My Intervention at the Home Secretary’s Statement on Western Jet Foil and Manston Asylum Processing Centres

Rt Hon Sir John Redwood MP (Wokingham) (Con): I strongly support all that the Home Secretary said in her opening statement: she spoke for the nation in saying we need to control this problem, and she spoke for all those caught up in these tragic events. I hope that all men and women of good will get behind her, and that the Home Office fully supports her in making sure we can speed up processing and return all illegal economic migrants to the safe countries they came from.

Rt Hon Suella Braverman MP KC, Secretary of State for the Home Department: My right hon. Friend speaks a lot of sense, as always, and he is right; the British people have had enough of an out-of-control borders system. It is incumbent upon this Government to address that, and I know for a fact that this Prime Minister takes the problem extremely seriously, and I know he will leave no stone unturned until it is fixed.



The Budget – Conservative Home article

 The Truss team railed against the pessimistic forecasts of the OBR and tried a tax cutting statement without OBR forecasts and without setting out their  alternative view of spending, revenue and borrowing. Many of us thought that unwise at the time.  The Sunak team were strongly critical and argued for higher taxes and less spending. Now today the new PM and Chancellor ponder very difficult options for tax rises and spending  cuts as the likely depressing  OBR forecasts come to haunt them.
        As regular readers will know I have long argued for a different control system for guiding our economic progress, where a tougher rule on inflation complements a  growth target. A limit on interest payments on debt which is already in place  would complete the framework for prudence. Unfortunately no post Brexit  Chancellor wanted in better times to make a change to our system though  we no longer have to follow the EU system based on state debt as a percentage of GDP. The current irony is the EU have seen how impossible steering with such targets is in today’s conditions  and have at least temporarily suspended them. Meanwhile the UK has to set a budget which demonstrates debt falling as a percentage of GDP at least by the end of the forecast period.
       There are various problems with this approach. No-one can know what the deficit will be in three years time, so the controlling number is a guess. If the number shows a possible large deficit it forces tax rises and spending cuts which may result in a recession. A recession would then increase the actual deficits we ran up, as the deficit is  very sensitive to growth rates. The marginal extra pound people and companies earn as the economy expands is highly taxed bringing in more revenue. Growth cuts the  numbers out of work and increases taxable activity. Recession removes the highly taxed marginal pounds and plunges more people onto benefits .
       The Truss team were right that you need to go for growth, or in current circumstances take some action to offset the pending downturn. You need to do so whilst eliminating needless or less desirable spending, showing concern to limit the deficit you run up. The new team need to grasp that they do not  have a lower deficit option going forward. They either allow a  bit higher deficit to offset some of the recessionary forces, or they reinforce the recession with tax rises and end up with an even bigger deficit. Raising corporation tax as much of the world slows down or slumps will doubtless mean much less inward investment and less new business, depressing our revenues. We will have to watch Ireland attracting more of the investment that is available thanks to their much lower tax rate.
        The best approach both for the economic prospects of the nation and to bind the Conservative party more closely together would be a full launch of a Sunak growth plan, including limited  tax cuts to foster more enterprise, investment and revenue, sensible spending levels and an appraisal of forecasts of the future deficits. Scenario forecasts rather than spot forecasts would be so much more informative  given the range of variables. Gas and electricity prices will have a big impact on spending and inflation going forward. Interest rates will have a growing impact on debt service costs so let’s see how outcomes vary with different levels of these and other crucial influences.
        The Chancellor should reinstate the roll back of the aggressive IR35 changes of recent years. We need all the self employed and start up businesses we can get and the onerous rules deter or impede this progress. He should work with the Business Secretary to accelerate permissions for North sea oil and gas investment. We need to cut carbon dioxide output by substituting our own piped gas for the imported LNG, which will also greatly boost tax revenues. We need to extract and sell more of our own oil for the same reasons. He needs to put plenty of tax incentive into the new Enterprise Zones, and to ease Business rates generally. The carbon tax should be suspended all the time energy prices are so high, as it is forcing the closure of high energy using industry. More imports, fewer jobs and less tax revenue will result from failing to tackle very dear industrial energy in the UK.
        The government needs to reduce spending. I repeat that they should tell the Bank of England not to sell bonds at a big loss, saving £11bn of payments to the Bank from the Treasury between now and next March. The bond portfolio of the Bank has always required government consent and underwriting and there is no need to sell these bonds now at current prices. They should amend the generous energy support package. They need to limit the amount of home energy any household can buy at the subsidised price to a reasonable amount of fuel. If rich people want to heat their swimming pools and outdoor hot tubs then they should pay full price for the extra power this takes.
           They could postpone the changes to social care that have not  been fully thought through and costed, keeping the current financial system in place. They could suspend the free smart meters programme which costs over £1bn a year, as the people who want them now have them. They could abandon the later phases of HS2 where construction contracts are not signed, saving maybe £100bn in future years. The collapse of commuting demand for rail travel has greatly changed the capacity case for this investment. The best cuts of all can come from intensifying work to help more of the people on benefits into the many jobs still available in our labour market. We need more mentoring, training, encouragement, and a clear understanding that benefits are temporary support whilst you find the new job. The government also needs to get on with the detailed work of slimming down the  numbers of quangos, working through quality and efficiency agendas service by service, and helping civil servants deliver more with less.
           November 17th is a big day for the government and our country it serves. It has to confirm sufficient help to people so all can afford the winter energy bills and the other rising costs. It has to demonstrate purpose to bring inflation down as the current higher interest rates should do. The future path of deficits and borrowing must  look better as public spending control and a resumption of growth brings revenues closer to expenses. The future energy subsidies must be cut and more market discipline restored. We need to foster much more investment in domestic energy, not deter it by a nexus of price controls and windfall taxes. The government  needs to remember you cannot tax your way out of recession, but you can tax your way into one. There is no way forward for the next year without borrowing more , but there are choices that can reduce the downturn. Austerity would  make it worse. This Financial Statement or budget will define politics up the next election. Going for growth in a  responsible way is what is needed.


The anti Brexit establishment plans a big push

The government which gained a majority by uniting pro Brexit voters with Remain voters who wished to accept the referendum and go with some Brexit wins, needs to be aware that some forces that cannot accept Brexit are out to push back on policy.

  1. They are trying to oust the Home Secretary as they fear she will take action to stop the flow of illegal migrants across the Channel. Anti Brexit lawyers and some Home Office officials are out to prevent policies that could work, as they dislike the wish of many Brexit voters to take back control of our borders..
  2. They want to sell out the Unionists in Northern Ireland who are resisting the EU’s unreasonable misinterpretation of the Protocol to stop the free flow of GB to NI trade, to stop NI benefitting from any VAT cuts, and to keep NI under EU laws. They wish to block a moderate UK legislative solution to restore UK trade and taxes in NI which is necessary to reinstate the Good Friday power sharing arrangements.
  3. They want prevent  gas exploration and development where communities want the revenue and the jobs it could bring, and where companies are willing to produce more from the North Sea,  to keep the UK import dependent
  4. They continue to block VAT cuts on energy despite the advantage this would bring by lowering the inflation index and helping people’s personal budgets
  5. They wish to impose an austerity budget to  deepen and lengthen the downturn and worsen the UK’s economic performance
  6. They want to abandon the Bill to reduce the volume of inherited laws from the EU and to establish the full supremacy of UK courts.


Populists against globalists

The persistent use of right and left as ways of analysing politics much favoured by the BBC and other commentators is way out of date. I heard yesterday morning the BBC describe Bolsonaro as extreme right and Lula as left in Brazil. Both are different kinds of populists who worry the global elites, though they currently think Lula will conform more with their wishes if he gets second period in office than he did the first time so they do not call him extreme.

The populist against the internationalist  is the best shorthand or generalisation to capture modern politics. In Europe we see globalist parties like the old Social Democrats and Christian Democrats can no longer win majorities and need to form difficult coalitions with other parties willing to trim to the establishment line to get Ministerial office. We see waves of challenger parties seek to assemble a popular army against the elite. In Greece Syria mounted a strong but ultimately unsuccessful challenge. In Italy first Lega, now Fratelli, try to moderate EU internationalist policies. In Spain Vox has dented traditional parties. In the UK the Conservatives could only win a convincing majority by embracing populist Brexit.

In the USA the Republicans could only win the Presidency by embracing populist Trump who railed against the internationalist establishment Democrats.

I myself find myself in agreement with the populists in some of their challenges to damaging elite theories and policies, but not in agreement with their more extreme views and actions. The internationalists are not always wrong and do include many talented people with good ideas and the capacity to improve the lot of the people. I do not like the arrogance and thuggish dismissal of any alternative view that the elite at their worst display. Nor do I like rioting Trump supporters loose in the Capitol.



Going to COP 27?

I think the PM was right to say he needs to stay in the UK to work with the Chancellor on a good budget rather than flying to Egypt. It would be better if these conferences to urge us all to travel less  and to burn less fuel were more often conducted on line to set an example on the issue of jet travel and to make their own contribution to reducing CO2 .

COP 27 faces the same big problem COP 26 faced. China generating 30% of the world’s CO 2 intends to  carry on increasing its output for most of this decade. President Xi will not be in Egypt for others to lobby him  to do what western countries are doing to cut their output. Current policy of us closing down energy intensive activities and fossil fuel mines and wells in order to import goods  from China does nothing to cut world CO 2. In many cases it  boosts it as we spend more on transport and on less environmentally friendly production in China. India, Russia and Brazil also are large producers of CO 2.

COP 27 does face a new problem from COP 26. As a result of the war in Ukraine and the need for the EU to cut its use of Russian gas, countries like Germany and Poland will be using more coal. China, facing shortages of power from hydro and renewables has also turned to more coal dependence. This is against the main conclusion of COP 26 that  countries should make rapid progress to eliminate coal, treating gas as a transition fuel whilst renewable electricity was expanded and technologies developed to store it for times when the wind does not blow and the sun does not shine.

It will be interesting to see what solutions they propose to tackle this difficulty.