Gerard Lyons: How to tackle the cost of living crisis

11 Jan

Dr Gerard Lyons is a senior fellow at Policy Exchange. He was Chief Economic Adviser to Boris Johnson during his second term as Mayor of London.

Crisis? What crisis? The good news is that the economic rebound continues, and the jobs market has returned to broad health. We may also be over the worst of the pandemic, although possible new variants mean that learning to live with Covid and avoiding further restrictions may be a key priority this year.

Yet it is not this recovery but two other economic matters that look set to dominate policy this year: the immediate cost of living crisis and, less talked about, where growth will settle post-pandemic. Views on the latter may influence how policy responds to the former.

While the consensus expects growth around 4.5 per cent this year, after seven per cent last, there is still much pessimism about the future trend rate of growth.

It decelerated following the 2008 global financial crisis. If future growth is low, more of the budget deficit is structural, not cyclical, and needs to be addressed through fiscal restraint – a squeeze on spending or higher taxes. That thinking, which seems to dominate at the Treasury, will be resistant to reversing planned tax hikes for this spring.

Moreover, the economic consensus is that Brexit will exacerbate this challenge. However, despite this common refrain, tax rises are not inevitable. It is not leaving the EU but what you choose to do after you have left that helps determine future growth. In this respect, the Government still needs to articulate a market-friendly pro-growth economic strategy.

It also has bearings for now. There is no easy way to stop a cost-of-living crisis, but the first thing you should do is not implement policies that will make it worse.

The present crisis has multiple components. Inflation that is set to peak at over seven per cent in the spring. Higher energy prices though global in origin, are exacerbated here by decades of poor energy policies, including price caps that are now being lifted.

Furthermore, there have been two separate decisions taken to raise taxes this spring: higher national insurance, and a stealth tax in the form of a freeze on income tax allowances. And then there is a postponement of the triple lock on pensions, which means that they will rise by less than the increase in inflation this year.

Often at times of economic shocks, the search is for a timely, targeted and temporary response – that is, one that addresses the immediate problem but does not change longer-term policy.

Currently, policy is looking at how to support those most in need, which raises questions of how it can be funded.

Temporary financial help as offered during the pandemic would be one approach. It could be paid for by a windfall tax on energy firms. Such a measure would not be ideal, but it has been tried before, for example on North Sea oil producers and banks.

The argument against a windfall tax is the message that it sends. Firms across all sectors may need to factor in that high future profits could be seen as a cash cow by future governments, and this might deter planned investment in the UK by attaching a risk premium to it. Corporate tax rates have already risen, adding to the anti-business perception.

Another option is to cut the five per cent VAT on fuel. The saving, while small, will help those on low incomes. That measure alone, however, would not be enough in itself. And the Prime Minister seems to have ruled the move out as a blunt measure that disproportionately benefits higher earners.

It also appears that the planned tax increases will not be reversed – particularly as the hike in national insurance was effectively presented as a hypothecated tax for health and social care. Reversing this would reopen questions about how to fund the latter.

However, reversing the tax increases makes more economic sense. Not just because it would alleviate the cost-of-living challenge, but because the fiscal numbers, while poor, are improving and mean that such tightening is a choice, not a necessity.

These decisions are not easy. There is no right or wrong answer.  They are about judgement calls – to address the immediate challenge as well as to position for the future.

A current economic debate is about how much fiscal space governments have, despite public debt levels being at an all-time high globally. The debate is less concerned with providing a case for rampant state spending, and more with avoiding being pushed into tightening fiscal policy unnecessarily.

A high level of debt adds to problems, but if the rate of interest is less than the rate of economic growth it creates fiscal space, and improves the chances of debt sustainability. Debt to GDP can be reduced steadily, provided growth is solid and inflation does not let rip. The latter forces rates and yields up, hampering growth.

However, the Bank of England has been asleep at the wheel over the last year. The risk is that the inflation genie is already out of the bottle, as inflation expectations rise and firms increase prices.

In all likelihood, inflation will peak in the second quarter – since some of the initial supply shocks are now over and imported inflation may have peaked already – and, after staying elevated for a short while, will decelerate.

But chances cannot be taken and inflationary risks will force the Bank to raise policy rates this year, and reverse its printing of money by implementing Quantitative Tightening (QT).

We witnessed a short-lived cost-of-living crisis in the wake of 2008, when a weaker pound triggered a temporary rise in inflation. But the last such major crisis was in the mid-1970s.

There is a need not to be taken in too much with current comparisons being made with that decade, since the economy and environment are so different.

While there are not many economic lessons to heed from that period, one springs to mind. In a battle against a rising cost of living, it is vital to have the public on side. Not only so that they can understand the tough policy context, but also in the case of inflation to avoid what are called second-round effects – or put more bluntly, a wage-price spiral.

In June 1975, the annual rate of inflation hit 26 per cent. The then Prime Minister, Harold Wilson, decided that every household needed to receive by post a pamphlet about his policy to fight inflation. I still have a copy.

Entitled Attack on inflation: A Policy for Survival – a Guide to the Government’s programme, its 16 pages made clear why inflation needed to be brought under control. One telling message, in bold capitals was: “the battle (against inflation) cannot be won in one year…but the battle could be lost in one year.”

In the event, the Labour Government lost the battle. Policy focused on a wages and income policy, culminating in the “winter of discontent” in 1978-79. The annual rate of inflation did not fall back into single digits until 1982, after Mrs Thatcher was in power, and also following a deep recession.

I am not advocating such a booklet now, but rather stressing the importance of ensuring that people understand the context of what is happening, especially when here is so much uncertainty and the pain may be severe but short-lived.

The best that can be done is to control the controllables. Provide assistance, ease the pain, reverse the tax hikes, explain why – and focus on a pro-growth strategy.

Stewart Jackson: A reshuffle that moved some of the Prime Minister’s critics into the Cabinet would be prudent

10 Jan

Stewart Jackson is a former Conservative MP and Special Adviser, and is the Founder and Director of UK Political Insight.

The precipitous recent decline in the poll ratings of the Prime Minister and predictions of electoral doom are indicative of two enduring phenomena: that Boris Johnson is unique and, like Margaret Thatcher and Tony Blair before him, dominates the political landscape.

Conservative MPs will largely sink or swim as a result of the electorate’s judgement of him. But there’s nothing new in these setbacks, and many Conservatives have little institutional memory, and perhaps little understanding, of the vicissitudes of modern politics.

The bien pensant liberal media classes and their cheerleaders such as Matthew Parris are loathe to concede it, but the Prime Minister is a historically significant figure. He not only led the movement (or at least the last throes of it) which resulted in the UK’s exit from the European Union but, more fundamentally, built a mighty vote-winning electoral coalition founded on culture and community rather than class and capital.

What Johnson has had in spades is not just celebrity and chutzpah, but luck: inheriting a safe Commons seat in 2001 when the Tories had detoxifying work in progress; coming to power in London during a Conservative renaissance in the capital when the voters were sick of Ken Livingstone, and quitting the Cabinet after the Chequers plan in 2018 – to usurp the pitiful May interregnum and break the Brexit impasse.

The Prime Minister’s greatest weakness is that he loves to be loved but, ironically, the more hysterical and cacophonous the shrieks of his critics, the stronger he becomes politically. To many Tory voters, all the usual suspects hate the Prime Minister – not least bcause they believe that he was and should be one of them.

However, he lacks a Praetorian Guard in Parliament who will walk through fire for him (even John Major had one) and the relationship that many Tory MPs have with the First Lord of the Treasury is cynical and transactional.

Covid restrictions, tax rises, self-inflicted wounds such as the Paterson affair, ethical issues, the fall out from reshuffles and recurring problems of miscommunication between Number Ten and Conservative MPs have all soured the glad confident morning of December 2019.

Johnson still has the power to forgive – and a reshuffle that pulled some hitherto irreconcilables and malcontents back into the tent would be prudent politics.

My erstwhile colleague at Crosby Textor and electoral wunderkind, Isaac Levido, has compared the post Covid scenario as like when the tide is at its lowest: all the Prime Minister’s problems lie like broken boats on the harbour floor.

Brexit and future relations with the EU, the cost of living crisis and soaring energy prices, social care and the demographic timebomb, delivering the levelling up agenda and regional and national infrastructure, the busted local government funding and planning systems respectively, fighting the “Blob” in the delivery and reform of publc services and the endemic problem of uncontrolled immigration – all are moving up the list of voter salience.

But there’s nothing new under the sun. In 1979, Thatcher wrestled with an inflation rate of 13 per cent and interest rates of 17 per cent. Even John Major, barely a year before besting Neil Kinnock in the 1992 General Election struggled with a jobless figure in the millions, 10 per cent interest rates and annual price rises of seven per cent – none of which Johnson will experience next year or, most likely, before the next general election.

The last two months will have actually helped Johnson and his most devoted supporters to shake free the contagion of complacency and “BoJo is teflon” exceptionalism: the Cabinet revolt against further Covid restrictions was  timely and good for efficient government. It means that in future, controversial policies are likely to be more routinely challenged, and will be improved upon by robust critique.  The Iraq War showed that Cabinet government by fan club very rarely ends well.

The Prime Minister’s most urgent strategic challenge is the same as that for Thatcher, Blair, Major and David Cameron – namely, how to reinvent his Government. For Brown and May – similar personalities – it was already too late. But such reworking was done in 1986 after Westland and in 1991 before the ERM catastrophe.

Most recently, David Cameron offers hope and inspiration. (Yes, I did write that sentence!) His clever decision to back a Private Members’ Bill to give effect to an EU Referendum in 2014 soothed the Eurosceptic fever in the Commons, and allowed the Conservatives to focus on their retail offering to voters at the 2015 election.

What also helped teamwork and discipline then was a narrow but consistent poll lead for Ed Miliband’s Labour Party, and the prospect of a re-energised Opposition and a possible SNP-Labour colation government.

Today, Keir Starmer’s Labour Party is off life support, is winning the right to debate, is more credible than during the last six years, and sp tighter polls will concentrate the minds of fractious Conservative MPs. For all that, though, Labour is miles from looking like a government in waiting and, frankly, if Wes Streeting is the answer, it’s a very silly question.

Specifically, the Government must rebuild its demoralised electoral coalition, keep the Right broadly united and it develop a positive case for the continuance of a Conservative Government – a compelling narrative and a legacy.

Support amongst Leave voters has slumped from 72 per cent to 56 per cent during the last six months, and Red Wall voters are disilusioned and impatient.

Currently, many Tory supporters in the South and South West, ABs and C1s who voted Remain, but were terrified of a Corbyn government, are angry about tax rises, general incompetence, planning, Tory Sleaze 2.0 (sic) and are shopping around for a protest vote.

Ironically, Theresa May’s entrance speech on the doorstep of 10 Downing Street in July 2016 provides the Prime Minister’s own template for rejuvenation.

There’s more than enough time to deliver on a commitment to localism – a repeat of the successes in Tees Valley and the West Midlands. Michael Gove has the acumen and strategic nous to understand that building enough houses for young voters is now existential for the Conservative Party – after all, you can’t create capitalists who don’t and can’t own capital. And deregulation, tax cuts and demonstrable Brexit wins, such as freeports, must be front and centre in the Conservative story.

The voters don’t care for Singapore on the Thames, but they generally favour traditional Tory values.The Cabinet, for all the media criticism, still has condident and pesuasive voices, such as Steve Barclay, Grant Shapps and Ben Wallace.

Johnson still has aces to play: by historic standards, he’s still polling reasonably well, even if the May local elections will be brutal. And as public opinion in the wake of the Colston statue trial has shown, the War on Woke energises his base, and is a cultural wedge issue which drives many newer Conservative voters.

But such action will be hobbled without firm and radical action on immigration.Similarly, “barnacles must be scraped off the boat” – such as socially liberal tokenism in new legislation, tax rises to fund green initiatives and appointing political opponents to public bodies.

It surely isn’t too much to ask for a Conservative Government to be, well, fundamentally Conservative? Competent, compassionate and communitarian. Johnson has limited time to deliver but at least he now knows and comprehends more than ever, as a classical scholar, the immortal words of the Roman slave to his Emperor: “respice post te, mortalem esse memento” – “look around you, remember you are mortal.”

Kate Ferguson: The Government must act – as the threat of ethnic cleansing haunts Bosnia once again

2 Dec

Kate Ferguson is Chair of Policy at the European Centre for the Responsibility to Protect, and is Fouding Director of Protection Approaches, which has convened The UK Atrocity Prevention Working Group since 2017.

Most people think that mass atrocity crimes are rare, exceptional aberrations, but they are actually fairly common. Where there are means of criminal enterprise, motivation of populist bigotry or manipulation of identity politics, and opportunity of unchecked power violence against groups becomes likely. All are present and worsening in the Bosnian-Serb majority entity within Bosnia-Herzegovina (BiH), Republika Srpska.

Thirty years ago these same propellants were left unchecked, and succeeded in driving a political campaign that saw the deliberate, systematic violent targeting and forced expulsion of Muslims and Croats by a coordinated coalition of Bosnian-Serb and Serbian state and non-state armed formations.

Ethnic cleansing, crimes against humanity and genocide are never inevitable, but they are predictable. The escalating risks in Bosnia today are familiar – and must – be confronted before the already precarious situation worsens.

Boris Johnson, in the outcomes of his Integrated Review of international policy, rightly made atrocity prevention a new strategic priority of British foreign policy: Bosnia is now the test case for this commitment.

This December marks the 26th anniversary of the signing of the Dayton Peace Agreement, which established the two-entity make-up of the country – an agreement that froze rather than resolved the violence, and which preserved the single state by establishing a complicated system of power-sharing governance that includes a tri-partite presidency, with a rotating chairmanship.

Uneasy peace has held, but not taken root. Recent months have seen escalation of inflammatory actions and rhetoric by the Bosnian Serb member of the BiH Presidency, Milorad Dodik. Dodik has announced his intention to withdraw Republika Srpska from many state institutions, including the border police, judicial institutions and the armed force of Bosnia and Herzegovina.

In 1991 as now, the Bosnian Serb leadership is testing the attention and resolve of the international community as it escalates the political crisis and heats up its incendiary rhetoric. Dodik and his coterie – as Radovan Karadžić and all violent populists before him– know that these misdeeds help to gauge international appetite for censure, while also serving to incite local level identity-based violence. If Dodik is allowed to continue, we will see an uptick in violence.

Such incidents are already not uncommon in Republika Srpska, where Bosniaks who were ethnically cleansed in the 1990s have returned to their homes are now often targeted, threatened and assaulted.

This violence is not new. The hurling of stones at the Serbian Prime Minister in 2015 during the twentieth commemoration of the Srebrenica genocide drew international attention, but only because it occurred in front of the world’s media.

Three days later, a returnee to RS was attacked by masked men who carved the four Serbian Cs in a cross on his stomach, but this was not reported in English language press. But tensions are now mounting, and returnees fear history is repeating itself.

While the current crisis is not a new one it is, in part, a consequence of BiH’s allies failing to adequately respond to the pernicious and persistent denial of the genocide of Bosnia’s Muslims, and to the ongoing incidents of the enduring identity-based violence that rarely draw headlines outside of the region.

Late in the day it may be, but friends of Bosnia must now step up fully, and emphatically communicate that the errors of the mid-1990s will not be repeated and that red lines, if crossed, will result in coordinated response.

So far, the UK is emerging a potential leader on the international stage – a stark contrast to Britain’s Bosnia policy of the 1990s. Being outside of the European Union but working with European partners places the UK in a unique and strategically useful position.

The British Embassy in Sarajevo, led by Matthew Field, the Ambassador, is very well respected. Here, Parliament has already held a number of debates – another later today brought by Alicia Kearns, Sarah Champion and Stewart McDonald – which communicates solidarity and cross-party political will. (Hansard’s records for December 1991 contain not a single reference to Bosnia).

But how the commitments of the Integrated Review are reflected in Britain’s Bosnia policy are not yet clear. The Government continues to reject cross-party calls for a comprehensive, cross-departmental strategy of atrocity prevention, arguing its narrow approach to conflict is sufficient.

During the 1990s, the then Conservative government failed to identify the campaigns of identity-based violence and atrocity for what they were and tried – and failed – to apply a framework of conflict resolution: at its heart, the violence between 1992-95 wasn’t a conflict, but a coordinated assault on populations, with the clear-eyed intention of removing or destroying them, in whole or in part.

The same mistake cannot be made again by the UK. Britain’s Bosnia policy needs to specifically recognise and respond to the rising risks of identity-based violence and atrocity.

BiH is the latest in a line of current and emerging crises where this policy gap can be seen to restrict the UK’s capacity to respond –the absence of central thinking strategically about preventing identity-based violence leaves even the most proactive country teams and embassies with their hands tied; they have to follow policy.

If the UK wants to stand with Bosnia, the Government needs to follow through on the promise of the Integrated Review. The IR claimed new emphasis on confronting grievances, criminal economies, political marginalisation as drivers of violence: this is what Bosnia needs.

Prevention policy requires a different way of doing things – it requires strategy, analysis, consultation, and coordination. But it doesn’t necessarily require big resources – in fact, effective prevention always saves both lives and money.

Since Dayton, Bosnia has been a frozen crisis. If Dodik is allowed to continue raising the temperature we will quickly reach the point there the thaw cannot be prevented. The goal for the UK and all allies of Bosnia mustn’t be to simply keep the uneasy peace, but instead to comprehensively support Bosnians who are working towards a safe, inclusive and resilient society.

 

Bim Afolami: Get ready for interest rates to rise – with all the shock to homeowners, savers and borrowers that this will entail

29 Nov

Bim Afolami is MP for Hitchin & Harpenden.

My father came to this country during the 1980s, from Nigeria, to complete his training as a junior doctor. Thankfully this country is where he chose to make his home, and it is the only place that I, and my younger brother and sister, have ever known and loved.

Yet we grew up hearing a lot of stories about what it was like growing up in a country so different to our own; partly to give us a firm understanding of the journey that our family has taken, but also to demonstrate the importance of sensible government and basic, competent management of the economy – something which in Britain, regardless of our political differences, we take for granted.

He told me a story of how he, as a junior doctor and son of an Anglican cleric, was rather impecunious, but had carefully saved the Nigerian equivalent of £24,000 then (about £94,000 now), which he wanted to use as a deposit for a home.

However, during the late 1970s, the Nigerian oil boom meant huge inflation, which, combined with continuing military rule, killed the value of the Nigeria naira – which meant that within a year, he was left with cash worth under £1,000.

It is not an exaggeration to say that his experience of the social and economic experience of the late 1970s in Nigeria was so negative it made him leave the country and seek a better life elsewhere. From this family story I was taught the importance of inflation which has stayed with me ever since.

Inflation may become a defining feature of politics over the next few years.

Inflation was a significant political issue from the 1960s until the early 1990s. There were a series of energy crises between 1967 and 1979 caused by problems in the Middle East, but the most significant started in 1973 when Arab oil producers imposed an embargo.

The decision by OPEC to punish the West in response to support for Israel during the Yom Kippur war against Egypt led the price of crude to rise from $3 per barrel to $12 by 1974. Consequently, the price of petrol rocketed, making all transport more expensive as well as making British industry uncompetitive.

Ted Heath’s government was already struggling to cope with high food prices caused by global shortages, so the oil shock fed into an inflation rate which, by August 1974, hit more than 24 per cent. Inflation never hit quite those heights again, but it averaged about 10 per cent between 1974 and 1992.

This potted history matters, because the politics of that period were completely shaped by the impact of inflation – the wage and incomes policies, the wage demands of the unions, the extremely high interest rates, the currency crisis which precipitated Jim Callaghan’s Labour Government going to the IMF in 1976, the three million unemployed in 1983 – and much else besides.

I am not, for even one moment, suggesting that history is about to repeat itself in any of the above respects. However, I am trying to demonstrate that when inflation is high, governments find it incredibly difficult to bring it down, because many of the causes for inflation are typically global, and high inflation results in tricky political choices.

The 2021 version of the 1973 oil shock is Covid 19. The world shutdown of economic activity and trade hugely affected supply chains, and literally shut them down in many parts of the world.

When almost all economies fully opened earlier this year, the demand for goods worldwide skyrocketed, and has continued to do so. It is this imbalance between supply and demand that has caused the bulk of the inflationary spike.

In addition, huge amounts of necessary government spending to cushion the blow of Covid on households and businesses increased the disposable income of millions. All of this extra spending power and demand is chasing fewer goods. It is worth noting that, notwithstanding the global factors, there is one major driver of inflation that Governments do indeed control – public spending and public sector wages. It is clear that th Treasury will be monitoring these carefully over the coming years.

As a result of all of these factors, inflation is up. The Bank of England’s latest forecast projects inflation to peak at around five per cent in the second quarter of 2022, and many City figures I know think this could be an underestimate.

Though that may be relatively low compared to the 1970’s, with interest rates still below one per cent (though these will creep up slowly), this inflation will erode the spending power of households to a noticeable extent. Interest rate rises may not be very effective at dealing with the inflation we are seeing now, because the causes of inflation are largely driven by a combination of exogenous factors that are not affected by them; ranging from global supply chain problems and energy supply disruption to a build up of excess money supply (through quantitative easing).

Amongst economists, a debate is currently raging about how transitory, or permanent, the inflationary spike will be, and this debate is being played out within the Bank of England’s Monetary Policy Committee – with regards to how quickly they raise interest rates.

I do not intend to get into the weeds of that debate here, but as a politician thinking about the political impacts, we should start planning for an elevated inflation rate (three to five per cent) for at least the foreseeable future. This will mean three key things.

First, interest rates will be going up, and that will mean higher costs of not just mortgages, but anything bought on finance, such as cars, household goods, and furniture. More importantly, it will affect the cost of our daily bread and basic foodstuffs.

We should never forget about the millions of people who are “just about managing” – they will find it harder to budget for their families over the next few months. In addition, any interest rate rise will curtail consumer spending – which may dampen down the speed of our remarkable economic recovery post Covid.

Second, energy prices are already rising and are likely to rise further. Again, this will be very directly felt by the electorate.

Third, there is the impact of rising interest rates on government debt repayments and the Government budget overall. The OBR says that just a one per cent increase in rates would add £20 billion to government debt repayments each year, and interest rates could rise further than that if inflation stays at an elevated rate for a while to come. £20 billion is roughly half the defence budget. Interest rate rises will make the Chancellor’s life even harder here – especially when coupled with ever increasing demands for more public spending, itself a domestic driver of inflation.

As higher inflation and rises in interest rates starts to bite, this will get to the heart of voters’ experience of the economy. They won’t care about statistics but, instead, will think about whether they can manage to pay for their daily costs, and whether they might be able to save enough to buy their kids a nice birthday present, or replace the car that keeps breaking down.

Wages are rising fast in some sectors, particularly for lower paid workers and for workers with scarce skills, but this won’t be for everyone and millions of households will have to tighten their belts. Our Plan for Jobs has been a resounding success, but after the winter we may need to plan for managing inflation.

David Willetts: New businesses, faster connections, better data, tighter security. There are so many reasons to commit to Space.

19 Nov

Lord Willetts is President of the Advisory Council and Intergenerational Centre of the Resolution Foundation. He is a former Minister for Universities and Science.

Britain can emerge from Covid more confident of what our scientists can do, more innovative, and hence more prosperous. That means backing the key technologies of the future. In the past, we have failed to exploit them.

One reason is that public funding has stopped too soon, before a new technology is fully commercial. Other countries, notably America, continue to provide public backing to support new technologies for much longer, reinforced with smart procurement. I have met American tech entrepreneurs with a contract to sell their new product to the Federal Government long before the first one had been successfully produced. It is all part of securing America’s lead in key technologies.

As Science Minister, I identified eight great technologies where Britain had a comparative advantage and there were global business opportunities. We backed them with funding to help get them to market and several unicorns, worth over £1 billion, have emerged as a result. They would not be thriving today in Britain were it not for that early support. Now Kwasi Kwarteng has identified seven key technologies which I hope he will be backing after the boost to science and technology funding in the Budget.

Space is a key one of these commercial opportunities in high tech for the UK. There is something special and exciting about space. Look at how Tim Peake has become a national hero. Attitudes to space tell us something important about a country’s willingness to look outwards. Britain was one of the original leaders in the space race. The Americans launched our first satellite for us 60 years ago (and subsequently disabled it with an atmospheric nuclear test). We launched our own satellite for the first and last time from Woomera 50 years ago.

Sadly, we then made the mistake of thinking of space as a useless luxury which wasn’t for us. You can still see on the Isle of Wight the decaying remains of a British rocket testing facility.

But Space is actually a key part of the infrastructure of a twenty-first century nation. Satellites collect the data that determine our weather forecasts. They enable us to track climate change and monitor natural disasters like floods. They give each one of us accurate information about exactly where and when we are. They synchronise financial transactions. They help our utilities to operate. They enable us to communicate across the globe.

Even through the decades when public interest and support was low, Britain’s entrepreneurs continued to do their bit. We don’t have the capacity to launch any rockets – at least not yet. So we had to hitch a ride on someone else’s launch vehicle (no wonder a Brit was the author of the wonderful Hitchhikers Guide to the Galaxy). That meant we had an incentive to develop lighter cheaper satellites where we are now a world leader.

And this gives us an opportunity. The new space race is to launch constellations of small satellites – hundreds if not thousands of them in low Earth orbit (LEO). Tomorrow marks the first anniversary of the Prime Minister’s boldest move to get us ahead in that race, when the deal was concluded taking a stake in OneWeb which is developing such a constellation.

These LEO constellations have crucial advantages. Because they are much closer to Earth than traditional big satellites much further away, the signal travels so fast that the problem of the slight time delay, latency, disappears.

This matters if you are running a B and B in the Scottish Highlands or starting a business in the West Country – or indeed if you are a teenager in Cumbria trying to play a video game with a broadband link only available by satellite. OneWeb has entered a partnership with BT to deliver the manifesto pledge of broadband access in remote areas.

OneWeb was put on the market because of the financial difficulties of its main investor SoftBank. More than ten percent of its constellation was already up in orbit – putting it ahead of the competition. And its headquarters are not in the American West Coast or a corner of Shenzhen, but in that hot-bed of high tech Shepherds Bush, London W12.

The Prime Minister decided that the British Government should bid and, in partnership with the Indian mobile phone operator Bharti Airtel, together paid $1 billion. Investors from France, US, Korea and Japan followed Britain’s lead, and now OneWeb has $2.6 billion of funding so it can complete its first constellation.

It is already more than halfway there, so the UK is now second only to the US for the number of satellites we operate. OneWeb should be providing a service North of 50 degrees in the next few months and a full global service by the end of next year.

The deal is already paying off, and the Treasury has made a healthy profit. But, even so, is it a dangerous encroachment of the state into business? We are only doing the kind of things America does all the time. Elon Musk is a great entrepreneur, but look at the funding he gets from the American Government in grants, soft loans and guaranteed contracts.

Governments can’t plan the economy sector by sector and intervene in every one. But it is an important role of Government to make some big strategic decisions about key technologies to invest in. They won’t all come right, but when they do they yield fantastic long term benefits. And these technologies are inherently disruptive – they aren’t propping up old industries. Indeed, they are often a new competitive threat to big incumbents.

The first generation of the satellites are being manufactured in Florida, but the real opportunity comes with the second generation planned for service in the next five years or so. Developing these could create a British supply chain. We need big UK-based primes which can place the contracts that help our successful small start-ups to scale up and reach the big time.

Becoming a serious player in Space is the kind of strategic decision which governments have to take. The Prime Minister may have been inspired by the example of his great predecessor, Benjamin Disraeli who faced a similar choice. The Egyptian Khedive, owner of the Suez Canal, had gone bankrupt. The Canal had been constructed by the French and the expectation was that they would obtain it.

But Disraeli swooped and bought half the company from the Khedive for £4 million (borrowed from Rothschild’s). It was a crucial reinforcement of our links to India. Gladstone was outraged, of course – but Queen Victoria loved it and the bold strategic move commanded wide support and helped keep Britain as a global power. Now there is a similar chance to be a world leader in today’s most important space race – for small satellite constellations.

There are national security angles to this. American and China have long seen technology this way, but we have been wary.  Last week’s test by Russia of an anti-satellite weapon was a signal to the West that it sees our capability in this area, which it cannot match, as of real strategic significance. The Prime Minister’s new Science and Technology Council crucially brings security and economic aspects of technology together.

We have a space industry stretching from Goonhilly in Cornwall to the North of Scotland. It encompasses Guildford Harwell, Leicester and Glasgow. It is a truly national endeavour and, with this investment in a world-leading LEO, constellation it achieves global significance.

David Willetts: If we’re to have less migration into Britain – and more productivity – we must move around more within it

5 Nov

Lord Willetts is President of the Resolution Foundation. He is a former Minister for Universities and Science.

Behind last week’s Budget and the Prime Minister’s conference speech there are deep questions about how Britain is going to pay its way – and hence pay ourselves well too.

In the 16 years leading up to 2008, average earnings grew by 36 per cent. In the next 16 years up to the end of the period covered by the Budget, it is forecast they will have risen by just 2.4 per cent. One reason for the anger and frustration in our public discourse is quite simply that we have stopped delivering the great promise of capitalism – of increasing prosperity for us and our children.

The only viable way to get us back on the path to higher living standards is by boosting our productivity. GDP per hour worked is now about a quarter higher in France and Germany than ours. We ought to be able to catch them up: that is the challenge we should set ourselves.

There is a clear agenda for it in the Budget. Invest in human capital at all stages of our lives. Invest in physical capital with public spend on infrastructure at record levels. And invest in science and innovation where increased public spending should crowd in more private spending too. And, crucially, get business investment growing again.

That is an excellent agenda. But it may not on its own get to the deeper reason for the decline in performance of the British economy: we are not dynamic enough.

The rate of economic change has been declining. Our research at Resolution Foundation shows that over the decade before Covid struck, the rate at which labour moved from one broad economic sector to another was at a post-War low. Similarly, the rate of voluntary job moves in 2019 was a third lower than in 2001. Labour mobility, geographical mobility and social mobility are all linked. We are quite simply not moving enough.

We are anyway going to have change forced upon us, thanks to the need to decarbonise and advances in technology. We ought to be able to use these drivers of change to boost our performance rather than trying to hide from it. That is why we at Resolution Foundation have set up an inquiry in partnership with the LSE into the future of Britain’s economic model.

The health advice during Covid – “stay home” – in a way summarises what has been happening to our economy for two decades. It is a striking contrast with the 1980s when Norman Tebbit famously told us to “get on your bike”. We had record rates of creation of new jobs (and the painful loss of old ones) and record shifts between different industrial sectors.

One clear signal about which jobs to move to was larger pay gaps between jobs. Nowadays, the places with higher pay also have higher rents and as fewer people are owner-occupiers this directly reduces their incentive to move. The 1980s did see rising inequality but, at the same time, there were record increases in absolute incomes – including for the less affluent half of the population.

This poses acute dilemmas for any Conservative. We are the party of freedom, mobility, and enterprise. But we are also the party of community, belonging, and tradition. What is it to be – roots or wings? These are tensions we all feel within ourselves. And we may reach different views at different stages of our lives. Young people need their chance to fly the nest but this is getting harder – with the move to independent adulthood slower and harder.

The mood in the Party and perhaps in the country seems to favour the ties of place. If you were still living in the county of your birth you were 10 per cent more likely to vote Brexit. In this sense, rather paradoxically, it is the remainers who were the Brexiteers. The balance is tilting in the endless debate on whether people should move to the jobs or jobs to the people.

This is why universities – a crucial means of detaching us from the family home and giving us the chance to move on and move up – appear to have fallen out of favour. But the higher education route has long been used by the more affluent for whom the residential university served as a natural successor to boarding school. It is still the case that the more affluent a student’s family, the further their university is likely to be from their hometown.

The Conservative Party owes its long political success to its skill in balancing these conflicting instincts – leave or stay – and needs to find a way to do it now. One way of reconciling them over the past 20 years – migration – is now diminishing. If we didn’t want to move but there were new requirements for new jobs, some of them unappealing ones, then the new migrant came in to plug the gap. We brought them in to the places and occupations which were short of people, so we didn’t have to retrain or move around ourselves. Reduced reliance on them means we have to be more flexible and mobile.

There are other smart ways of resolving these conflicts without forcing people to face anything like the disruption of the 1980s. Birmingham and Lyons are cities of roughly similar size. But many more people can get to the centre of Lyons in half an hour because local transport is so much better. It creates a bigger labour market. There are towns stranded on the edge of major cities outside London which would really benefit from such investment. So this sort of transport spend really makes sense and we got some of it in the Budget.

Next, social housing is a real barrier to mobility. I remember from my time as an MP the appalling bureaucratic hassle if you are a tenant of one association and trying to move to another social tenancy in a different area. Easier and standardised rules for easier transfers would make a big difference. Meanwhile, stamp duty acts as a disincentive for home owners to move as well.

Then if we are to boost the prestige and values of vocational qualifications, we could also provide some maintenance loans for residential training courses. The original idea of the apprenticeship was that the apprentice left home to live with his or her new master. Conscription and apprenticeships have both declined as ways of semi-supervised living away from home. Instead, the university has become the dominant model. Rather than trying to suppress demand for university places we should try to enable other forms of vocational training to offer that residential experience as well.

The 2020s can a decade of renewed dynamism and mobility. Our Economic Inquiry is already identifying some reasons for optimism too. In the week of COP26, the happy accident that our renewable energy in wind and tide are distributed across the country will attract economic growth to those areas. Carbon capture and storage means ingenious repurposing of ageing industrial plant.

There is also a surge of young people into the labour market – the baby boom of the first decade of the new millennium will drive economic change just as Thatcherism rode an earlier tide of incoming young people born in the 1960s. Lots of new workers is a fantastic opportunity to move into new jobs in new sectors with higher productivity and higher earnings. The Conservative Party needs an agenda for dynamism and change. It is what the economy needs too.

Bim Afolami: After the Budget, we won’t deliver levelling up without putting economic growth first

1 Nov

Bim Afolami is MP for Hitchin & Harpenden.

In the wake of another Budget, I have been wading through the Red Book and the other documents. One word keeps coming to my mind. Growth.

Why has it been stubbornly weak? What can the Government do about it? What are the political consequences of low growth over the medium and long term?

Growth has been stubbornly weak across most of the Western world since the financial crisis. Britain’s economic performance has been even worse than those of our main competitors, such as Germany, the US and Canada.

Between 1979 and 2010 (including three recessions), growth averaged 2.3 per cent each year and, if you exclude the major recession years of 1980, 1991, and 2009, growth averaged 2.8 per cent.

But since the financial crisis up and until Covid hit in early 2020, growth has averaged 1.8 per cent – with no recession during that time. If you look at the Office for Budget Responsibility’s forecasts for the coming years, you will see that it predicts the medium term outlook for growth is 1.7 per cent per year, in line with the post-financial crisis growth pattern. Why do we accept this?

I am boring you with these statistics to evidence a simple point. Our growth is a lot lower than it used to be: roughly 30 per cent to 40 per cent lower than it used to be, every single year. There are lots of purported reasons for this low productivity – and hence low growth: over-reliance on foreign labour, preventing investment in automation; regional inequality; poor skills in middle management and SMEs; the over-allocation of wealth in housing; low private capital investment levels; weak exports; poor numeracy, poor transport infrastructure, and many more.

The Chancellor is acting to fix the problems. The Help to Grow scheme is specifically focused on improving the management capability and outcomes for thousands of SME owners across the country. We are investing record amounts into R&D and reforming R&D tax reliefs, taking us forward to being a science and tech superpower. We are continuing to deliver on our promise on investing record amounts in infrastructure. We are maintaining such tax reliefs as the Enterprise Investment Scheme and Seed Enteprise Investment Scheme, which encourages those with capital to invest them in fast-growing British businesses, rather than buy property or land. The Chancellor launched a new £500 million scheme, Multiply, designed to target one of the biggest complaints from business owners:the poor numeracy of many staff entering the workforce.

I strongly support what he is doing. We should hope that all of these measures have an impact over the medium term. However, I have a nagging sense that, despite our best efforts, these policies alone will not move the dial on growth sufficiently. Let me explain why.

A few months ago, I finished the books of the brilliant economic historian, Deirdre McCloskey, whose trilogy (Bourgeois Virtues, Bourgeois Dignity, Bourgeois Equality) incessantly remind us of the exceptionality of economic growth.

The three books comprise an intellectual journey which aims to answer the great riddle of modern economic historians: why did the Industrial Revolution, with its immense economic growth, take off precisely when and where it did? Why Britain? Why the eighteenth century?

Her answer is that it was culture that needed to change so that the economy eventually could tpp. Materialistic enrichment had non-materialistic causes. She argues that “talk and ethics and ideas caused the innovation”. In particular, “ordinary conversation about innovation and markets became more approving”. Wealth could be created on a grander extent than ever, but only as soon as wealth creation was no longer deemed a filthy purpose by the educated elite.

It was the championing of innovation (not merely capital accumulation) which fundamentally transformed our economic prospects as a nation, and we led the world. Ideological and societal changes were the sine qua non of transformative growth of the eighteenth and nineteenth century, not tax policies nor our legal system nor stable national institutions (though these were all undeniably helpful).

Margaret Thatcher’s governments understood the importance of boosting economic growth and dynamism in that era. Nigel Lawson’s Chancellorship was pivotal for the pro-enterprise policies and tax rates that he introduced. However, a huge element in our success during the 1980s was the social change that saw innovation and enterprise and getting richer as an unambiguously good thing – particularly for the working classes.

This social change was partly driven by the atmosphere, rhetoric and tone of the Government, backed up with concrete pro-growth policies. Looking at a very different society to ours – China – one sees that the 40 year explosion of its economic growth was not just about legal and policy changes.  The Communist Party allowed a new spirit to sweep the country: soon after Mao Zedong’s death, Deng Xiaoping declared that “to get rich is glorious” and “it doesn’t matter whether a cat is black or white – so long as it catches mice,” which was indicative of his view that socialism was not incompatible with a market-economy. These sentiments had a huge impact.

We need two things if we are to have a hope of reviving our growth rate.

First, on the technical side, we are going to need to continue the many pro – growth policies that this Chancellor has introduced and, in addition, significantly reduce the tax and regulatory burden for SMEs – which are far too high at the moment.

Secondly, we will need to shift the whole focus of the Government’s energy towards a pro-growth mindset overall, not just a redistributive one with regards to levelling up (important though this is). Conservative politicians should champion the nobility of wealth creators, work with those in universities and civic society to promote a more positive image of innovation, and praise these things because they are a good in themselves – not just because their taxes help the Exchequer.

Perhaps by linking innovation to the green agenda, and the unifying cause of saving the planet from gradual decline, we can actively argue that more economic innovation is a social good because it enriches society.

What would all this look like? It could mean a reshaped honours system – to champion innovators and wealth creators much more. It might mean Government policy in all areas being publicly changed to optimise for growth as the primary goal above all else (i.e: universities policy and regulatory policy). It could mean a shift in the national curriculum to teach children the positive virtue of setting up a business with clear, ethical goals, and that this is a positive way to help your community.

If we fail to significantly lift our growth rate, we will have a growing list of problems. There will be an ever-increasing tax and debt burden, because demographic changes mean that our public services (particularly NHS) will need more money every year. It would mean the failure of levelling up, because redistribution of a stagnating cake is not politically sustainable in the medium term. Finally, it would mean continuing generational inequality, because the tax rates of working (younger) people will be so high that they will have no ability to build up capital assets; and any attempt to tax older generations to a much greater degree than today will be politically tricky.

Much higher growth is the necessary condition for us as a country to be successful in the future. This Chancellor has diagnosed the problems, and is acting to fix them; but the Government overall will need to take a lead to make this the central rhetorical, atmospheric, policy focus of the country as a national mission.

“Levelling up works for the whole country” – the Prime Minister’s conference speech in full

6 Oct

Isn’t it amazing to be here in person? The first time we have met since you defied the sceptics by winning councils and communities that Conservatives have never won in before – such as Hartlepool. In fact it’s the first time since the General Election of 2019 when we finally sent the corduroyed communist cosmonaut into orbit where he belongs? And why are we back today for a traditional Tory cheek by jowler?

It is because for months we have had one of the most open economies and societies and on July 19th we decided to open every single theatre and every concert hall and night club in England and we knew that some people would still be anxious so we sent top government representatives to our sweatiest boites de nuit to show that anyone could dance perfectly safely and wasn’t he brilliant my friends?

Let’s hear it for Jon Bon Govi. Living proof that we, you all represent the most jiving hip happening and generally funkapolitan party in the world and how have we managed to open up ahead of so many of our friends?

You know the answer, its because of the roll-out of that vaccine a UK phenomenon the magic potion invented in Oxford University and bottled in Wales distributed at incredible speed to vaccination centres everywhere

I saw the army in action in Glasgow firing staple guns like carbines as they set up a huge vaccination centre and in Fermanagh I saw the needles go in like a collective sewing machine and they vaccinated so rapidly that we were able to do those crucial groups one to four – the oldest and most vulnerable faster than any other major economy in the world. And though the disease has sadly not gone away the impact on death rates has been astonishing and I urge you all to get your jabs because every day our vaccine defences are getting stronger and stronger and you, all of you, and everybody watching made this roll-out possible you each made each other safer.

So perhaps we should all thank each other? Go on – try a cautious fist bump because it’s OK now and we in turn thank the volunteers, the public health workers, the council workers the pharmacists but above all our untiring unbeatable unbelievable NHS. And as a responsible Conservative Government we must recognise the sheer scale of their achievement but recognise also the scale of the challenge ahead. 

The NHS

When I was lying in St Thomas’s hospital last year l looked blearily out of my window at a hole in the ground between my ICU and another much older Victorian section and amid the rubble of brick they seemed to be digging a hole for something or indeed someone – possibly me. But the NHS saved me and our wonderful nurses pulled my chestnuts out of Tartarean pit. The other day I went back on a visit and I saw that the hole had been filled in with three or four gleaming storeys of a new paediatrics unit and there you have the metaphor my friends for how to build back better now.

We have a huge hole in the public finances. We spent £407 billion on covid support and our debt now stands at over two trillion pounds and waiting lists will almost certainly go up before they come down covid pushed out a great bow wave of cases people did not or could not seek help and that wave is now coming back.

A tide of anxiety washing into every A and E and every GP. Your hip replacement. Your mother’s surgery and this is the priority of the British people. Does anyone seriously imagine that we should not now be raising the funding to sort this out? Is that really the view of responsible Conservatives?

I can tell you something. Margaret Thatcher would not have ignored this meteorite that has just crashed through the public finances. She would have wagged her finger and said more borrowing now is just higher interest rates and even higher taxes later when this country was sick our NHS was the nurse frontline health care workers, battled against a new disease. Selflessly risking their lives sacrificing their lives and it is right that this Party that has looked after the NHS for most of its history should be the one to rise to the challenge.

48 new hospitals

50,000 more nurses

50 million more GP appointments

40 new diagnostic centres

And fixing those backlogs with real change because the pandemic not only put colossal pressure on the NHS. It was a lightning flash illumination of a problem we have failed to address for decades

Fixing Social Care

In 1948 this country created the National Health Service but kept social care local and though that made sense in many ways generations of older people have found themselves lost in the gap when covid broke there were 100,000 beds in the NHS – and 30,000 occupied by people who could have been cared for elsewhere whether at home or in residential care. And we all know that this problem of delayed discharge is one of the major reasons why. It takes too long to get the hospital treatment that your family desperately need and people worry that they will be the one in ten to suffer from the potentially catastrophic cost of dementia wiping out everything they have and preventing them from passing on anything to their families.

We Conservatives stand by those who have shared our values thrift and hard work and who face total destitution in this brutal lottery of old age in which treatment for cancer is funded by the state and care for alzheimers is not – or only partly – and to fix these twin problems of the NHS and social care we aren’t just going to siphon billions of new taxes into crucial services without improving performance. We will use new technology so that there is a single set of electronic records as patients pass between health and social care improving care and ensuring that cash goes to the frontline and not on needless bureaucracy.

When I stood on the steps of Downing Street I promised to fix this crisis and after decades of drift and dither. This reforming government. This can do government. This government that got Brexit done. That is getting the vaccine rollout done. Is going to get social care done

And we are dealing with the biggest underlying issues of our economy and society the problems that no government has had the guts to tackle before and I mean the long term structural weaknesses in the UK economy

It is thanks to that vaccine roll-out that we now have the most open economy and the fastest growth in the G7 we have unemployment two million lower than forecast

We have demand surging and I am pleased to say that after years of stagnation – more than a decade – wages are going up faster than before the pandemic began and that matters deeply because we are embarking now on a change of direction that has been long overdue in the UK economy.

We are not going back to the same old broken model with low wages, low growth, low skills and low productivity – all of it enabled and assisted by uncontrolled immigration. 

The answer to the present stresses and strains – which are mainly a function of growth and economic revival – is not to reach for that same old lever of uncontrolled immigration to keep wages low.

The answer is to control immigration. To allow people of talent to come to this country but not to use immigration as an excuse for failure to invest in people, in skills and in the equipment the facilities the machinery they need to do their jobs.

The truckstops – to pick an example entirely at random – with basic facilities where you don’t have to urinate in the bushes and that is the direction in which this country is going now. Towards a high wage, high skill, high productivity and yes, thereby low tax economy. That is what the people of this country need and deserve in which everyone can take pride in their work and in the quality of their work and yes it will take time. Yes it will sometimes be difficult. But that was the change that people voted for in 2016 and that was the change they voted for again powerfully in 2019. To deliver that change we will get on with our job of uniting and levelling up across the UK the greatest project that any government can embark on

We have one of the most imbalanced societies and lop-sided economies of all the richer countries it is not just that there is a gap between London and the South east and the rest of the country. There are aching gaps within the regions themselves. What monkey glands are they applying in Ribble Valley what royal jelly are they eating that they live seven years longer than the people of Blackpool only 33 miles away?

Why does half of York’s population boast a degree and only a quarter of Doncaster’s?

This is not just a question of social justice. It is an appalling waste of potential and it is holding this country back because there is no reason why the inhabitants of one part of the country should be geographically fated to be poorer than others or why people should feel they have to move away from their loved ones, or communities to reach their potential

When Thomas Gray stood in that country churchyard in 1750 and wrote his famous elegy as the curfew tolled the knell of parting day. He lamented the wasted talents of those buried around him. The flowers born to blush unseen. The mute inglorious miltons who never wrote a poem because they never got to read. The simple folk who died illiterate and innumerate and he knew that it was an injustice.

Let me ask you, maybe you know, where was he standing when he chewed his pensive quill ? Anybody know? Correct, thank you, he was standing in Stoke Poges.

My friends there may be underprivileged parts of this country but Stoke Poges is not now among them.

In fact it was only recently determined by the Daily Telegraph and if you can’t believe that, what can you believe my friends, to be the 8th richest village in England.

Since Gray elegised, Buckinghamshire has levelled up to be among the most productive regions in the whole of Europe.

Stoke Poges may still of course have its problems. But they are the overwhelmingly caused the sheer lust of other people to live in or near Stoke Poges.

Overcrowded trains. Endless commutes. Too little time with the kids. The constant anxiety that your immemorial view of chalk downland is going to be desecrated by ugly new homes.

And that is why levelling up works for the whole country and is the right and responsible policy, because it helps to take the pressure off parts of the overheating South East while simultaneously offering hope and opportunity to those areas that have felt left behind.

Let us be clear that there is a huge philosophical difference between us and Labour because in their souls they don’t like levelling up. They like levelling down. They do. They like decapitating the tall poppies and taxing the rich till the pips squeak. They dislike academic competition – Latin I hear. And in Islington – I kid you not I have seen it with my own eyes – they like kids to run races where nobody actually wins and I have to tell you I don’t believe that is a good preparation for life. Let alone for the Olympic Games.

And if you insist on the economic theory behind levelling up. It is contained in the insight of Wilfredo Pareto, a 19th century Italian figre who floated from the cobwebbed attic of my memories that there are all kinds of improvements. You can make to people’s lives he said without diminishing anyone else

Rishi, will I am sure confirm this and we call these pareto improvements and they are the means of levelling up and the idea in a nutshell it is that you will find talent genius flair imagination enthusiasm everywhere in this country all of them evenly distributed. But opportunity is not and it is our mission as conservatives to promote opportunity with every tool we have and it is still a grim fact that in this country that some kids will grow up in neighbourhoods that are safer than others and some will be, as Priti was saying, some will be sucked into gangs and some will be at risk of stabbing and shooting and some will get themselves caught in the one way ratchet of the criminal justice system and many others will not. That’s why levelling up means fighting crime. Putting more police out on the beat as we are and toughening sentences and rolling up the county lines drugs networks as we are – 1100 gone already –  and giving the police the powers they need to fight these dealers in death and misery that’s what we want to do. What is Labour’s answer, by the way – to decriminalise hard drugs apparently. To let the gangsters off with a caution. An answer that is straight from the powder rooms of the North London dinner parties and nothing to do with the real needs of this country.

Crime has been falling and not just by the way because we took the precaution of locking up the public for much of the last 18 months. But because you have a Conservative Government that understands the broken windows theory of crime

I read a learned article by some lawyer saying we should not bother about pet theft. Well I say to Cruella de Vil QC – if you can steal a dog or a cat then there is frankly no limit to your depravity.

And you know those people gluing themselves to roads. I don’t call them legitimate protestors like some Labour councillors do. Some Labour councillors actually glue themselves to roads.  I say they are a confounded nuisance who are blocking ambulances, stopping people go about their daily lives and I am glad Priti is taking new powers to insulate them snugly in prison where they belong what I found most incredible of all was the decision by labour now led by lefty Islington lawyers to vote against tougher sentences for serious sexual and violent offenders and on behalf of the entire government I tell you:

We will not rest until we have increased the successful prosecutions for rape because too many lying bullying cowardly men are using the law’s delay to get away with violence against women and we cannot and we will not stand for it and I know that there are some who now tell us that we are ungenerous and unfeeling in our attempts to control our borders and I say – don’t give me that

This is the government that stood up to China and announced that we would provide a haven for British overseas nationals in Hong Kong 30,000 have already applied and I am really proud to be part of a Conservative government that will welcome 20,000 Afghans people who risked their lives to guide us and translate for us. We are doing the right and responsible thing and speaking as the great grandson of a Turk who fled in fear of his life I know that this country is a beacon of light and hope for people around the world. Provided they come here legally. Provided we understand who they are and what they want to contribute and that is why we took back control of our borders and will pass the Borders Bill. Because we believe there must be a distinction between someone who comes here legally and someone who doesn’t and though I have every sympathy with people genuinely in fear of their lives.

I have no sympathy whatever with the people traffickers who take thousands of pounds to send children to sea in frail and dangerous craft and we must end this lethal trade. We must break the gangsters’ business model.

And is it not a sublime irony that even in French politics there is now a leading centre right politician calling for a referendum on the EU. Who is now calling for France to reprendre le controle?? It’s good old Michel Barnier.

That’s what happens if you spend a year trying to argue with Lord Frost. The greatest frost since the great frost of 1709 and we will fight these gangs at home and abroad. Because their victims are invariably the poorest and the neediest and I will tell you what levelling up is.

A few years ago they started a school not far from the Olympic park a new school that anyone could send their kids to in an area that has for decades been one of the most disadvantaged in London. That school is Brampton Manor academy and it now sends more kids to Oxbridge than Eton and if you want proof of what I mean by unleashing potential and by levelling up look at Brampton Manor and we can do it.

There is absolutely no reason why the kids of this country should lag behind or why so many should be unable to read and write or do basic mathematics at the age of 11 and to level up – on top of the extra 14 bn we’re putting into education and on top of the increase that means every teacher starts with a salary of £30,000.

We are announcing a levelling up premium of up to £3000 to send the best maths and science teachers to the places that need them most and above all we are investing in our skills. Skills folks. Our universities are world beating, I owe everything to my tutors and they are one of the great glories of our economy. But we all know that some of the most brilliant and imaginative and creative people in Britain and some of the best paid people in Britain did not go to university and to level up you need to give people the options. The skills that are right for them and to make the most of those skills and knowledge. And to level up you need urgently to plug all the other the gaps in our infrastructure that are still holding people and communities back.

As I’ve been saying over this wonderful conference to you when I became leader of this party, there were only, can you remember, what percentage of households had gigabit broadband when you were so kind as to make me leader? 7 percent, only 7 percent and by the new year that will be up to 68 per cent.

Thanks to Rishi’s superdeduction the pace is now accelerating massively as companies thrust the fibre-optic vermicelli in the most hard to reach places.

Its wonderful, for years SNP leader Ian Blackford has been telling the Commons that he is nothing but a humble crofter on the isle of Skye. Well now we have fibre optic broadband of very high quality that we can inspect the library or is it perhaps the billiard room of Ian Blackford’s croft and that is levelling up in action and my friends it is not good enough just to rely on zoom.

After decades of ducked decisions our national infrastructure is way behind some of our key competitors

It is a disgrace that you still can’t swiftly cross the pennines by rail a disgrace that leeds is the largest city in Europe with no proper metro system a waste of human potential that so many places are not served by decent bus routes transport is one of the supreme leveller-uppers and we are making the big generational changes shirked by previous governments

we will do Northern Powerhouse rail. We will link up the cities of the midlands and the north. We will restore those sinews of the union that have been allowed to atrophy the A1 north of Berwick and on into Scotland. The A 75 in Scotland that is so vital for the links with northern Ireland and the rest of the country. The north Wales corridor.

And we will invest in our roads. Unblocking those coagulated roundabouts and steering-wheel-bending traffic lights putting on 4,000 more clean green buses made in this country – some of them running on hydrogen.

As we come out of covid our towns and cities are again going to be buzzing with life because we know that a productive workforce needs that spur that only comes with face to face meetings and water cooler gossip.

If young people are to learn on the job in the way that they always have and must we will and must see people back in the office and that is why we are building back better with a once in an a century £640 billion programme of investment and by making neighbourhoods safer by putting in the gigabit broadband

By putting in the roads and the schools and the healthcare we will enable more and more young people everywhere to share the dream of home ownership the great ambition of the human race – that the left always privately share but publicly disparage and we can do it

Look at this country from the air

Go on google maps. You see how our landscape has been plotted and pieced and jigsawed together by centuries of bequests and litigation. A vast testament to security of title trust in the law. A confidence that is responsible for so much international investment. You see how rich this country is growing. The billions of loving and incremental improvements to homes and gardens. You can see how beautiful it is. Vast untouched moorland and hills.  Broadleaf forests. We are going to re-wild parts of the country and consecrate a total of 30 per cent to nature.

We are planting tens of millions of trees. Oters are returning to rivers from which they have been absent for decades. Beavers that have not been seen on some rivers since tudor times massacred for their pelts and now back and if that isn’t conservatism, my friends I don’t know what is. Build back beaver. Though the beavers may sometimes build without local authority permission you can also see how much room there is to build the homes that young families need in this country not on green fields.

Not just jammed in the south east but beautiful homes on brownfield sites in places where homes make sense.

Home ownership

This government is helping young people to afford a home. It has been a scandal – a rebuke to all we stand for that over the last 20 years the dream of home ownership has receded and yet under this government we are turning the tide.

We have not only built more homes than at any time in the last 30 years. We are helping young people on to the property ladder with our 95 per cent mortgages and there is no happiness like taking a set of keys and knowing that the place is yours and you can paint the front door any colour you like. As it happens I am not allowed to paint my own front door, it has to be black. But I certainly don’t have far to go to work. And if you don’t have too far to go to work and the commute is not too dreadful and if the job suits your skills and your wifi is fast and reliable then I tell you something else:

That housing in the right place at an affordable price will add massively not just to your general joie de vivre but to your productivity and that is how we solve the national productivity puzzle: By fixing the broken housing market, by plugging in the gigabit, by putting in decent safe bus routes and all other transport infrastructure and by investing in skills skills skills and that by the way is how we help to cut the cost of living for everyone because housing, energy, transport are now huge parts of our monthly bills. It is by fixing our broken housing market, by sorting out our energy supply – more wind, more nuclear, becoming less dependent on hydrocarbons from abroad – by putting in those transport links we will hold costs down and save you money.

We will make this country an even more attractive destination for foreign direct investment

We are already the number one – look at the Nissan investment in Sunderland or the Pfizer vaccine manufacturing centre that’s coming to Swindon and with these productivity gains we will turbo charge that advantage and help businesses to start and grow everywhere so let me come now to the punchline of my sermon on the vaccine

It was not the government that made the wonder drug it wasn’t brewed in the alembicks of the department of health.

It was, of course it was Oxford University, but it was the private sector that made it possible behind those vaccines are companies and shareholders and, yes, bankers. You need deep pools of liquidity that are to be found in the City of London.

It was capitalism that ensured that we had a vaccine in less than a year and the answer therefore is not to attack the wealth creators. It is to encourage them because they are responsible for the aggregate increase in the country’s wealth that enables us to make those pareto improvements and to level up everywhere.

To rub home my point it is not just that vaccination has saved more than 120,000 lives. Vaccination has allowed us to meet like this and blessed us with such rapid growth with wages rising fastest for those on lowest incomes and that levelling up in action.

The vaccines have ensured that by a simple vowel mutation jabs jabs jabs become jobs jobs jobs. The world’s most effective vaccines have saved our open society and free market economy and it is our open society and free market economy that have produced the world’s most effective vaccines and that is the symmetry in the lesson of the covid vaccines – science, innovation, capitalism – is vital now for the challenge we face.

The challenge the whole humanity faces is even more existential for our way of life in just a few weeks time this country will host the summit of our generation in Glasgow when the resolve of the world is put to the test can we keep alive the ambition of Paris – to stop the planet heating by more than 1.5 degrees government can’t do it alone and taxpayers certainly can’t do it alone.

The other day I took a boat out into the Moray Firth to see an aquatic forest of white turbines towering over the water like the redwoods of California and you have no idea of their size until you see them up close.

The deceptive speed of their wings. Twice the diameter of the London Eye. Their tips slicing the air at more than 100 miles per hour and I met the young men and women apprentices who had moved straight across from the world of oil and gas and they had the same excitement at working amid winds and wave and being able to see whales and dolphins from the office window.

But they had the extra satisfaction that goes with knowing you are doing something to save the planet and get Britain to Net Zero by 2050 and that is the symmetry represented by these giant windmills.

Massive and innovative private sector investment and a government taking the tough decisions to make it possible.

That’s the difference between this radical and optimistic Conservatism and a tired old Labour.

Did you see them last week, did you watch them last week in Brighton hopelessly divided I thought they looked.

Their leader like a seriously rattled bus conductor – pushed this way and that by, not that they have bus conductors any more unfortunately, like a seriously rattled bus conductor pushed this way and that by a Corbynista mob of sellotape-spectacled sans-culottes. Or the skipper of a cruise liner that has been captured by Somali pirates desperately trying to negotiate a change of course and then changing his mind.

Remember Labour’s performance during the pandemic. Flapping with all the conviction of a damp tea towel. They refused to say that schools were safe. They would have kept us in the European medicines agency and slammed the brakes on the vaccine roll out. The Labour leader attacked the vaccine task force for spending money on outreach to vaccine hesitant minority groups when it is hard to think of any better use of public money and let us try to forgive him on the basis that he probably didn’t know what he was talking about.

In previous national crises labour leaders have opted to minimise public anxiety and confusion by not trying to score cheap party political points one thinks of Attlee or even Michael Foot in the falklands crisis – sadly that was not the approach taken by Captain Hindsight.

Attacking one week – then rowing in behind when it seemed to be working. The human weathervane, the starmer chameleon. In his final act of absurd opportunism he decided to oppose step four of the roadmap in July. That’s right folks. If we had listened to captain hindsight we would still be in lockdown we wouldn’t have the fastest growth in the G7.

If Columbus had listened to captain hindsight he’d be famous for having discovered Tenerife and how utterly astonishing that in the last few weeks labour should actually have voted against new funding we’re putting frward for the NHS

We need to remember why and how we have been able to back people through this pandemic at all.

It was because we Conservatives fixed the economy. We repaired the damage Labour left behind. Every Labour Government has left office with unemployment higher than when it came in – every single one – ever since the party was invented. And today we are going to fix this economy and build back better than ever before and just as we used our new freedoms to accelerate the vaccine rollout.

We are going to use our Brexit freedoms to. To do things differently. We are doing the Borders Bill. We have seen off the European superleague and protected grassroots football.

We are doing at least eight freeports, superfertilised loam in which business will plant new jobs across the UK.

And now we are going further. Not only jettisoning the EU rules we don’t need any more. But using new freedoms to improve the way we regulate in the great growth areas of the 21st century as we fulfil our ambition of becoming a science superpower, gene editing, data management, AI, Cyber quantum.

We are going to be ever more global in our outlook. We have done 68 free trade deals including that great free trade deal with our friends in the EU that they all said was impossible and after decades of bewildering refusal we have persuaded the Americans to import prime British beef – a market already worth £66 m

Build back burger I say.

And you ask yourself how have the Americans been able to survive without British beef for so long? And if you want a supreme example of global Britain in action of something daring and brilliant that would simply not have happened if we had remained in the EU I give you AUKUS – an idea so transparently right that Labour conference voted overwhelmingly against it

And I know that there has been a certain raucus squaukus from the anti-aukus caucus. But Aukus is simply a recognition of the reality that the world is tilting on its economic axis and our trade and relations with the Indo Pacfific region are becoming ever more vital than ever before.That is why we have sent the amazing carrier strike group to the far east been performing manoeuvres with 40 friendly countries.

HMS Queen Elizabeth – as long as the entire palace of Westminster and rather more compelling as an argument than many speeches made in the House of Commons. It has dozens of F35s on board and 66 thousand sausages aboard. Not because want to threaten or be adversarial to anyone either with the F35s or indeed the sausages. But because we want to stick up for the rule of law that is so vital for freedom of navigation and free trade and that is what brings AUKUS together Australia, UK, US – shared values.

A shared belief in democracy and human rights and a shared belief in the equal dignity and worth of every human being. Very few countries could have pulled off the Kabul airlift – an astonishing feat by our brave armed forces. Even fewer have the same moral priorities

No other government brokered a deal such as this government did with Astra Zeneca so that the Oxford vaccine has been distributed at cost around the world. More than a billion low cost vaccines invented in Britain, saving millions of lives

We are led by our values. By the things we stand for

We should never forget that people around the world admire this country for its history and its traditions.

They love the groovy new architecture and the fashion and the music and the chance of meeting Michael in the disco.

But they like the way it emerges organically from a vast inherited conglomerate of culture and tradition and we conservatives understand the need for both and how each nourishes the other and we attack and deny our history at our peril.

When they began to attack Churchill as a racist I was minded to ignore them. It is only 20 years ago since BBC audiences overwhelmingly voted him the greatest Briton of all time because he helped defeat a regime after all that was defined by one of the most vicious racisms the world has ever seen.

But as time has gone by it has become clear to me that this isn’t just a joke. They really do want to re-write our national story starting with Hereward the woke.

We really are at risk of a kind of know nothing cancel culture know nothing iconoclasm and so we Conservatives will defend our history and cultural inheritance. Not because we are proud of everything but because trying to edit it now is as dishonest as a celebrity trying furtively to change his entry in Wikipedia and its a betrayal of our children’s education.

Churchill’s last words to his Cabinet, actually his whole ministers but his Cabinet were there, were: “Never be separated from the Americans.”

Pretty good advice I’m sure you’ll agree and ended with the observation man is spirit

He was right there. I believe that through history and accident this country has a unique spirit the spirit of the NHS nurses AND the entrepreneurs whose innovative flair means that there are three countries in the world that have produced more than 100 unicorns not a mythical beast tech companies worth more than a billion dollars each

They are the US and China and the UK and those unicorns they are now dispersed around the United Kingdom in a way that is new to our country, that is the spirit of levelling up and we need the spirit of the NHS nurses and the entrepreneurs because each enables the other.

I mean the spirit of the footballers who took England into the final of a major knock out tournament for the first time in the lives of the vast majority of the people of this country probably, looking around at all you young thrusters, the majority of you in this room the indomitable spirit of Emma Raducanu her grace and her mental resilience when the game was going against her because that is what counts.

The spirit of our Olympians it is an incredible thing to come yet again in the top four a formidable effort for a country that has only 0.8 per cent of the world’s population in spite of the best efforts of some us jacob but when we come second in the Paralympics as well.

That shows our values not only the achievement of those elite athletes but a country that is proud to be a trailblazer to judge people not by where they come from but by their spirit and by what is inside them.

That is the spirit that is the same across this country in every town and village and city that can be found that can be found in the hearts and minds of kids growing up everywhere and that is the spirit we are going to unleash.

David Gauke: Johnson’s health and social care plan. A betrayal of Conservative principles? No – because, at one level, there aren’t any.

13 Sep

David Gauke is a former Justice Secretary, and was an independent candidate in South-West Hertfordshire in the 2019 general election.

The Government’s plan for increases in National Insurance (NI) contributions to fund higher health spending and increased health spending has provoked a furious response from some on the right.

It “sounded the death knell to Conservatism” and drove “a coach and horses not only through the Tory Party manifesto, but Toryism itself”  according to Camilla Tominey in the Daily Telegraph.  In the same paper, Allister Heath fumed “shame on Boris Johnson, and shame on the Conservative Party…they have disgraced themselves, lied to their voters, repudiated their principles and treated millions of their supporters with utter contempt” and that “an entire intellectual tradition now lies trashed”.

In the Times, Iain Martin declared that “at this rate, the Conservative Party might as well rename itself the Labour Party”  and in the Spectator, Fraser Nelson questioned whether the “Boris Johnson” definition of conservatism as “a protection racket, where the tools of the state are used to extract money from minimum-wage workers and pass it on to the better-off?”

Meanwhile, Dominic Cummings has argued that “if you think you’re ‘conservative’, and you give those speeches about ‘enterprise’ and ‘responsibility’, why would you support making many more dependent on state money and bureaucracy?”

It’s all jolly strong stuff. And there are elements of the criticisms with which I have sympathy. I share the scepticism about prioritising a tax-funded social care cap, in that those who will gain most are those who have the most (thanks to rising house prices) and that is the wrong priority for public money.

There is a need for risk-pooling, but I think Peter Lilley’s proposal on this site is worth close examination (I suggested something similar when in Government). I also dislike NI as the choice of tax because of the narrowness of its base – and the distortions that this causes – and the dishonesty of employers NICs (no, Prime Minister, it is not a tax on business: it is a tax on jobs and employees’ wages).

In fairness to the Government, raising taxes is difficult, NI is less unpopular than income tax (largely because much of the public misunderstand it) and, being cynical, it is not surprising that Ministers exploit that misunderstanding.

Having said all that, is it a fair criticism to state that Johnson’s Health and Social Care plan undermines everything for which the Conservative Party stands? For a number of reasons (some of which reflect better on the Party than others), I think not.

First, the Conservative Party has an honourable record of fiscal responsibility. When the public finances are in trouble, Conservative governments have been willing to raise taxes in order to put the public finances on a sound footing – not least Margaret Thatcher’s, when Geoffrey Howe raised taxes in 1979 and 1981. The advocates of Reaganomics always find this disappointing, but responsible Conservatives do not believe that lower taxes will pay for themselves (as they did not for Reagan).

In reality, even putting aside any new commitments on social care spending, the prospects for the public finances are not great. Not only do we face some immediate challenges (Covid catch up, net zero and levelling up), but demography and rising health expectations will mean a tax-funded healthcare system will require higher taxes.

Some on the Right will argue for further cuts in spending or an alternative health model, but the political feasibility of such an approach is highly dubious. If we are going to spend more (and we are), taxes will need to rise to pay for it.

Second, the idea that a Conservative government prioritising homeowners is a complete break from the past does not bear scrutiny. Look at the arguments that Thatcher made in resisting the removal of mortgage interest tax relief (although the Treasury rightly prevailed in the end), or the general dislike of inheritance tax from the wider Conservative world. The reaction to Theresa May’s social care policy in 2017 suggests that the instinct to ‘defend our people’ (and their inheritances) amongst Conservatives is a formidable one.

Third, complaints about the Conservative Party not being the party of business are (how can I put this?) a little rich from some quarters. Imposing higher taxes, whether on employment or profits, is not great for business – but making it substantially harder to trade with our largest trading partner is a bigger problem.

It is all very well complaining about the anti-business instincts of this Conservative government, but hard to do if you have been a cheerleader for anti-business policies or, for that matter, Boris “f*** business” Johnson. If your expectation is that the Conservative Party would automatically be on the pro-business side of the argument, you have not been paying much attention in recent years.

The reason why the Conservative Party moved in the direction of an anti-business Brexit is that was where the votes were. And this brings me to the fourth and most important observation about the Conservative Party.

It has one purpose: to be in power. At one level, it is not possible for it to repudiate its principles because it does not have any. This can give it a tremendous advantage in a democracy because the public, as a whole, does not have political principles either – opinions and political alignments shift over time.

The Conservatives have been protectionists and free traders, the party of Empire and the party that facilitated the retreat from Empire, Keynesians and monetarists, the party of price controls and wages policies and the party of market economics, the party of Europe and the party of Brexit. It never stays on the wrong side of public opinion for long.

What is happening to our politics at the moment is that party support is realigning along cultural lines and, as a consequence, much more along generational lines. This has worked to the advantage of the Conservatives, so it is no surprise that it pursues policies that prioritises health spending over lower taxes for people of working age.

Polling suggests that the new, Red Wall voters who switched to the Conservatives at the last election are notably more left-wing on economic issues than traditional Conservative voters who are, in turn, to the left of Conservative MPs. The decision was made to pursue those voters and, if the Conservative Party wants to keep them, it cannot risk the NHS collapsing under financial pressure – which means higher spending and, ultimately, higher taxes.

Johnson’s critics are right to think that this will not be the end of it. Last week’s package was supposed to be an answer to how we fund social care. The reality is that it was a package to boost spending on the NHS. As Damian Green has argued on ConHome, it is hard to see how resources will be taken out of the NHS and switched to social care in three years’ time – and that, at that point, some expensive social care commitments will come into effect.

here will another funding gap and, on the basis of last week’s revealed preference, a further increase in the Health and Social Care Levy. Those who see the purpose of the Conservative Party as delivering low taxes are right to be glum.

Afghanistan and America 1) Why British security policy is dangerously exposed

16 Aug

Air Force One is a period fantasy of U.S idealism and supremacy.  The Soviet Union has collapsed.  American hegemony is unchallenged.  At a dinner in Russia, James Marshall, the President, explains why the two countries have jointly apprehended the leader of a rogue state.

“The truth is…we acted too late. Only when our own national security was threatened did we act.  Tonight I come to you with a pledge to change America’s policy. Never again will I allow our political self-interest to deter us from doing what we know to be morally right.”

The film was released in 1997, during the decade or so between the fall of the Berlin Wall and Al Qaeda’s attack on 9/11.  And some ten years before Chinese communism began to fill the gap that Russian communism had left.

This is the world that most of us have lived the longest in: the one that came into being after the United States got out of Vietnam and before it got into Iraq – and Afghanistan.

America is still the most powerful country in the world, at least if one turns to one of those indices that try to measure economic strength, military muscle, diplomatic reach and international influence.

It remains the lynchpin of NATO, which has helped to keep the peace in Europe since 1945, and maintains an armed presence in Germany, Kosovo, South Korea, Iraq, Djibouti and elsewhere.

Furthermore, it isn’t inevitable that China will wax while the United States wanes.  The collapse of communism, Khomeine’s rise to power in Iran, the so-called “Arab Spring”: none of these were foreseen by western governments.

Perhaps China will somehow crumple again into the “celestial chaos” of the early years of the last century.  Who knows?  But as we gaze appalled at barbarism rampant, innocents dying and the West humiliated in Afghanistan, we can only weigh likelihoods.

When Joe Biden proclaimed “America’s back!”, he wasn’t telling a lie – even if its frantic retreat from Kabul, captured in the most mortifying  footage for the U.S since the fall of Saigon, suggests otherwise.

The President has returned America to the communal fold on Iran, climate change, and engagement, ending the use of Twitter as a tool of presidential statecraft, if that’s quite the right word for it.

But it is crucial to grasp, as so much of our reflexively anti-Trump media didn’t, that America is back on Biden’s terms, and while these may be multinational diplomatically they are unilateral militarily, or at least have that flavour.

Indeed, Trump’s Afghanistan policy begat Biden’s, because the latter inherited the Doha Agreement, pledging the withdrawal of U.S troops from Afghanistan, signed last year.

And Trump was successful at Doha where Obama had previously failed.  The former President’s administration tried at least three times to hold negotiations with the Taliban.

Such has been the direction of travel since George W.Bush – a kind of President Marshall on steroids – responded to Islamist terrorism with neo-conservative doctrine, attempting to build western, liberal, democratic states in Asia backed by American firepower.

Biden would presumably honour America’s NATO obligations were Vladminir Putin to open a new front in the Baltic States, though he has taken Russia’s part over the Nord Stream 2 natural gas pipline.

Perhaps he can cobble together an international alliance against China that re-establishes U.S. leadership – though how he will to do so after his grotesque miscalculation in Afghanistan, goodness knows.

Nonetheless, British policy-makers would be wise to look at the trends in America over the last decade or so.  And not merely the ones in security.

The Obama-Trump-Biden withdrawals from Afghanistan and Iraq (the President wants U.S troops out of the latter by the end of the year) haven’t taken place in a social, economic and cultural vaccuum.

The United States is becoming less united, more extreme (within both the main parties), more woke, more spendthrift, less religious, more druggy, more violent, more porous, less prosperous (at least compared to its main rival).

The British state shows no sign of coming to terms with the speed and scale of the change, and reviewing assumptions that have more or less held since the Second World War and the Marshall Plan.

And were America no longer to be there for us, for better or worse, we would be uniquely exposed – at least as our security policy is concerned.

Perhaps ConservativeHome is taking a rosy-tinted view of British security policy, but it seems to us that, in the balance between realpolitik and justice, the latter weighs more heavily here than among our European neighbours.

Consider Russia – the perpetrator of an outrage on our soil three years ago.  Germany wants Nord Stream 2 and a pacific policy to go with it.  Emmanuel Macron is pivoting towards Putin.

Poland and other Eastern European states are fighting back, and Britain, Brexit or no Brexit, remains their most committed military ally, with our troops exposed in Estonia in what Lord Ashcroft reported as “Operation Tethered Goat”.

London may be awash with Putin money, but it is our Government, alert to human pressures in Parliament and outside it, that has imposed “Magnitsky sanctions” on 25 Russians (and others).

Turn then to China, towards which British policy, echoing Biden’s, is more ambiguous – describing it in the Integrated Review of Security, Defence, Development and Foreign Policy as a “systemic competitor” rather than, like Russia, as an “acute and direct threat”.

But while Boris Johnson wants to keep its options open on the Chinese communist state, an entire House of Parliament, plus a significant slice of the Conservative Party, does not.

The political push to hold China’s government accountable for crimes against humanity has found spectacular expression among peers and MPs over the past year.

Three times the Lords sent an amendment to the Trade Bill down to the Commons which would, if passed, have seen China’s leaders pursued through British institutions over the most heinous crime on the charge sheet: genocide.

On the last occasion, the Government squeaked through by 18 votes, and 29 MPs voted against the Party line – including a former Party leader, Iain Duncan Smith.

He and four other Tory MPs, including the Chairman of the Foreign Affairs Select Committee, Tom Tugendhat, and our former columnist Neil O’Brien, now Chairman of the Party’s Policy Board, have now been sanctioned by China.

Is this site alone in pondering the possibility that the trend to isolationism in America gathers speed, returning us to the kind of world that we haven’t seen since the 1930s, in the vanished days when Britain still had an empire?

If so, can we be so noisy about Russia and China at once? Furthermore, what about Islamist extremism and, with an eye to Plymouth, home-grown terror?

Might we not have to choose – in a Europe in which Russia is the nearest and biggest threat to our national security?  Can a Britain with smaller forces really afford a “tilt to Asia“?

Air Force One ends with the vigorous President Marshall, played by Harrison Ford, despatching a terrorist with the cry of “get off my plane”.  Biden is shut up in the presidential jet, metaphorically speaking, and heading for home.