Debate on the Address

John Redwood Excerpts

Tuesday 7th November 2023 Commons Chamber

[Mr David Davis (Haltemprice and Howden) (Con)]

It is a privilege to follow the Public Accounts Committee Chairman. She will understand that I have a certain affection for her in these debates because of her position.

The hon. Lady made a comment about looking forward 30 years. The whole western world faces a paradox that goes back 30 years. In the 1990s, three massive things happened in the world: first, there was a dramatic reduction in tariffs, which led to a huge increase in global trade; secondly, there was the collapse of the Soviet empire; and finally, there was a dramatic acceleration in the creation and adoption of new technology. All those things raised well over 2 billion people out of oppression by starvation and out of political oppression. They changed the world dramatically for the better, but those dramatic changes have had a number of effects.

Today, we face a series of challenges in the western world, not just in Britain, that are more complex and more difficult to deal with than any I can remember since 1979, whether it is Ukraine and the series of wars that are breaking out, whether it is the migration that results from that, whether it is domestic challenges such as the impact on the wages of the western working class—much of the impetus for Brexit was the result of working-class wages across the west being depressed by competition with the rest of the world—whether it is the impact on public finances, which derives partly from that, or whether it is the impact on public services, which are failing not just in Britain but in many countries, to some extent for the same reasons.

That is why, unlike the hon. Lady, I welcome what I think of as the common sense in the King’s Speech. There are a number of sensible measures, including on crime and justice to promote safety, justice and closure for victims, which is important, and on net zero, where the approach is intelligent and measured, rather than headline driven. That is important—the old net zero strategy would not have survived the public reaction. Like the hon. Lady, I vehemently welcome the policy on smoking. We have done far too little for many decades to focus on public health, rather than patching people up in the last three years of their life, which is what our national health service has been reduced to doing. In education, we are building on some of our successes, including in PISA—the programme for international student assessment—and our international competitiveness. There is much to recommend in the proposals in the King’s Speech, particularly with respect to apprenticeships and vocational education. The Minister for Skills, Apprenticeships and Higher Education is brilliant and is making a great difference.

Broadly, the proposals are sensible, but the House would be surprised and disappointed if I did not find something to criticise in the Home Office proposals. I will not surprise the House—I am going to pick up on something that I think is a fundamental mistake. I hope that Ministers will think hard before they introduce the proposal, which has been aired in briefings in the last day or two, to allow the police to search homes without a warrant. This is one of the fundamental foundation stones of a free British society, along with jury trials and the presumption of innocence. The right not to have the state kick your door down and search your house without judicial approval is a massively important British value. If anybody has any doubt about that, I have two words to say to them: “Damian Green”. They should go back and look at what happened with the Metropolitan police’s handling of the case, as it were, of my right hon. Friend the Member for Ashford (Damian Green). The Leader of the Opposition was then the Director of Public Prosecutions, and he in effect struck down the Metropolitan police’s behaviour. We have to think about that very hard indeed, because the judicial control of the police is vital and must be preserved.

Beyond that, the education measures are good as far as they go—as I have said, particularly on skills—but I would go further, as I will explain in a moment. Indeed, all King’s Speeches are basically just frameworks, not the whole agenda for the coming year, and this one is the same. As a result, the last line of every King’s Speech is always the same:

“other measures will be laid before you.”

I want to talk about what I think those other measures ought to be.

What should those measures be? I think most of them should be in areas where the state is struggling to cope with the worldwide problem I have talked about arising over the last 30 years. By the way, it is not an accident that I say “30 years”; that covers Governments of both persuasions, and neither have managed—in some cases, I might say they have failed—to solve the things I am going to talk about. The one advantage we have when it comes to the problems I am about to lay out in education, health and housing—the three critical areas on which we need to go further—is that for the first two, technology may come to our aid to some extent. I, like the Public Accounts Committee Chairman, welcome the move on AI. I thought it was quite risky to have that conference, but it worked diplomatically. It has not got a solution yet, but that has got us on the first step.

Let me talk about health for a second. All parties have taken the approach for my entire lifetime, which is much the same as the lifetime of the health service, of putting more and more money into the health service. We are now talking about a huge amount of money; it swallows the entire amount of national insurance contributions, and what was supposed to cover health and pensions now simply covers health. We spend more money than the OECD average on health—that in itself is quite extraordinary—but it does not deliver. We can put all sorts of excuses in the way, but this is more about management than it is about money. Before we got to covid, from 2017-18 to 2018-19 we put about £3 billion extra into health in real terms—and what happened? Productivity went down by 0.75%. The next year, we put in £7 billion, and productivity went down by over 2%. That was before covid started.

Those dry numbers sound bad, but they do not quite carry the terror of the actual effect, and I am going to give an example from my own constituency to explain what I mean. I had a constituent whose name was Richard. He had had cancer, and had been operated on and cured, and as a result he had regular six-monthly check-ups thereafter to watch for any outbreak. But through administrative failure, he did not get the check-ups, so was at least six months behind the timetable. We all know that the later we diagnose a cancer, the more difficult it is to solve. The operation he was supposed to have was then delayed as well, and it got to the point where basically there was no chance of recovery for Richard. He came into my life, as it were, as I was his constituency MP and his family wanted him out of hospital for Christmas so that he could die among his friends and family rather than surrounded by strangers. That is what we are talking about thousands and thousands of times over. That is the impact of this failure. I think there are a lot of things we can with respect to the re-management of the health service, but I will talk about one.

[John Redwood (Wokingham) (Con)]

Is my right hon. Friend aware that the Office for National Statistics published figures for the three years from 2020 to 2022, which state that public service productivity in general fell by an unprecedented 7.5%? That means that we needed to put roughly £30 billion extra into public services to achieve the same thing.

[Mr Davis]

My right hon. Friend is right: it is a systemic problem. It does not just affect Britain or the health service. Indeed, I think that numbers for those years for the health service were about 25%—so huge, huge numbers. I bring this back to the reality of the individual. If we delay diagnosis and treatment, we sentence people to death. It is as harsh as that.

I would like us dramatically to increase the amount of diagnostic capacity we have. If we look at OECD numbers on CT scans, I think we are third from worst. This is why I say it is not a single Government problem—we do not get to be third from worst in one term; it happened over the course of the whole 30 years. On MRI scans, we are the worst in the OECD. How on earth a country such as ours gets to that position is astonishing.

--- Later in debate ---

[John Redwood (Wokingham) (Con)]

I have declared my business interests in the Register of Members’ Financial Interests.

I hope the Government are listening to the right hon. Member for East Antrim (Sammy Wilson) on those important matters for Northern Ireland. It is vital that there are changes to the Windsor framework, so that Northern Ireland is properly a part of our United Kingdom and can accept our commonly agreed laws on everything from taxation through to the arrangements over products and trading.

I welcome very much the emphasis in the King’s Speech on the United Kingdom’s producing more of our own oil and gas in substitution for that which we are currently importing. The logic of substitution is most obvious in the case of gas. We have gas pipelines already installed to bring gas from the fields to the mainland, with capacity in them because gas output has been declining; and, of course, if we deliver it directly through gas pipelines we have none of the extra cost and trouble of transit involved in importing liquefied natural gas, usually from the United States or Qatar. Those who are keenest on the road to net zero should recognise that having our own gas down a pipe greatly reduces the amount of world carbon dioxide because so much more carbon dioxide is generated if it is necessary to liquefy the gas, to transport it for long distances, and then to recreate it as gas when it arrives. All those are very energy-intensive processes which we do not need if we generate more of our own gas from the North sea.

I have good news for Ministers. Let me remind them that although they say they think we need a bit of additional legislation for future licensing rounds, what we really need to do is concentrate on developing the existing fields and the new discoveries that have been well known about, in many cases, for a great many years, and maximising the output of what we already have so that the gas and the oil come more quickly and at lower cost, because we need it now. Most of our constituents still need gas for their domestic heating and will need it for the foreseeable future, most of our industrial plants run on gas as their main source of energy, and most of us have petrol or diesel cars, so we still need the fractions of oil to run our transport. It is important for us to get on with that—and, as the right hon. Member for East Antrim has said, another great bonus for all of us, including the Treasury, is that the sooner we get that oil and gas landed, the sooner we will secure a big increase in tax revenues from which we could benefit, enabling us to get the deficit down and support the public services that we wish to see.

I am very pleased that the King’s Speech began with the mighty topic of the economy. I am sure that the Government and the Prime Minister would agree that what we do over the next year to get inflation down more quickly, to bring about faster growth to create more and better-paid jobs, and to secure the extra investment that we want to see is absolutely vital. Again, I have good news for the Government. I think there are measures that they can take in a future Finance Bill—which, I am sure, will constitute part of our proceedings over the next year—that would help to achieve all those aims. They are not incompatible, and we do not have to wait. Some people seem to think it is necessary to sequence it and to spend a year of misery—with a massive credit squeeze and an austerity Budget—to get inflation down before we can think about doing the other things, but if we cut the right taxes, we can bring forward the reduction in inflation, and that, of course, has a direct knock-on effect on the cost of running public services. One of the reasons we have seen such a big increase in public spending in the last year or so is the massive rise in inflation, because so many things are directly geared to the inflation rate.

So, Government, let us have a year of temporary tax cuts on energy, because British energy is far too expensive. It makes us much less competitive, and it is a burden on household budgets. I would pay for that— because I do not want to increase the overall deficit—by selling all those NatWest shares that we still have. Interest rates have gone up a lot, and banks should be making a lot more money. Let us just sell all the shares and use that for a one-year advantage while the oil and gas prices are still very elevated, and to ease the transition from slow growth to higher growth and to a faster reduction in inflation, which will then help reduce the deficits.

We also need measures to help small business and the self- employed. It is of great concern to me, as it should be to many other Members, that we have 800,000 fewer self-employed people today than were known about, at least, in February 2020. Some of that is due to covid and lockdowns or to natural retirements, but some of it is due to the sharp change in the tax system called IR35, which took place in two tranches, one at the end of the last decade and one at the beginning of this one. It is now very difficult for people to grow businesses, particularly if they want contracts from other businesses. This has put many people off, and we are not seeing the new generation of self-employed people coming through that we have seen in previous generations—and that is mightily important, because they provide much of the flexibility in our economy, and can also provide extra capacity. Such measures would also help to provide worthwhile things for people to do, because some will be currently without a job and will be on benefits generally. So, Government, change the tax system back to the pre-2017 one which allowed a phenomenal growth in the number of self-employed people, and helped the workings of not only products and services markets but the job market itself.

We all have many small businesses in our constituencies and we know how important they are to the services and output of our local community. We know how flexible they are, how hard so many of them work and how prepared they are to go the last mile to win clients and to look after clients and customers. They need a tax break, and the first thing we should do—now that we no longer have to accept the EU rules on VAT registration —is to have a big increase in the threshold level at which businesses register for VAT, because this is now a major constraint. I am sure we all know small businesses that turn down work or close down for a month extra during the year because they do not want to go over the £85,000 turnover, with all the burdens of the compliance, regulation and paperwork that that would cause, as well as having to put 20% on prices and so forth.

Let us allow small businesses to enjoy their flexibility for longer and to get to a bit bigger size—let them have one or two employees—before they have to go through all the hassle of registration and the legal pressures that that generates. I think that would generate more revenue from other types of taxes, and even on the strange Treasury arithmetic it would be quite a cheap item. For example, we could easily pay for it out of modest improvements in productivity, which we will need to ensure if we are to deal with the collapse in public sector productivity identified by my right hon. Friend the Member for Haltemprice and Howden (Mr Davis). There must be ways to do something about that, and I believe that the Chief Secretary to the Treasury is working on them.

My final point relates to the Bank of England. The Bank is independent in the setting of the base rate and the work of the Monetary Policy Committee, but it is not independent in managing the mighty portfolio of bonds that it currently owns on behalf of the institution and wider taxpayers. The proof of that is the fact that successive Chancellors from Alistair Darling onwards signed a concordat with the Bank of England giving it permission to buy bonds and agreeing to pay any losses, should losses be made, when it came to sell them or when they matured. The Bank of England now wishes to sell £100 billion-worth of bonds over the next few months, now that they have crashed on the markets because of the Bank of England’s changes in interest rate policy and bond policy, meaning that huge bills are being sent to the Treasury. I believe that the bill was £24 billion of losses in the first four months of the current fiscal year, and the theoretical liability is over £170 billion of losses of that kind and of the kind of running losses due to the way in which the Bank holds bonds at the moment.

I would like to advise the Chancellor and the Governor of the Bank of England to look at what the European Central Bank is doing. It too made the colossal mistake of overinflating, over-creating money and buying too many bonds at very expensive prices, just as the Bank of England did, and it too ended up with the predictable excess inflation that we have seen. But the ECB is not panicking out of those bonds; it is holding them until they repay, which will result in fewer losses for it. There will still be losses, because it often paid more for the bonds than their actual repayment value, but it is not incurring big losses by selling them at very depressed prices on the market, now that the central banks have decided to smash the asset values of the bonds that they spent quite a lot of time acquiring just two or three years ago in many cases.

We need to do this because the Treasury should not have to make those huge losses and because money has now lurched from being crazily too expansive and likely to generate inflation to being far too tight and likely to overshoot in slowing the economy too much. So please, Government—listen, watch and on this occasion I say learn from the European Central Bank, which seems to be getting this just a bit more right than we are. Then we might start to make progress in bringing together the perfectly compatible aims of getting some growth, which we will not get if we have too severe a credit squeeze, and getting inflation down, which could be speeded up with the right type of tax cuts.

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[Sir Jacob Rees-Mogg (North East Somerset) (Con)]

I certainly welcome this King’s Speech, particularly because at the end of the King’s Speech we saw—I see a former Lord Chancellor, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), looking at me with a beady eye—the reintroduction of an important tradition: the Lord Chancellor went backwards down the stairs, rather than the modern innovation that we have been infected with in recent years of the Lord Chancellor turning his back on his sovereign. So we have one occasion when the Tories, after 13 years of Government, have at last turned the clock back. Evelyn Waugh complained that in all his life the Tories had never turned the clock back, but we now have one good example.

In the King’s Speech, we also have an opportunity for growth. I endorse every word said by my right hon. Friend the Member for Wokingham (John Redwood) on growth, the need for growth and the need for us not to treat the withdrawal from quantitative easing in the way the Bank of England is doing it, which is insanity. The men in white coats, who were once called upon by John Major, could be sent in a different direction on this issue.

Two key parts of growth are set out in His Majesty’s Gracious Speech. The first is in the comprehensive and progressive agreement for trans-Pacific partnership and in having legislation for that. Free trade is the real opportunity to make this country and the world richer. My right hon. Friend the Member for Haltemprice and Howden (Mr Davis) pointed out that, since 1990, the growth in free trade has had a phenomenal effect in reducing absolute poverty from 36% of the globe’s population to 9.2%—from about 1.9 billion people to seven hundred and something million people. That phenomenal success in prosperity comes from free trade. With the CPTPP, we have the opportunity to push that further, but we should go further still.

We should get rid of tariffs and barriers to trade unilaterally, because opening up our market is beneficial for our consumers. Protectionism is always the provider of the port for vested interests, but free trade is to the advantage of consumers and individuals. So yes, the Government are going in the right direction and the King’s Speech is going in the right direction, but I would encourage His Majesty’s Government to go further, as I would on the issue of using the Brexit opportunities.

We have a chance to become a light-touch regulated economy that can be efficient and competitive. Again, we should be challenging vested interests. Many Members will remember that, when the REACH regulations came in, the chemical industry was up in arms, saying “These are terrible, awful European innovations. We don’t want them, they are costly, they are ghastly.” Then industry said, “Oh, these regulations are marvellous because they keep out any competitors.” We want to change things like the REACH regulations, so that we recognise regulators around the world that provide a similar level of safety, rather than allowing regulations to be used as a means of covert protectionism. That is the challenge for this Government.

Using these advantages is mentioned in the King’s Speech; we need to use them aggressively. I have an interest in financial services, declared in the Register of Members’ Financial Interests, but these advantages should be used particularly in financial services, where we should restore our position as one of the most competitive areas in the world. We should be using them in agriculture to take the burden off the backs of our farmers because, when I advocate free trade, it is only fair that the quid pro quo is that we allow those who produce to do so in an easier way—in a way that takes burdens off their backs.

Talking of taking burdens off backs, there is a part of the King’s Speech that is essential, but does not go far enough. A few weeks ago, my right hon. Friend the Prime Minister made an excellent speech about lifting some of the net zero burdens and some of that will be coming forward to this House in the coming months, but it is nothing like enough. On the motor cars issue, most of the regulations, as I think my right hon. Friend the Member for East Antrim (Sammy Wilson) pointed out, will remain and will still make it harder for people to buy cars; they will make it more expensive. That is a burden on British people. We want to be getting rid of things such as that. We do not want to force people to do things; we want the technology to be there first so that they want to do it. No one had to regulate to make people give up the horse and carriage and move to the motor car—the horseless carriage, as I used to call it—even though His Majesty came to Parliament in a horse and carriage. They did so not because of a regulation or a penalty, but because market forces meant that we favoured the motor car. If an electric motor car is so good, people will buy it; if it is not so good, they will stick to petrol—I am certainly going to stick to petrol for the time being.

[John Redwood]

Does my right hon. Friend agree that it does not work in its own terms? If somebody gets an electric vehicle today and goes home and plugs it in, they will have to burn more gas in a gas power station, because there will not suddenly be more renewable power to recharge that car.

[Sir Jacob Rees-Mogg]

My right hon. Friend is absolutely right but at least, thanks to this King’s Speech, it may be a little bit more British gas that we will be getting out, and that of course should be pushed further. There has been some talk that the proposals have been watered down. Well, they should be watered back up again, so that we get as much out of the North sea as we possibly can. It is in our economic interests and our environmental interests because the emissions are lower when we use domestically produced resources. But, as I say, we have to go further.

We have heard the news about our steel industry. The reason our steel industry is being changed, so that we will have no pure steel manufacturing, is because of Government policy. It is because of the emissions trading scheme. It is because of having the third most expensive electricity costs in the world. It is about putting burdens on industry that make it impossible for it to operate and this utterly bogus view that, if something is made in China, the emissions are Chinese and, if it is made in the UK, they are British emissions, even if the steel is used for exactly the same purpose. This is the ridiculous thing about Drax. The chips put into the Drax machine count as Canadian emissions even though they are burnt in the UK. This is barmy in wonderland stuff. We need to be putting British industry first, and not using silly statistics—legerdemain of carbon emissions—to try to pretend that we are doing something that we are not.

This ties in with the growth agenda. Let us look at what we have already achieved. Since 1990, the UK has reduced emissions by 44.1%, the United States has reduced emissions by 2.6 %, and the People’s Republic of China, our red friends, has increased emissions by 426.5%. We have done our bit. Our economic growth has been lower in that period than it otherwise would have been because we have forced upon ourselves the high cost of energy, which the Americans and the Chinese have not done.

Therefore, we need a growth strategy with cheap energy, but there are problems that we have to deal with. There is a bit about enforcing the rules against the small boats, but we have to go further than that. We are not building enough houses, as the Leader of the Opposition pointed out. We are not building the infrastructure for 606,000 net migrants to come to this country a year, and we are finding, as we see there is trouble on our streets, possibly even on Armistice Day and Remembrance Sunday, that the integration that we hoped we had in this country is not as deep as we thought it was. That is something that should concern us. I thought that we could be very proud of the integration that we have in this country and the good relations, and we want to keep those, and the way to keep them is to control migration and to have it at levels that allow for integration to take place.

Therefore, I am disappointed that we are still focusing on illegal flows. I am afraid we are caught up in the HMT-OBR understanding of migration that is wrong because it focuses on total GDP, rather than GDP per capita. We are actually making ourselves poorer as a nation by the excess of migration that we are having, and we are risking what I might call the comfort of the nation—the ease with which we all live together—by allowing the arguments of countries away from the United Kingdom to be heard on the streets of the United Kingdom, which is unwelcome. We want a growth strategy, we want cheap energy, we want to control migration, but we do not want to abandon our ancient liberties.

I was not planning to mention this, but I was inspired by my right hon. Friend the Member for Haltemprice and Howden, who is standing at the Bar of the House, when he talked about warrantless entry. If the police always got things right, we might think that was a good idea, but over the last few years we have had any number of problems of police behaviour and police leadership.

I say that cautiously, and I concentrate on leadership because when we go around this Palace, we speak to as fine a body of men and women as we could hope to meet, who keep us safe every day, and whenever I meet constables in North East Somerset, I find exactly the same—fine, brave people who look after us. But their leadership, we must acknowledge, has been pretty poor, and this seems to me not the time to give them a power that goes against one of our most ancient constitutional safeguards.

I know that there is a rule in this House that discourages tedious repetition, Madam Deputy Speaker, so I hope I can assume that the House was not paying sufficient attention in March 1763 to a comment made by our old friend Pitt the Elder, because he said:

“The poorest man may in his cottage bid defiance to all the forces of the Crown. It may be frail—its roof may shake—the wind may blow through it—the storm may enter—the rain may enter—but the King of England cannot enter!—all his force dares not cross the threshold of the ruined tenement!”

That is such an important liberty. It does not mean that the police cannot run in after someone if they are caught in the act, but it means that if they are to come through someone’s door, they need evidence and a warrant. It is a foundation of our liberties, and I do not think a King’s Speech, as a prelude to a manifesto, is a place in which to water down our ancient liberties.