Yesterday William Cash MP asked the Speaker to grant an urgent debate on the draft inter governmental Treaty which Mr Cameron declined to sign for the UK last December. The Speaker heard his case. Many of us were in the Chamber signifying our suport for an early debate. The Speaker granted Mr Cash’s requests on its merits. The government declined to oppose the suggestion, so tomorrow we will have our three hour debate.

                 I was pleased he did so. Mr Cameron is soon off to another summit of EU leaders. It is important that he presses UK concerns. Whilst it is great news that we will not sign this Treaty, it is important that the 25 signatories do not seek to use EU institutions to enforce their proposed Treaty in any way that inflicts loss or duties on the UK.  The UK is raising legal questions about how such a Treaty of the 25 would work, given that the 27 are the custodians of the EU institutions and of the EU Treaties. Can they use the EU institutions at all, when two members of the EU have declined to accept this draft Treaty?

                   The debate needs to go wider than these important legal and constitutional issues. The truth is the Treaty of the 25 is in trouble. The French socialist candidate for the Presidency has said he wishes to renegotiate the Treaty. The re are rumours that incumbent President will offer a referendum on it. The Irish have now said they would need a referendum. Instead of this Treaty being a quick fix for the Euro, a rapid dash to stronger controls over Euro member budgets, it is in danger of becoming a long running constitutional saga which could help to unmake governments and thrust more antagonism between governments and their electors.

                    The draft Treaty, even with an easy passage, was never going to resolve the Greek crisis, for example. It is all well and good the EU or a group within the EU telling Greece to spend less and tax more, but they have been saying this for years and it has not happened. Saying it under some new powers in a new Treaty, and threatening to fine Greece if she does not comply, is bizarre. As Greece has run out of money and has to borrow so much from other Euro states and the IMF, she would have to borrow the money from them to pay the fine. How would that help?

                     Much of the ground in the draft Treaty is reminiscent of   the old Growth and Stability  Pact all Euro members were meant to follow. It is similar, but Germany claims there are new enforcement procedures and sharper focus to the fiscal union in the draft Treaty than in the existing Treaties for Euro members. It looks as if Germany’s insistence on greater clarification and enforcement of fiscal union rules will create more dislocation in the churning politics of Euroland. Meanwhile Greece has promised to have an economy growing every year from next year to 2020. If it does manage to do so, it will once again fail to hit the deficit reduction targets that it has promised to meet before.

                    The EU awaits nervously as private holders of Greek bonds make up their minds whether to accept the new much reduced terms for their bonds. They wait nervously to see if Greece can at last find policies which simultaneously cut spending, increase taxes and promote growth. They watch to see if the contagion might spread to Portugal. And now with baited breath they contemplate what the voters might make of their latest fiscal union ideas, given that it looks as if somewhere in the union a referendum will be held on it if the Treaty survives to ratification.

Dear John

Thank you for taking the time to send in your comments as well as opening up the debate with your constituents and others through your online diary.  Your thoughts, and those of the respondents to your website, are very welcome as we take forward the government’s response to the Portas Review.  Indeed, many of the recommendations you offer, as well as those submitted by respondents to your website, are covered in Mary Portas’ Review, particularly around regulation, access and parking, and the creation of ‘Town Teams’.

With regards to regulation, we have already carried out a retail themed Red Tape Challenge, and we will work with local authorities to address their own regulatory functions.  We are very keen to identify and remove any unnecessary regulations impacting on the high street.

As far as access and parking is concerned, Mary Portas suggests the lack of free parking puts high streets at a disadvantage to out of town shopping centres, and that more should be done to make shopping in the high street easier.  Although this is an issue for each local authority, we would urge councils to look closely at their parking provision and charges and to consider the different options that are available, and think about new schemes to ensure they are working to do the best for their area and bring vitality and success to their high street.

Last year, we removed a number of barriers to tackle parking rules, including the policy that encouraged councils to set car parking charges to discourage the use of cars.  The draft National Planning Policy Framework follows through on these changes by removing the restrictions which impose maximum numbers of parking spaces in new non-residential developments.  This in turn will relieve pressure on on-street parking and support local high streets.

We have also made a number of proposals to help businesses.  We have listened to concerns about the Retail Price Index (RPI) increase for 2012-13 business rates bills, and are therefore giving businesses the option of spreading the increase over three years.  This will give businesses flexibility to manage their rates bills in the current economic climate, help their cash flow, and give them time to adjust to the impact of inflation.

Additionally, we have also doubled small business rate relief for two and a half years, which will include the whole of the 2012-13 financial year.  Over half a million businesses in England are expected to benefit, with approximately a third of a million businesses paying no rates.  We are ensuring that all eligible ratepayers automatically receive the small business multiplier, and we are removing the legal red tape requiring ratepayers to fill in paperwork to claim the relief.

In addition, government is giving local councils new powers to levy local business rate discounts, for example, to support local shops, community pubs, new business parks or vital local facilities, via the Localism Act.  The new power will be available from April this year.

With respect to rent levels, I agree with your opinion that this is a matter which the market should largely resolve and it is an area where government intervention should be measured.  Tenants who are in leases with upward only rent review clauses will indeed find that their rent does not move downwards in accordance with market values;  however, research suggests that the average lease length is now around 5 years and as such the majority of new leases do not feature rent reviews; this makes upward only rent reviews far less common that they once were.  We are working to make sure that progressive, fair and flexible leasing terms continue to form the basis of standard leasing practices across the sector.  As per Mary’s recommendations, we, in conjunction with BIS, are supporting and promoting the 2007 Code for Leasing Business Premises which sets out advice for prospective tenants and landlords aimed at ensuring tenants secure the best leasing terms possible, including considering alternatives to the upward only rent review clause.  We have challenged key industry players (RICS, the British Property Federation and the Law Society) to consider how they too can do more to raise the profile of this valuable tool.

Mary Portas recommends that Town Teams should be considered.  She clearly set out in her report how key to the success of high streets visionary, strategic and strong management can be.  We will look at ways in which the Government can support and encourage town centre management, and we would expect town teams to work with local partners to develop a joint vision for their local high street.

I recently announced a competition to choose twelve towns and cities across England to create Town Teams, with successful bidders benefiting from a share of £1 million to turn around their local high streets.  Those bidding will need to demonstrate a real transformational vision on how they can breathe new life into their high street or shopping parade and should have the strong support of their local community and a range of local partners.  Further information and the prospectus can be found at: www.communities.gov.uk/publications/regeneration/portaspilotsprospectus/ .

The Government intends to respond formally to the Portas Review in the Spring.

Yours ever

Grant Shapps MP

 

Many of us dislike the apartheid in UK education. If you are blessed with parents on good incomes, or with parents willing to make a large financial sacrifice, you have access to some of the best schools in the world, the top public schools. If you do not, you face a postcode lottery for how good your local state school will be. You may end up at a poor performing school, where ambition for pupils is low, and where there is no tradition of pupils successfully striving for excellence.

Of course there are weak or poor fee paying schools, and there are some excellent state comprehensive schools. It is not as simple a division as some class warriors would have us believe. Nor is it fair to suggest that all rich parents are great parents. They may not spare the time or offer the love and suppport children need, in addition to the money for the fees. Meanwhile socialists wrongly assume that all poor backgrounds mean disadvantage, when low income parents often do provide time, support, a framework of encouragement for their children which is so important. Allied to a good local state school, this can work well.

As we saw yesterday, the politicians have lighted on a definite social problem. Pupils from the great public schools do get a very  high a proportion of the places available at top universities, implying there is some problem with the state schools on average  in helping pupils pursue such ambitions.

The grammar schools fare better than the comprehensives. In one sense that is only to be expected, as they choose pupils most likely to qualify for elite universities. Grammars should produce a higher proportion of suitable candidates for top colleges. In another sense it is worrying. Comprehensives do not fare as well as grammars, when adjusted for the impact of selection. The Comprehensives in most parts of the country include the group who would otherwise have gone to grammars. Many comprehensives do not seem to provide the same back up to these able pupils as the grammars once did.

The left say that selection is wrong in principle. I find this difficult to understand. They seem to welcome academic selection at 18, accepting that only some should go on to university. They welcome selection based on ability and tests  for sports academies, for music schools, for elite dance and arts establishments. They do not want to have quotas of disadvantaged footballers placed in every elite Premier league team, nor do they complain if young people have to jump through hoops of fire to compete in the Olympics. Their approach to selection is highly selective. More importantly they lived through 13 years of government with school selection at 11 or 13 based on parental income, as if this were in some way more just or acceptable than selection based on ability and work rate.

The Coalition government rightly says one of its prime tasks is to raise school standards. The Secretary of State is pulling various levers in his part of the government machine to try to get standards higher. Allowing selection by ability and work rate at 11 or 13 in the state sector would create many more opportunities for children without rich parents to get to a top university at 18. The UK’s best policy for social mobility, the grammar school, was largely ripped out.

           The advocates of comprehensive education for all but the rich promised us more social mobility and better results. The truth is it has not happened. Could advocates of comprehensives explain why not? And could they refrain from just saying comprehensives do not get enough money per pupil, when they often get more per pupil than grammars. We have just lived through a generous era for public spending. Labour voted as much as it dared. Why did it not work?

 

 

           I was surprised yesterday to wake to the news that 38 Conservative MPs led by Dan Poulter had signed a short letter to the Sunday Telegraph declaring that they suported the Health Bill. The spin said these were loyalist MPs who wanted to show their support for the Prime Minister’s Health reforms.

             I was surprised because at last count around 300 Conservative MPs supported the Health Bill. I had not heard rumours of large groups of disloyal MPs seeking to change the Bill radically or get it droppped. There have been no angry meetings about this, no letters signed by 100 potential rebels, no attempt to table unhelpful backbench motions through the backbench business committee, no pre-emptive summons of Health Ministers to the 1922 Committee to explain themselves.  This is no referendum on the EU or powers back from Brussels issue within the Conservative party, where all of these things have been happening, including from some of the same people who signed this letter.

         I was surprised because many MPs  had not been shown  the letter or invited  to sign it, so clearly there was no wish to maximise the numbers of signatures. As a result a letter went out with just 38 names on it, running the risk of implying there are almost a couple of hundred   Conservative backbench MPs who would not sign it, when I guess most had not been asked. Let me reassure you all further, those who like the reforms or are relaxed about them. As far as I know Conservative MPs will continue to vote for this legislation if asked to so so. If you are against the Bill , you will be relying on Labour and Lib Dem votes in  the Lords to force the changes.

            The letter makes the fair general point that the aim of the Health Bill reforms is to improve the quality of patient care, partly by offering more control over that care to medical practitioners within the service. The aim presumably was the worthy one to try to get across the high level messages about this reform – that quality and choice are the drivers of the reforms with  the aim of better patient care. One of the means of doing this is cutting bureaucracy and leaving more direct control to medics. Unfortunately the absence of any praise for Mr Lansley in the text left the media with the story that the loyal MPs were loyal to the PM but not to the Health Secretary, which  no-one seemed to move  rapidly to deny. The original White Paper in 2010 was co signed by Mr Cameron, Mr Clegg and Mr Lansley. All three were completely united in recommending their chosen course of action to the public.

          What is my view? I favour more choice and more patient power in the NHS. I am happy about effective cuts in overall bureaucracy, as long as the replacement offers better management for less cost. I did not advocate the Bill, but will  support  the government  if they tell me that is the best way of bringing about these general aims. I was asked at the beginning of the government what I thought about proceeding with it. I suggested it would prove difficult as I expected the Lib Dems enthusiaism for it to wane if it ran into criticism.  They do need to be careful lest the Bill becomes a very expensive complex measure, with all sorts of new duties and functions for the NHS built into it to seek agreement to it in the Lords. They need to concentrate on achieving that better quality care with more choice that is at the heart of the original proposals.

         I would be interested to hear your views on this Bill, and on the government’s approach to it. I have delayed the schools piece until tomorrow, as this is topical today.

 

The Office for fair access to Higher Education (OFFA) has a new Director.  The appointment of Professor Les Ebdon of Bedforshire University to this post has caused a strong argument in Parliament. Its details  reveal much about the state of current UK political thinking.

The Office  for fair access is the product of Labour thinking in the early 2000s. They set up the quango  to deal with the scandal that far more pupils from independent schools get places at the top universities compared to  comprehensive schools, when allowing for the numbers of potential applicants in each case. Labour were clear that they needed to cajole, persuade or lean on the top universities to take more pupils from state schools. Their policy implied that the fault lay with the universities in ignoring obvious talent. The underlying instinct  was that  these universities are ignoring   well educated young people from state schools out of prejudice or through their traditional networks encouraging laziness in recruitment.  Many  Lib Dems seem to be in sympathy with this thinking.

It fell to Dr Cable to recuit a new boss of Labour’s organisation. When his choice,  Les Ebdon,  was called before the Select Committee for a confirmation hearing, he worried the Committee. He seemed to say that he would use the powers of his office to require larger proportions of state pupils at top universities, by naming, shaming and removing grants if they did not comply. Some Committee members felt he wished to override the fundamental principle that the universities themselves have to make their own decisions about who is suitable to have  a place, and who is  well enough equipped to make good use of one. They recommended that the government did not confirm the appointment. Dr Cable disagrees with the Committee.

The row is an intense one. All three main political parties are agreed that they want a world in which  more young people from comprehensive schools  go to top universities. Labour and Lib Dems think it needs a Les Ebdon to push the universities. Many Conservatives thinks the fault lies in the state comprehensive schools. The people at top universities I know are as keen on social mobility as the political parties. Many will choose a state school pupil over an independent school pupil if all else is equal. Some will go further and allow for worse teaching, poorer background and the like in their assessment. These universities have programmes to encourage state pupils to apply. They organise sessions for pupils and teachers to learn more of their requirements. They signal very clearly that they want high grade high quality A levels in difficult subjects as a basic requirement. We need to ask why the creators of comprehensive education, who have boosted spending on it by so much in recent years, still think universities need to make allowances for a state education as if it were an impediment to progress.

Dr Cable’s  insistence on Les Ebdon has radicalised more Conservative MPs on this subject. Now many would like the whole Office abolished. They just do not think there is a quick and fair fix by pressurising top universities into taking people they would not choose for academic reasons. On this issue the Conservative party is no defender of privilege, no reactionary group wanting Eton to win in the university place stakes through having superior connections and money. There is just a strong feeling that years of comprehensive education has not achieved the breakthrough in standards and spread the love of learning as  planned, especially in the more deprived areas. There is a fear that ripping out so many grammar schools has cut social mobility, not improved it. Most Conseravtives want to fix the state schools, not penalise the good universities.We will review this question tomorrow.

 

Before the last election Mr Cameron put out a plea for new people to join the Conseravtives as potential MP candidates.  He said we need a new influx of professional talent to help us with our deliberations on future policy, and in managing the public sector. He had in mind highly trained and well educated individuals like doctors working in the NHS.

A couple of doctors stepped up to the plate, and persuaded selectors to choose them as candidates. Sarah Wollaston and Philip Lee duly were elected. They have been keen to offer their advice to the government as it embarks on its NHS reforms. Surely, they asked, this was the idea of inviting them in to the Parliamentary fold?

On Wednesday in the House it did not seem like that. Dr Philip Lee, after months of trying to persuade the government in private of ways to reform the NHS, broke cover and offered a Ten Minute Rule Bill to Parliament. These bills do not usually stand any chance of making it to the Statute book, as there is not normally any time available to take them through a committee stage. However, the slot is popular as it is in prime time just after Questions. Successful Ten Minute Rule bills attract media and lobby group attention and may come to  influence the government’s own legislation.

Dr Lee feels strongly that people do not understand the costs of their healthcare. He proposed that everyone should receive an annual statement of the healthcare they have received over the past twelve months, with the costs of each service item. The healthcare would remain free, but everyone would then know what they were receiving from the system and would understand the costs involved. The NHS should already have good patient records recording all the treatments and consultations. It also has a lot of information about prices from its purchasing activites. He argues it would cost little for a computer to  collate and transmit this to each patient.  He also favours allowing co payments for treatments that go beyond the limited list of treatments available on the NHS, instead of forcing people who want such treatment into opting out of the NHS altogether and going private. He has a number of views on how the NHS could offer better quality at lower cost.

The government did not look keen on all of this. Labour hated it, and duly voted the proposal down.

Sarah Wollaston too has be driven to private members legislation to try to get her message across. She thinks binge drinking is one of the main causes of poor health in the UK, and is proposing legislative restrictions on alcohol advertising to try to control it. She has also been reported making  criticisms of the government’s NHS reforms.

It’s not easy being a doctor in the House. It appears that Doctors have bigger followings for their medical advice than for their political advice, despite the good intentions of the new professionals scheme. I would be interested to hear what you think about the government taking some medical advice.

 

 

As predicted, RBS continued its glittering run of losses. There is no whiff of a dividend for long suffering taxpayers in our role as forced shareholders.

According to  the bank it deserves applause. They could, they argue, have lost so much more. They have, they proudly tell us, shrunk the assets from an eye popping £2.2 trillion  to a tidy £1.5 trillion. I seem to remember them  saying they would slim down to a mere £1.2 trillion, but that seems to have been yesterday’s plan, not today’s. They rejoice in telling us Investment banker bonuses are down this year compared to last.

I think taxpayers will find this all very difficult to stomach. The banker bonuses are down,  but so are the profits of the Investment Bank. Meanwhile base pay for some  is up according to the media, at a time when people in other loss making businesses are usually told there will be no pay rise whilst the company is trying to make a profit. What’s so different about RBS? Well, it has the government and taxpayers bankrolling it. RBS tell me the top paid people did have a pay freeze.

They lost money in Greece, and they lost money in Ireland. What part of the Euro crisis were they unable to forecast? They tell us the core bank is now profitable and successful. So are the other main private sector clearers in the UK. Given the charges and loan rates they impose againmst a background of very low official rates, it would be surprising if they managed to lose money.

Slimming a balance sheet is not necessarily a difficult task. RBS has large trading book positions and large positions in derivatives. These should be wound down by netting off, by sales, by allowing expiry of contracts. Taxpayers should not be running these sort of risks on the scale of RBS. Any competent financier should be able to do this in an orderly way. Bad loan books do require skill in handling and some patience. Good bankers know which loans will never be recovered, and close them down promptly, whilst cutting some slack to borrowers who may be able to change their fortunes and honour their debts.

What should be done with RBS? It should be broken up. The government should create three good UK banks out of the assets and liabilities of RBS, and float them off. They should raise new private sector capital as they go. The government could even get some money back for them if it constructed them sensibly. Taxpayers would be left with the bad bank, which would need continuing Treasury guarantees: we already own these doubtful assets and have to stand behind them anyway.

An alternative proposal is to give the shares to UK taxpayers. Taxpayers would only be able to sell them when they were above a specified price, and would have to send a specified part of the profit to the Treasury. This scheme looked sensible when the RBS share price was higher. The taxpayers could have sold above the government’s purchase price, and reimbursed the government on sale for the whole of the government’s purchase cost. That all looks fanciful at the moment, as RBS shares are so far below the UK government’s purchase level.

Meanwhile, back in the real world, we seem to be lumbered with the idea that the whole of RBS is going to be turned around, and in due course taxpayers will be able to get their money back by selling the shares. Looking at the last two year’s results, that is all a long way away. RBS is not a natural unified bank. It is an ugly congomerate of interests that do not fit together. It has done itself no favours by its handling of the rewards  of the Investment bankers, and creaming off too much of their profit at a time when large losses are being made elsewhere in the Group. If the Investment bankers want to make loads of money they should buy their bank off the taxpayer, and then they could pay themselves what they like. All the time they are punting with taxpayers money, and are part of a loss making group, their remuneration will be a highly charged political issue.

RBS in its current form does not look like proof that capitalism does not work. It looks like proof that socialism just generates bad results and disappointment, as yet another nationalised company gets into the habit of living on subsidy and delivering losses.

 

 

             It is predictable and sad that the south of the UK is threatened with water shortages.

             I remember urging the last government to put in more reservoir and desalination capacity. I asked in my news  release whether they wanted to greet Olympic athletes and visitors  to London in 2012 with words telling them to cut down on the showers and avoid using too much water.  Apparently they did want that, and sure enough it is coming to pass.

             There has to be a reason why an island surrounded by big seas where people worry about rising sea levels, with massive rainfall in many parts of the country, is unable to supply sufficient water for its population. The reason is simple. It is that we still choose to supply our water through local monopolies that are heavily regulated “in the public interest”.

             Potential challengers to the water monopolists find it difficult to get access to water supplies and access to the market for a variety of reasons. They are prevented from offering an alternative to  most consumers.  

               It is instructive to compare the bread and water industries. Both are important to life. Bread is a competitive more lightly regulated industry. I do not recall bakers poisoning their customers. I do not remember the industry issuing warnings that we will have to be put on allocation or rationing. They do not announce at Easter or Christmas when there is a rush to buy more bread,  cake  and buns for family feasts that there is Christmas cake or hot cross bun temporary suspension owing to too much demand.

              In contrast the water industry has been through some worrying water quality issues affecting supply. It is already telling us to use less of its product, and saying that there may have to be bans on garden water usage this summer. It is arguing that the reason is low rainfall this winter.

                 The bread industry does not use poor grain harvests as a reason to make less bread. The water industry seems to think that it can meet the ever rising demand from water stemming mainly from the growth of population in London and  the south East without putting in more capacity. We need to ask why? The industry also seems to think it is fine to assume heavy rainfall, and then to take it out on customers if it does not occur.

                Some people argue it is not green to use too much water. This is bizare. You cannot destroy water. There is a water cycle. All the industry has to do is to collect and clean it. We then use it and return it to the system. Of course government has to stop companies taking too much water out of streams and rivers so they dry up. Water companies collect a very small proportion of the water available. There is plenty of scope to expand supply without damaging rivers. I attended a meeting yesterday with representatives of the industry and regulators. The government’s White Paper wishes to strengthen competition. I proposed they go a lot faster and further in doing so. Without competition we will continue to have dear water, and occasional rationing.

 

             Let me court unpopularity. I am going to defend the City of London.

              The Global Financial Centres Index ranks London as the world’s Number One Financial Centre. It stays a little ahead of New York, and Hong Kong, which have been fairly consistent as the top three for some time. The only other European centre in the top ten is Zurich. Four top ten centres are Asian, and four are North American.

              Many countries would give a lot  to have a top ten financial centre. It brings jobs, incomes, and other business on the back of the financial transactions. The Euro area has been trying for some years to knock London off its perch, and replace it with a unified Euro centre in Frankfurt, allied to Paris. After more than a decade of the Euro, Frankfurt languishes at 16 and Paris at 24 in the league.

                 Centres like Hong Kong, Singapore and Shanghai have studied London’s success and try to emulate it. Only in parts of the UK, the host country to the London markets, does there appear to be so much antagonism to what the City does and what it stands for.

                  The German government acts as host and regulator to a similar success story in world automotive engineering, though Germany does not manage the world number one slot for volume of cars made. You do not hear the German government trying to impose regulations against the expensive and fuel hungry vehicles German industry specialises in making to sell to the rich of the world. There is no push to set an automotive transactions tax. There is not the same jealousy drive to convert people from Mercedes and Porsche to something more practical and mundane.  Even the active German greens are handled in a  way which preserves the interests of the motor industry which does so much to sustain the German economy.

               Similarly the French government acts as host and regulator to the world class French wine industry. French governments do not spend their time exposing the dangers of wine based alcoholism. They do not think up special tortures for people daring to make wines that only the very rich can afford to buy. They take pleasure in producing wines in France that can sell for thousands of pounds a case. They do not propose to cut their deficit by a special levy on wine producers.

               The UK takes the City’s pre-eminence for granted. Politicians of various parties delight in thinking up more new ways to extract more tax revenue, and to expose what they see as the immorality of the actions of some working in the Square Mile.  The large revenues that the UK government does draw from the financial industries are crucial to paying for the NHS and wider welfare system of the country.

               Is this pre-eminence in danger? Are most right to be complacent, thinking  that the City will always be there as the world’s number one whatever we throw at it?  Surveys show that tax, regulation and transport feature prominently in people’s decisions on where to locate their financial businesses. They do not look for the lightest regulation – they look for the right mixture of effective and credible regulation with sensible costs. They do not seek the lowest tax rate available, but if you push the taxes too high it does start to drive talent away. They accept that the price of wanting a great City with good restaurants, cafes, galleries, theatres and schools is some inconvenience to travel. However, if you let your transport system deteriorate too much it can cost you business. There are more beautiful cities around the world than there are top ten financial centres.

                  The UK needs to look after the City, as it is one of the outstanding sucess stories of the UK economy. A medium sized country does not achieve greatness in many areas, so it is important to reinforce success, not undermine it.

                  It was interesting to see in the figures for tax revenues and spending yesterday that Income Tax is now only up 2.4% on a year earlier.  It looks as if the 50% rate is having the predictable effect of lowering revenue. Yesterday’s better figures for borrowing were helped by very buoyant VAT and Corporation Tax, offsetting the very poor Income Tax performance. Recent figures are not conclusive proof of the power of the Laffer curve – I have presented that evidence for CGT here before. However, it is an interesting fact that revenues from Corporation Tax surged,where the government  is undertaking a phased programme of cutting the rate, whilst revenues from Income Tax spluttered, where the government imposed a large increase in the top rates.

 

           We learn that the Foreign Office and doubtless the State Department are most concerned that Iran is fast approaching the ability to produce nuclear weapons. Let us suppose that on this occasion the intelligence is correct. We know that intelligence about weapons of mass destruction  was false in the case of Iraq.

             We learn that the authorities argue that once Iran has these weapons there will be  a rapid arms race to have them elsewhere in the Middle East amongst the neighbours of Iran. This leads some to argue that the west has to seek to stop Iran from arming, by threats, sanctions and diplomatic pressure. If all else fails, they cannot “rule out” military force.

         It is true that diplomatic threats are more likely to succeed if the country on the wrong end of them thinks the west may invade. There is plenty of form to leave enough doubt in the minds of such a country for the threat of force to have some impact. Any dictator will have learned something from the end of the Iraqi and Libyan  dictators.

         The ideal outcome is that Iran backs down from making such weapons, faced as she may think she is by an ultimatum.  The worst outcome is if the west threatens too far, Iran does goes ahead, and the west is left with the dangerous choice. Invasion may bring a war too far. Failure to act undermines  future use of threats as a means of coercing better behaviour.

          History is no simple guide to what might happen. Kennedy’s threat of force if the USSR kept pouring missiles into Cuba was believed and the Soviet ships belatedly turned back, ending a very dangerous crisis. The Soviet suppression of democratic rebellions in Hungary, Czechoslovakia and Poland  was ignored by the west. The USSR had correctly worked out there would be no western military support for the rebels. The west took no action to take various states from gaining access to nuclear weapons. The west allowed Pakistan to remain as an ally, despite harbouring anti western terrorists and holding nuclear weapons. In Iraq and Libya the dictators took a gamble about western action, and lost.

          The problems for the west are several if the west continues to take a strongly interventionist approach.  Intervention does involve killing a lot of people. It means backing one side in a civil war which may include a number of groups that are no more desirable by western standards of civil liberties and democracy than the groups they are fighting. There is no guarantee for the west that once the task of evicting the old government is accomplished, there will be a smooth passage to a new government which meets with the approval of the west and has sufficient consent at home to be credible and successful.

           I understand that the world is an even more unstable place if Iran has nuclear weapons. Using military force to stop that might not make it a more stable place.  Maybe the best we can hope for is enough uncertainty of our intentions for diplomacy and pressure to have a chance of success. Pulling the trigger on another military intervention in this dangerous part of the world is not something I would want to do myself. Isn’t it time that the threat of force was made by countries nearer to the problem, with more money than we have to spend on such things? All of this is best carried out by the UN, with the forces supplied by countries most closely involved with Iran. The UK has shed all too much blood and treasure in recent Middle Eastern wars. There is no need for the UK to seek to lead world reactions to Iran.