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Monday, 15 December, 2008 
Labour has accused the Conservatives of being the ‘do nothing’ party when it comes with dealing with the recession. Labour are wrong, just because we don’t support their policies doesn’t make us the ‘do nothing party’, it’s just that we think what they are doing is wrong. To explain this, I will set out why I think we are in this recession and what I think we need to do to get out of it.
The cause of this recession is excessive debt. For the last decade or so, much of it when Gordon Brown was Chancellor, the economy has been kept afloat by a huge increase in debt. In fact, if you add up all the debt of individuals, companies and the Government, we owe an amount that is about three times the size of the UK economy. UK households are the most indebted in Europe, millions were struggling with bills before the current recession and the Government was borrowing at high levels before the recession began to bite.
There have been three players in this tragedy: firstly individuals who have borrowed to the hilt and spent it all. Secondly, Banks who lent money out recklessly and failed to regulate themselves properly, and thirdly the Government. They joined in the spending spree, taxed, borrowed and spent without reforming public services, and failed to step in and regulate the banks when the banks failed to do it themselves.
As people borrowed and spent, imports were sucked in which is why we have a record balance of payments deficit. With housing, as more money sloshed around the system, but housing numbers didn’t increase sufficiently, prices rocketed. People then borrowed more on the value of their houses and the whole cycle continued. It was like a huge bubble, getting bigger and bigger as Labour said we were all better off, and they had abolished ‘Boom and Bust’. The reality was that we were just living the high life on a debt-fuelled binge and the crash was just a matter of time.
The problem with bubbles is they burst, and this is what has happened. Eventually the debts started to go bad, the banks started failing when they couldn’t get the money back from the people they had lent it to. As Banks started running out of money they stopped lending to each other and to individuals with the inevitable consequences of business failures and unemployment.
Labour was right to stop the banks failing by injecting public money (recapitalisation) but this action has failed to start lending again. But, Labour is wrong to try and borrow our way out of a recession, the problem is debt, you cannot solve it by getting into more debt.
All this debt will need to be paid for, which puts a huge tax burden on future taxpayers, would it not be the ultimate selfish act for Labour to burden our children with the cost of their excesses? Already international investors are doubtful that this borrowing can be paid back and this is why sterling has collapsed, how long before Britain is declared bankrupt and has to go cap in hand to the International Monetary Fund ( IMF)?, it has happened before under Labour can it happen again?
So what can we do, what should the correct course of action be?
On bank lending, the Government is lending money to the banks at high rate of interest and then demanding that the banks pass this on to individuals and businesses at a lower rate. This is impossible; the banks will just keep failing. No amount of bullying from Labour will change simple mathematics, that if you borrow at a higher rate than you lend out, then you will go out of business. Coupled to this is the need for the banks to repair their balance sheets by holding cash not lending it out.
This is why Conservatives have proposed a National Loan Guarantee scheme, whereby the Government will guarantee loans to businesses. This will get money flowing to businesses, allow the Banks to recover and get credit flowing through the system again.
In order to help businesses and individuals there are practical steps that can be taken to help in the current crisis. Conservatives have proposed a temporary VAT payment holiday and a National Insurance cut for small businesses. For individuals and families we have said we will freeze Council Tax for up to two years. These are practical steps that can help businesses and people through the immediate problem, and will do more good than a VAT cut, which will do little to boost demand when shops are discounting heavily already.
But all of these are just short-term crisis measures to help with the immediate problem. In the long term we need to tackle the root causes of the problem, which is debt, and for that we need to go back to the three players in this problem.
Individuals need to borrow less, spend less and save more, they need to pay off their debts and get their finances back onto an even keel. Banks need to be more responsible in future, and we need to enhance the powers of the Bank of England to monitor overall debt levels so we never get in this mess again. Then finally Government must play its part also. We need to cut back borrowing which means real reform of the public sector to root out waste, reduce the growth, and some cases the size, of the public sector. Only then, over time, can we have lower debt levels and with it lower taxes for all.
Businesses must be helped to grow and create real wealth by reducing the bureaucracy that stifles growth and by setting out a clear economic framework that is responsible and for the long term, with at its heart, lower taxes and real stability.
There is no magic bullet I’m afraid, simply trying to go on, as before, is not an option, and places an intolerable burden on future taxpayers, is it right that we should ask them to give their tomorrow so we can have our today? Should we not take the more honest path?
That is the choice we face, carry on regardless, pretend the credit crunch never happened and borrow more, hoping for a recovery, or chart a new path, one of responsibility and opportunity, but grounded in an acknowledgement of what has gone wrong and what must change.
Only the Conservatives are honest enough to face up to the challenge and confront the Labour failures that have brought us here, that is why we are the ‘Do it right’ party
Sunday, 14 December, 2008
Last week the Defence Secretary, John Hutton announced that the Aircraft Carriers being built for the Royal Navy would be delayed by one to two years. He said this was because of the need to balance the books of the MOD, as well as to bring the in-service date of the Carriers in line with the in-service date of the aircraft that will fly from them. He further stated that this delay would not affect jobs because the work would still commence in the spring of 2009 but that it would be at a slower pace. Mr. Hutton has declined to comment on rumours that the work planned for Barrow will be moved to another shipyard around the country. Let’s look at Mr. Hutton’s arguments in detail.
Firstly, the need for the MOD to balance its books in the medium term and fund its priorities. It is certainly true that the MOD faces a severe budget squeeze from the need to fund two operations as well as the re-equipment programme. These pressures have been building up since the end of the Cold War and have accelerated under Labour. The simple fact is that Britain spends less on defence than anytime since the 1930’s and we actually spend more on paying interest on Government borrowing than on defence. We face a choice, we either cut our commitments to match funding or fund our commitments properly. I believe strongly that our defence commitments and capability are fundamental to our nation, so we need to fund them properly. Labour have never faced up to this fact and have tried to do defence on the cheap. That is why we need a Defence Review now to decide on our priorities and then arrange public finances to pay for what we need. At a time when Gordon Brown has no worries about borrowing hundreds of billions of pounds to prop up the economy he broke, you would have thought the MOD could have found the money for its projects. It just goes to show you the disdain this Government hold for our military.
Secondly, Mr. Hutton argues that the carriers can be delayed to bring them in line with the availability of the new aircraft. It is again true that the chosen aircraft, the F35B, is planned to come into service later than the carriers, but this is a problem that could have been worked around. There are two solutions to this particular issue, either the existing Harriers are used on the new Carriers for their first few years in service, or radically the design of the Carriers could have been looked at again. The Carriers are currently planned to be configured as STOVL (Short Take Off and Vertical Landing), yet at 65,000 tonnes, they are easily capable of taking conventional aircraft, and could be fitted with catapults and arrester wires. In fact they are designed to be fitted ‘for’ but not ‘with’ this capability to allow them to be re-configured to conventional carriers, if needed, in the future. If they were now configured in a conventional way then the options open to the MOD would be: lease aircraft such as the F18 Hornet to fill the gap before the F35 comes into service, continue to fly the Harriers from the ships or even navalise the final tranche of Typhoons for use on the carriers. The standard F35 (non STOVL) could then be bought in the future. In addition there are still many problems with the vertical take off version of the F35 so to configure the Carriers in a conventional way would mitigate many of the risks that this plane may not ever come into service. What will happen if this plane is cancelled? Why, when we are building large carriers does the MOD persist in building STOVL Carriers, when there is no need? Why wasn’t this option explored?
Finally Mr. Hutton claims that the work will start next spring but will progress at a slower pace and that this will not affect jobs. I don’t know about you but I can’t follow his logic on this. If the work is at a slower rate then you don’t need to employ as many people in the future, so you either reduce your workforce to reflect the fact you have longer to do a given job, and therefore need less people to do it, or you don’t recruit any additional staff. Either way to claim it has no affect on jobs is ludicrous; it must have an affect on jobs as stated above. As for the work in Barrow, Mr. Hutton has made no statement, so the rumours that the work will be reassigned to either the Tyne or Scotland, persist. Local businesses in Barrow who may have been hoping that the influx of contract workers would help the local economy, have been let down by this Government and their MP.
Mr. Hutton also fails to point out that since the premature withdrawal of the Sea Harrier the Royal Navy now has no fighter aircraft with long-range air-to-air missiles. The Harrier is only equipped with short-range missiles such as Sidewinder. This means that if we have to put our Fleet in harms way, facing a relatively sophisticated enemy, then there is a serious gap in their air defences. The delay of the Carriers and its aircraft mean that this gap will be for longer and the risk is for longer. This problem could be partly offset by reconfiguring the Carriers in a conventional way as stated above.
I believe strongly that the carriers are critical to the future defence of this Country; they are an extremely flexible and useful piece of kit that can be used from everything from war fighting to disaster relief and emergency evacuations. I’m sure that a Conservative Government would not have taken this short sighted and dangerous decision.
We need the Carriers and if I were the MP for Barrow & Furness I would be fighting to secure them now, for our Navy, for the people of Barrow and for our Country.
Saturday, 13 December, 2008
Poor old Gordon Brown, it seems not all world leaders agree with him that he has ‘saved the world’. Last week he suffered first an attack from German Finance Minister Peer Steinbruck, who called his decision to cut VAT levels and raise borrowing to record levels to support the weakening economy as "crass" and "breathtaking." The Government dismissed this comment claiming that it was motivated by internal party politics and that all Europe agreed with the Prime Minister. Unfortunately for Gordon brown a second front was opened when Steffen Kampeter, Chancellor Angela Merkel's CDU party, described Mr Brown's £20bn fiscal stimulus as "a failure of Labour policy". Perhaps Gordon should study some more German, then he may come across the word ‘Gotterdammerung’ which is used in English to refer to ‘a disastrous conclusion of events’.
Monday, 01 December, 2008
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