and forecast. We have been talking here about the need for a stronger growth strategy for eighteen months, and clearly as the government recognises more needs to be done. What is far less well known is the fact that the government sector is still adding to the expansion, whilst industry and some private sector services are dragging the figures down.

            In the last quarter the  government sector was up 0.4%. Business and financial services were unchanged. Production and construction fell. For the year, government and other services were up 2.5%, business services and finance were up 2.1%, whilst production industries were down 2.6%.

           Perhaps all those who have been talking of the massive state cuts might like to explain how this results in a continued expansion of the state sector relative to manufacturing industry.

 

            There are popular cuts in spending. The government has done some work to reduce the degree of regional government in England, but it should do more. Many of us would be cheering in the aisles if the government said it could no longer afford any regional government, and rolled it all up. It could leave local matters to Councils, and English national matters can be decided at Westminster.

              Many of us have no regional loyalties. Indeed, we do not even know which region they want to cajole us into. Is my region Thames Valley? Or is it Rest of the South-east?  Is it the South East?  Is it Home Counties?  Is it part of ancient Wessex? Why does my region usually exclude London, where we have strong links and contacts, but may include Thanet and East Kent, which is a long way away?

                It is said the further away from London you go, the stronger the sense of regional identity. I do not myself find Exeter is keen to accept a lead from Bristol as part of the wider South-west, or Plymouth happy to genuflect to Exeter. Liverpool is not a natural subject of Manchester. The senses of City and local identity are usually much stronger than the EU’s regional identities they are seeking to impose.

                    On Monday  night I was invited on to Scottish BBC (there is no equivalent English BBC of course) to talk about English nationalism. I tried to explain that English nationalism is fuelled most of all by the EU. It is our sense of injustice and anger over the way the EU wishes to balkanise England, and wipe it off the face of their maps, that does more than anything else to propel English feelings. The interviewer was not of course interested, as he was seeking to define English nationalism as a response  to Scottish nationalism. He could not grasp that is not how most of us in England define it for ourselves, but as so often the BBC was uncomprehending and uncaring of the English viewpoint.

 

               I reported here my question of the cost of HS2 this Parliament to Miss Greening.  She told me they would “only” be spending £200 million this Parliament on preparation work. By the standards of  recent government  spending, that was reassuring for three and a half years.

             Today I received a letter. It told me the total cost of HS2 “is expected to be £32.7 billion…..Of this the cost of the scheme this Parliament will be around £750 million”. She had apparently recalled the cost of land acquisition, not all the consultancy and planning costs.

 

           Restoring democracy to the UK requires the following steps:

1. Hold an early referendum on Scottish independence. I suspect the Scots will vote to stay in the Union. We can then get on with planning a stronger UK democracy.

2. You could then  create symetrical devolution. MPs elected to the Union Parliament could meet in their respective capitals two days a week to transact devolved business, and three days a week in London to transact Union business. London would be the capital of England as well as of the UK. Doubtless the Scots will wish to keep their double manning with different Scottish representatives for the Scottish Parliament. This should require rethinking the pay and rations of their MPs at Westminster,once they do not participate in decisions on England.

3. Renegotiate our relationship with the EU, and put the result to a vote of the UK people to answer the question if they wish to stay in the EU on the revised terms.

4.Complete the abolition of all English regional government

5. Abolish more quangos

6. Complete the reform of the Lords

7. Strengthen the Commons further

 

I will be writing in more detail about each of these in turn in future posts.

 

 

 

 

            The Lib Dems seek to differentiate themselves from the Coalition’s policies. I have no problem with that. The two Coalition parties are different, and need to offer choice to the electors come another election.

              What suprises me is how they wish to be different. They think a benefits cap of £26,000 is too mean, when a large  majority of the electorate and a majority of their own voters think it is an important improvement in our welfare system.

              They think the UK should not stand up to the EU, but should go along with more or less any further transfer of power, tax imposition and other humiliation the EU should want to visit on us. Around 80% of the UK public disagree with them.

               They want a mansion tax , to tax people who live in the more expensive parts of the country, regardless of their incomes, mortgages and circumstances.

                Put this altogether and they end up with just 9% support in the latest polls. No amount of banker bashing rhetoric seems to work to make them more popular, but then they are in government and are paying RBS executives large sums whilst losing  they lose  taxpayer money. No amount of pro EU rhetoric seems to lift their poll ratings. Nor, I suspect, will voting for more benefits for people not in work as these matters are put before the Lords.

 

           There has been so much comment and debate about the Credit Crunch, bank collapse, large recession and inflation which happened in recent years, that attention has been diverted from the constitutional vandalism carried out by the EU and its collaborators in the last government.

           In 1999 I wrote a book entitled “The death of Britain”. It is time to revisit its predictions, bring the analysis up to date, and to go to ask how can UK democracy be restored to a country with a mangled constitution.

          I argued that devolution would “fuel nationalist movements in Scotland and Wales”. “It is helping create a Europe of the regions in the way the Commission wants”.  “The end result will be a more factious, more overgoverned, more overregulated United Kingdom… It will not reconnect the public with the politicians. It will confirm the public in their view that politicians by and large do not solve problems, do cost too much, and are good at misleading the public in their own interests”. Devolution is usually a stepping stone on the way to a break up of a union.

                The book concluded:

 “It is a crowning irony that, that following decades or centuries of success with the Westminster model and our belief in freedom, this government and this European Union should  now be uniting to destroy much of what is best in the Mother of Parliaments.”

               “What is the point of Parliament if a common foreign policy for Britain is hammered out by our partners on the continent? What is the point of Parliament if the most important decisions about economic policy are taken by an independent central bank in Frankfurt? What is the point of Parliament if many of the important issues of health and education and local government are determined by regional assemblies and not at Westminster? How much democracy will there be if crucial decisions are taken behind closed doors at Brussels meetings?…”

            “One day, however, the British people will collectively wake up to realise that Parliament, the fountain of so many of their liberties, no longer has much water in it….They will discover there are so many layers of politicians and bureaucrats from town hall through district council through county council through regional assembly through Westminster to Brussels, that they very rarely get a straight answer to anything and find it extremely difficult to work out who , if anyone, is to blame….The Scots will get restless for more independence…”

                       “Labour’s constitutional blueprint is nothing more than a plan for the destruction of United Kingdom democracy. It threatens splits within the kingdom. It threatens transferring too much out of democratic control. It gives far too much ground to the federal plan on the continent. ”

                         13 years on much of what I feared has come true. Devolution has unleashed nationalist movements.Devolution is not a stable settlement, but a constant series of demands for more. The Treaties of Nice, Amsterdam and Lisbon have transferred far too many powers to the EU, making the  UK powerless in many more areas and adding to scepticism and hostility toward politics as a result. The advent of more decision making in quangos, Brussels and further layers of government has added to cost, complexity. It  lacks  clarity and is increasingly unacceptable to electors. A so called independent Bank  of England presided over our worst economic and banking crisis since the 1930s, making many policy mistakes.  As I feared Labour got rid of the people it did not like in the Lords, but did not know how to reform it positively.

                       Some things I feared we prevented. We stopped the UK joining the single currency, despite Mr Blair’s enthusiasm. We stopped changes to the voting system for Westminster, though we have them for other layers of government.  We have checked regional government in England, defeating elected regional government and now starting to cut  back the unelected because it is a needless and unaccountable layer.

                      In future pieces I will examine what more we need to do to rebuild a proper Parliamentary democracy in the UK.

                     The BBC today reported  79% now support English votes for English issues – that’s a start. Then the BBC ruined it, by saying the answer to the sense of English injustice with the union was a bit more devolution to the northern cities! No, BBC, the answer is to let us English speak for England, and for England to be able to take its own decisions where such decisions are devolved in Scotland. If Scotland is united in its devolved kingdom, so must England be.

 

             Twice this week I have asked this question in Parliament. To try to win it more traction let me ask it again, at greater length. Who speaks for England?

              The Cabinet contains a Scottish, Welsh and Northern Irish Secretary of State arguing their case for money and laws that will help their parts of the country.  Each of these parts of the UK have their own Parliament or Assembly, taking many decisions which for England are taken by the Westminster Parliament.

              The English have for many years been relaxed about the  Union. There used to be  little English nationalism. Most English people have accepted that England, as the large majority partner in the UK, should pay more in ,  put up with more criticism and accept   less good terms than the other parts of the kingdom.

               Few English people complain that the Welsh are fierce in supporting their rugby team , or the Scots strong in backing their athletes and sporting heroes. It hurts a bit more if England is the only surviving Union team in an international competition to learn that some Scots will then back anyone but England. In times past support for Scotland from English fans would have been automatic if England had been knocked out.

                 Until recently few English people have complained strongly about the much higher public spending per head recorded in parts of the three devolved regions than in most of England. The advent of a more powerful Scottish Parliament, putting in different policies on student fees and care costs has started to upset the usually tolerant English.

                 England and Scotland have coats of arms that vary a common theme. Scotland has one aggressive lion rampant, flashing claws. England has three more sedate lions passant. Their claws are obvious, but they are not raised in anger. For years it has been thus. England expects flashes of Scottish anger. Scotland expects little English reaction, despite the superior controlled power.

                 Today the Union is at risk in a way unknown to the post war generations, and unknown to anyone born during the last eighty years. We need to go back to the break away by the Republic of Ireland and the stormy arguments over Irish home rule to find a period of greater stress and tension within the Union.  When I wrote “The Death of Britain” at the start of Labour’s long period in government in the late 1990s I forecast that devolution would endanger the kingdom, not unite it. So it has proved.

                  Devolution has given a great platform to the SNP, who have used it well to build support in Scotland for an independent state, or at least for a state with so much devolved power that it is more or less independent. The more aggressive Scottish nationalism becomes, the more a counter balancing English nationalism arises. Once Scotland raises the issue of independence it naturally focuses England’s mind on the deal both countries enjoy. It leads England to question whether and how an independent Scotland could still share an army, a royal family, a Central Bank, a currency and international representation with England.

           The English thought nothing of Scotland having her own football league and their results being reported on English tv and radio. Now as Scottish teams shun the greater competition that a UK league would  bring, some ask what this means?  If a Scottish tennis player wraps himself in the Scottish flag at Wimbledon rather than the Union flag, where an English player would  select the Union flag, how should the English in the crowd react?  Welsh football teams play against England in the same league, and Welsh players join the English cricket team. Scotland plays it very differently.

           Many Scots acknowledge that it makes no sense for English MPs at Westminster to have no say over Scottish health, environment, local government and education, yet Scottish MPs at Westminster have both vote and voice over all those matters for England. Isn’t it time that we had English votes for English issues? Isn’t it time that the English Secretaries of State – for Health, Local Government, Education and Transport – not only worked for England but spoke out for England?

 

 

 

 

           It was good news to hear confirmed that the USA is not going to make more money available for the Euro. Apparently the US position, as reported again on today’s BBC, is that Euroland needs to sort its own problems out and pay its own bills. As the UK government has said it would only contribute to the IMF if all the main players do so, that looks like a helpful development. I guess China will also be reluctant to put money up for the Euro.

             Douglas Carswell restated the main arguments against IMF attempted bail outs of the Euro  well this morning on the Today programme. If the countries receiving IMF aid cannot devalue and default on some debt at the same time as cutting spending and borrowing more, the medicine cannot work. The IMF should stick to bailing out sovereign countries, not regions in a very badly constructed currency area that are being strangled by the very set up of the currency and the economic policy.

 

David Cameron’s speech was the best of the three party leaders’  discussions of what kind of capitalism we want in the future.  They have made it a topical matter, as they press on with their attacks on bankers and bonuses, reflecting considerable public disaste for some of the extremes we have witnessed and are now paying for as taxpayers.

In 1988 I published a book entitled “Popular Capitalism”. In it I  sought to promote wider ownership – shares for everyone, property ownership for the many. I drew together the differing strands of policy. There was privatisation, allowing or encouraging the public to become part owners of some of the largest businesses in the land. There was employee ownership, at its best in the sale of National Freight to its employees. There were share incentive schemes for many private sector companies. Council house sales, homesteading, policies to promotote self employment, and pension plan investments with generous tax breaks were all designed to make owning the experience of the many rather than the privilege of the few.

This idea needs updating and developing for the era after the Credit Crunch and  bank collapse. We wish now to ensure  that some  future large bank cannot go down and end up with massive taxpayer subsidy. This government has adopted the ideas of living wills and controlled administration  should a large bank get into trouble. It’s a pity they did not do that last time round. More importantly, the government needs to pursue a vigorous competition policy for banks as well as for many other sectors of the economy. It was the mega mergers the last government allowed or encouraged which made the problems so much worse in the financial world.

The challenge today is to create a capitalism people are proud of and wish to work within. It is surprisingly difficult to sustain the merits of capitalism to some UK audiences. They say what did capitalism ever do for them. One could ask, do they not value the car and the plane, the new pharmaceuticals and the computers, the mobile phones and the televisions which competitive free enterprise in the west has designed and delivered? Don’t they value the staggering range of goods now being delivered to their doorsteps from the highly competitive factories of China and India?  What part of modern living standards do they regret compared with a hundred years ago. Which did not come from free enterprise?

They also caricature those  who support the creativity and flexibility of free enterprise as wanting a kind of lawlessness. This could never work. Any sensible exponent of capitalism knows there needs to be a strong rule of law, to make criminal acts difficult and to promote competition and fair dealing  forcefully. It is the role of government to write those rules that are needed and to enforce them. It is the role of markets to offer choice and jobs, investment and consumption, innovation and tradition. Of course some in markets get it wrong, make mistakes, go to excess, produce bad products or services. So do some in the public sector. The advantage in many cases of doing things in the private sector is twofold. There is choice, so you do not have to have the less good service. And there is a faster way of removing the shoddy and the poor performer. As customers go elsewhere so the business that is poor has to contract or die.

In my lifetime so far I have seen capitalism bring fridges and tvs, cars and washing machines, computers and phones into reach for most, whilst raising the quality and lowering the price. With an offer like that, surely capitalism can also be popular?