As I did not get a satisfactory answer yesterday, let me have a go firstly at an answer the PM could have given, and then at a fuller answer to the problem I was highlighting.

Question: “The balance sheet of RBS shows £700 billion less in loans and other assets at end December 2009 compared to a year earlier. Where has the £700 billion gone?”

Possible PM answer ” The Rt Hon gentleman should understand that when we took over RBS it had a very overextended balance sheet. Management is currently working to shrink the size of the balance sheet by selling off trading and other assets, reducing liabilities at the same time. I am very keen that they should not allow this process to impede levels of lending to persons and companies in the UK and will take further action as shareholder to ensure they do not restrict their supply of credit in a damaging way”

I wished to highlight two related questions. The first is the actions and attitudes of the Banking Regulator, at a time when we need an economic recovery. The Regulator has chosen this time to demand higher levels of cash and capital from banks than they were required to hold during the boom. This means that at the weakest point in the cycle they are forced to reduce their lending and other risky activities, as a bank like RBS has no easy way to raise further large sums of capital to sustain its former balance sheet. Why is the Regulator behaving in a way which aggravates the cycle rather than smoothing it? Many now say they believe in the counter cyclical regulation I have been advocating, so why aren’t they putting it into effect?

The second is shareholder value. Taxpayers have been made to buy 84% of RBS at an average price higher than today’s share price. Taxpayers would like to get their money back with profit, and will want to know what impact such a rapid reduction in the overall size of the bank will have on the future value of their shares. There has been no guidance from the government as shareholder’s representative on this important matter.

I think it is wrong that these huge sums of money at risk for taxpayers are neither properly reported nor debated in the House of Commons. As I keep explaining to the government, they have got us into a situation where the state is the best part of a couple of large banks with a medium sized government attached. The sums at risk in our bank ownership far exceed annual public spending. Ministers should take a more serious interest in what is happening in these large state owned and influenced banks, and report it to us. Ministers should also be able to answer questions on the main strategic thrust of what they are doing with them in our name.

Today was an unusual day. For the first time in years I won a PMQ in the weekly ballot for the opportunity to ask a question.

I decided to ask him what had happened to the £700 billion of assets that disappeared from the RBS balance sheet in 2009. You would have thought he might have noticed it and taken an intelligent interest in it. After all, £700 billion is more than the government spends each year, and is around half the national income. Now we own a bank on this scale, it would be nice to know the boss was in charge and knew the numbers and understood the strategy.

My purpose in asking was to highlight the conflict in current policy. The public sector is made to spend more and more to “keep the economy going”, whilst the private sector remains under an intense squeeze. RBS has been forced into collapsing its balance sheet by huge sums to meet new requirements for more cash and capital relative to the amount it lends and trades.

I am trying to find out if the government realises it is squeezing the private sector too hard and is doing it because it really does want an ever bigger public sector at all costs, or whether it does not realise that its Banking Regulator is holding back the recovery. I am none the wiser, but hope others may take up this important quesiton on the back of my PMQ. With major banks slimming this quickly it is no wonder mortgages and business credit are scarce and dear.

The Advertising Standards Authority were right to ban two of the government’s gobal warming ads. They attracted a record number of complaints from people who disagreed with their message.

It reminds us how there are some obvious spending cuts to make which would improve the quality of our lives. We do not need the government wasting our money trying to brain wash us into agreeing with their warped view of the world.

The BBC, ever faithful to Labour in its extreme global warming mode, told us this morning the government had had a “score draw” with the Advertising Standards Authority. I don’t think so. The government was judged to have run two misleading and politically biased adverts and told to stop running them. That is defeat for the government. We were told that there was just one word that was wrong – yes, the word that asserted a forecast and causation between global warming and other phenomena – a rather crucial word.

It’s not just the global warming ads that grate. This government bamboozles us continuously about lifestyle and taxation, spending much more than any previous government on “public information”. It stretches the limits of public information ever closer to political messages which should never be paid for out of tax revenue.

The government should do the decent thing and stop all this advertising in the run up to the election. A new government should make the ad budget one of the first targets for substantial reductions.

The USA thinks the answer to the huge imbalance in world trade between China and the rest is a revaluation of the Chinese currency, the renminbi.

China has responded strongly to this advice, telling the USA not to meddle in what China regards as her business. Premier Wen advises the USA to look to itself to sort out why it imports too much and exports too little. He managed a good side swipe at the hapless US President, by reminding the world that the uSA refuses to export some of her hi tec wizardry to China, items which China would like to buy.

The renminbi is a managed currency. There are tight restrictions on who can buy it and how much they can buy. It is not the official currency of either Macau or Hong Kong, relatively more exposed parts of the Chinese economy to world finance and trade. As Premier Wen explained, policy is to “keep the yuan (the highest unit of the renminbi currency) basically stable at a reasonable level”. The managed rate will only be changed if it suits China to change it. At the moment they think it adds to world recovery, as it enables China to grow rapidly.

There are two important questions for analysts to ask.The first is, could external events and US pressure lead to such a revaluation? The second is, might China wish to revalue the renminbi any time soon for her own reasons?

It is extremely unlikely that China will give way so soon after making a clear statement she has no intention of doing so. That would entail loss of face. China is also all too conscious that she owns large sums in dollar based investments, so any revaluation of the yuan immediately leads to a substantial loss on her holdings, as well as making it a bit tougher to export. The main thing she wants from the US – the cancellation of weapons exports to Taiwan – is unlikely to be conceded by the President, as that would entail too big a loss of face for him. US diplomacy is counter productive, delaying a revaluation which might other wise occur.

For there are domestic reasons which might lead to a revaluation. China has a growing inflation problem. The rate rose to 2.7% in February, and could rise a lot higher this year, following the explosive injeciton of credit and spending over the last year. China has started to rein in by ordering more bank reserves. She can do more of the same. A revaluation would also help cool the domestic economy, whilst cutting the prices of imports and helping a little with the inflationary pressures. She has not yet raised interest rates, fearing that could abort the recovery in a world where other economies are still struggling.

A revaluation of the renminbi is possible, but is not an immediate probability. The US could delay it further by overdoing the pressure on China. The USA does not have a very strong hand. The outside risk is the USA for internal political reasons overdoes the posturing against China and embarks on a course of tariffs or other restraints on trade. A more likely outcome is delay, followed by the inevitable revaluation of a strong currency for a country which remains super competitive at these exchange rates.

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One of Labour’s spin successes in recent years has been to shape misconceptions of the Conservatives. The press and public have been fed the line that Conservatives are the ugly ducklings. It is time to reveal that, on the contrary, they can be the swans.

The ferocious spin has been relentless. Anyone who believes, as I do, that more decisions should be taken democratically here in the UK and fewer bureaucratically in Bruswsels, is branded as extreme – even though voices on the left and of no particular leaning think the same.

Anyone who believes as I do there ought to be better rewards for hard work and thrift, and think tax revenues would be bigger if we set lower rates of tax, is also branded right wing. We are deliberately said to favour cuts in schools and hospitals, despite our view that our approach would expand the revenues, and our constant reminder that we did not come into politics to sack teachers or nurses.

Anyone who questions the wisdom of some new set of regulations on the grounds that they might not work, is said to wish the harm the regulations purport to be against. I have been accused of single handedly causing the problems in banking owing to my belief in deregulation, despite writing a report saying they needed to regulate cash and capital more strongly and intelligently than they managed.

So it is for the Conservative party as a whole. Labour’s surveillance society, its poltically correct agenda, its belief that every problem can be solved by some combination of new regulation and public spending has been the zeitgeist for too long. Too many interviewers conduct interviews from the proposition that all public spending is good and more is better. They ask questions based on the assumption that laws and rules stop bad behaviour, and that if you question their efficiacy you condone it.

Labour tries to set the agenda to stop the Conservatives speaking well on tax, on Europe, on social policy and on immigration. It is time to throw off this constraint, and to change the terms of the debate.

The draft EU report on the UK economy is unfortunately all too accurate. It says the government does not plan sufficient measures to control the deficit, is running with growth forecasts that are too optimstic, and has failed to offer credible detail about the cuts it is planning to make. These are conclusions any self respecting UK governemnt would come to themselves without having to be told by Brussels. It is a nice irony that this most Europhile of government should in the end be undermined by their continental bureaucratic friends.

David Cameron’s week-end message –

“Britain is in serious economic trouble. Not only have we just had the longest and deepest recession on record, but our recovery is one of the weakest in the developed world.

This has all happened on Gordon Brown’s watch. But now the man who promised “no more boom and bust” says he’s got us through the worst of the storm, and all we need is his hand on the tiller to steer us through the choppy waters.

That is 100% wrong. He didn’t steer us safely through the storm – he made it worse for us, by spending and borrowing so much.

So, we’ve had enough of Gordon Brown’s hand on the tiller. We need to change course – as I explain in this week’s video message.

We need to act now to show the world we’re serious about paying back our debts. We need to get more for less with government spending – just as families across the country are having to get more out of their money. And we need to make Britain the best place in the world to do business.

That’s the big choice on our economy today. Five more years of Gordon Brown – or change with the Conservatives with the energy, leadership and values to get Britain moving again.”

The government has belatedly decided to disagree with UNITE, one of its largest benefactor Unions. Alarm bells have gone off in Downing Street. They remember too well the damage the winter of discontent did to them in the 1970s and do not wish to be too heavily associated with an unpopular strike.

The irony is that UNITE are simply arguing in one company for the approach that Labour wishes to take with the national budget – to put off reform and keep on spending. We need to ask the PM why it is necessary for a company – or a family – to bring their costs into line with their incomes, but not for the nation.

The truth is that most of current policy is very old Labour. These are the bank nationalisers, the people who wantonly threw billions of public money into banks which had been brought low by a change of rules of their very own regulators, following the banks’ all too willing response to previous encouragement of too much credit by those same regulators.

These are the over regulators of our daily lives, the people who wish to force dog insurance on dog owners and spend hours thinking up new ways of taxing and controlling motorists. These are the men and women who sent in the thought police.

These are the people who think there is a public spending answer to every social problem, regardless of whether the nation can afford it or whether it works. This is a government of the control freaks, of borrowers, and of wasters of other people’s money.

It is true it is also a NULabour regime to the extent that it believes you can control what people think most of the time by superior spin, paid for by taxpayers.

Many people have fallen for bank nationalisation, because Labour allowed former Labour Councillor Vince Cable to front run the idea for them, with the government “reluctantly” giving in to this “moderate” lobbying. Sensible alternatives to avoid bank collapse and to protect taxpayers were carefully kept off the airwaves or airbrushed out of the official script.

Some may now fall for the idea that UNITE and the government are at loggerheads, and the government is not in favour of such strikes. The test of that proposition is will Labour give any of the money back to the Union which they have received, saying that they think it wrong to have taken money from people who behave in a way they condemn? Will the Union tell the governing party it will not be receiving any more in the future because the Union disagrees with Labour’s stance on its strike? I doubt it.

We will be told endlessly that public spending has to continue at full throttle all the time the recovery is so weak. We need to ask why Greece was brought up with a jolt by the markets for following Labour’s policy on spending and borrowing? We need to ask why is the UK so different from Iceland, Ireland and Greece, all of whom have been forced into bigger spending cuts and interest rate increases owing to their failure to take timely action?

We will also be told that taxing the rich is the answer to the deficit. This morning’s news that their changes to Non Dom taxation may end up losing us tax revenue should be no surprise to sensible people. Their 50% tax rate will also drive successful people and businesses away. The proof that this lot are old Labour is their belief that you maximise tax revenue from the rich by raising the rates, and that in itself is enough to pay all the bills.

As readers of this site will know, you maximise tax revenue from the rich by lowering rates – and you increase it from the not so rich by exactly the same means. We also know that the deficit is so huge, any additional tax from a tax the rich policy that worked would not solve the problem on its own.

There has been a large response to the main Conservative messages.

Respondents fall into four categories.

Long term opponents of the Conservatives are critical of the messages. That is no surprise, and would have been true whatever had been put out.

Some loyal Conservatives are pleased with them, and will get on and put them to electors once the election gets underway.

UKIP supporters and sympathisers are critical. They want the Conservatives to speak mainly about the EU, sovereignty, immigration and related subjects. Time will tell how many of them carry out their threat and vote UKIP, knowing as they must do that it makes the election of a federalist MP in their seat and an overall federalist Lib/Lab government more likely.

Some Conservatively inclined voters are also expressing doubts, or sending in messages they would prefer the Conservatives to get across. Many will find that their concerns are covered in policy statements, available on the Conservative official website. The next few weeks are not just about how the swing voters swing, but how many traditional Conservative sympathisers do finally decide to vote for a change of government. There is only one realistically on offer, and that is change to a Conservative government.

Traditional Conservatives need to be reminded that their party has pledged to reverse some Labour policies they most dislike – the one way ratchet of powers to Brussels, the lack of proper border controls, the surveillance society and the ballooning deficit.

The proper way to bail out a Euro member would be to amend the Treaty to allow a formal system of loans and grants to Euro members who get into trouble. The Treaty could provide for suitable controls over the member state’s conduct in return for seeking and being granted aid. I would favour that approach, as I think the Euro area needs a better system of transfers.

As a non Euro member it would give the UK a good opportunity to bow out of more of the needless EU government that we do not want, and would give us the opportunity to have a refererendum on the Treaty as modified. Clearly the UK should not be party to the bails outs or the rules imposed on Euro members. The EU would doubtless need to give us substantial powers back to make a new Treaty palatable to the UK public.

A single currency scheme either needs a single government which can make the calls on how much to borrow, how much to print, and how much to spend, or it needs a set of rules over how much each of the individual memebrs can spend, borrow and print. If I were a German taxpayer I would not wish to bail out Greece. I would not be satisfied they have done enough to cut their spending. I would be worried in case Portugal, Spain and others were in the queue for my support as well.

Why do these governments whinge and whine so much about the need to reduce their costs? Business accepts that in recessionary times you may need to cut costs by 10% or 20% to survive. You just get on and do it. You don’t do it by threatening your customers with a worse service, or by cutting back your front line service or best product offerings. You do it by working smarter and cheaper.

These EU governments – and the UK – have failed to make themselves efficient and to discipline their costs for years. That should make it easy to cut the costs of doing what they need to do. They should be told to get on with it, instead of seeking new ways to milk the taxpayer. Borrowing more is just delayed tax.

I promised to explain why I did not go by train to Manchester. My local station is a twenty five minute or so walk from home. The first available train to get me to London Waterloo leaves at 6.06 in the morning, and after a change of train gets me there at 7.31 if it is on time. I needed to be at my destination in Manchester by 10.30 in the morning. That meant catching the 7.35 from Euston to get to Manchester Picadilly for 9.49. There was no way I could cross London in four minutes. Even if I had caught the later Euston train, the 8 am, and ran the risk of being late for my speech, I would only have had 29 minutes to get the Jubilee to Green Park and the Victoria line from there. So the train offered me the prospect of setting out at 5.30am but not guaranteeing I could be at my destination by 10.30. It would also have given me five hours of worry that all five trains would work and be on time.

A 35 minute drive to Heathrow, a one hour flight and a thirty minute taxi journey were bound to be shorter, even allowing for the waiting and checking time at Heathrow. I estimated I could leave home at 7am and still be there for 10.30, and so it proved. Three and a half hours. Not good, but fewer links to go wrong.

I could have driven to Euston, but that would entail battling the congestion and heavy London traffic in the morning rush hour, culminating in a difficulty in parking no doubt. That would have taken the best part of two hours, still leaving me with more than a four and a half hour journey if fortunate.

The cheapest option and maybe even the quickest would probably have been to drive the whole way. There was parking at the other end.

We learn this week that after 13 years of dithering and failing to put in any significant new rail or road infrastructure (other than the Channel link which the previous government had planned) the Transport Secretary suddenly wants to slash journey times by train to Birmingham. Of course, on closer inspection he does not expect the government to do this any time soon. It looks like an announcement for an election.

As my journey indicates, for many of us the problem with train travel is getting to the right station to jump onto a faster train in the first place. The endless congestion in most town and city centres near to stations is the number one problem we all face when thinking of train travel. If I lived near Euston and if my meeting had been near Manchester Picadilly it would have been a no brainer to go by train, but few of us are in such a position.

We want easier, cheaper and more timely point to point jounreys of the kind we actually undertake. My journey to Manchester did not need a faster train from London, but easier access to local stations, and faster trains from local feeder stations to main termini.

The government is always talking of joined up policies and integrated transport policy. True integration would improve junctions and roadspace to allow us road access to main stations, and provide plenty of parking when we get there. Then people might switch more to fast trains, and the train might indeed take some of the strain. At the moment the anti motorist policies in many cities gum up the works, force the use of more fuel per mile travelled, delay and frustrate motorists and impede access to rail services. Instead of grandstanding about ever faster trains on a few routes, Ministers should think about real journeys made by people trying to work in this country.

The FSA says today it will in future monitor more and make judgements about the safety of various financial products and activities.

The tripartite regulators led by the Chancellor made some very important judgements 2005-8. Between 2005 and 2007 they thought banks had more than enough capital and cash for their huge increases in lending and investment banking. They were wrong. They allowed the banks to bloat their balance sheets in a damagaing way.

Between end 2008 and today they have told the banks they have to raise or hold much more capital and cash relative to their lending. This has unsurprisingly proved very recessionary. Again they have been wrong – they should have asked for a more sensible rate of progress to more prudence, geared to the state of the economic cycle.

If the regulators wish to make more judgements, they should consider the next possible crisis, not the last.

They should ask, for example

Is it right for pension funds to be encouraged or required to keep so much of their asset in Uk government bonds? Markets think at these interest rate levels these are risky instruments. What happens if markets lose confidence in Uk government debt, or if interest rates have to increase substantially to raise all the extra money?

Is it right to encourage or require banks to keep so much of their liquidity in UK government bonds? What happens if they fall in price?

Yesterday was another successful day for anti terrorism. I was especially grateful as I was travelling to and from Manchester by public transport in order to make a speech there. We should not tempt providence or take things for granted. The anti terrorist police and Intelligence services are to be congratulated for all the networks and plots they have intercepted to make us safer.

I wanted to get to Manchester and back as quickly as I could. For reasons I will describe tomorrow that meant I had to go by car and plane, rather than by car and train. It meant experiencing once again the security and customer handling at Heathrow. There are a few questions I would like to raise about physical security, as opposed to intelligence and policing work.

The main worry yesterday at airport security seemed to be women who might be concealing bombs in their scarves or boots. They all had to take these off and put them through a scanner. All of us had to remove our belts, any men wearing boots had to take those off but shoes were fine, and all had to remove coats and jackets. No-one was found with anything wrong whilst I was in the queue. Meanwhile at the station no-one was searched for anything, despite the fact that terrorists have attacked trains as well as planes in recent years. The first question I have is why do we treat air and train travel so differently?

Because it took each person time to take some of their clothes off, find enough trays to put it all in, and prepare for the scanners,there was a long queue. There were not enough scanners available and open. When you choose which queue to join it is not possible to see which queue is longest, owing to the way the queues were controlled, so some people had to wait longer than others depending on the lottery of the queues. Why can’t they provide more channels? Why can’t they have proper overall queue control so waiting times are fair?

Security also required three different checks on the boarding card of each pasenger. We had to queue to have the boarding pass checked before being allowed into the security check area, we had to queue again to have the boarding card re checked to get from the security check area to the gates, and then again to gain access to the plane from the gate. I see the obvious need to check everyone at the point where they board the plane, to make sure we know who is on the plane, to check they are on the right plane and have paid the fare. I assume they also want to have a check on every person first going airside, so they can make sure all who reach airside can be accounted for. Why do they also need a third check on the boarding card?

As someone who has urged splitting up the monopoly over London airports I hope that when these main airports are in different ownership we will see improvements in the way security checks are handled. It is, after all, taking time away from shopping at the airport, and putting passengers into a mood where they are less likely to be willing to spend.

Yesterday the Conservative message for the next couple of months was unveiled to some of us.

It is: “We can’t go on like this. Vote for change”

Change includes:

“Change the economy. Back aspiration and opportunity for all. Gordon Brown’s debt, waste and taxes are holding us back and threatening the recovery with higher interest rates”

“Change society. Mend our broken society by encouraging responsibility and backing those who do the right thing.”

“Change politics. Give people more power and control.”

Any comments?

This week’s poor balance of payments figures for last month revealed two worrying facts. Despite the sharp falls in the pound, there has been no surge in exports to show us gaining market share as we become more price competitive. At the same time, imports have increased sharply as destocking ends, with no sign that UK industry is about to replace imports with home produced goods. Trade volumes both ways are up as the world economy recovers a bit, but there is no encouraging sign that we are about to improve our relative position.

After a decline of almost one quarter in the currency, you would expect both a surge in exports and a lively increase in import substitution. The absence of both so far implies several problems.

First, a lot of capacity was clearly lost in the recession. Factories were closed, people were made redundant. The last twelve years have seen industry decline as a result of high taxes and high regulatory costs.

Second, manufacturers have been finding it difficult to get bank finance for their activities. In need of cash, they have favoured putting prices up in sterling terms, taking advantage of the lower pound to do so. They have been forced to raise their margins on lower volumes given the shortage of finance.

Third, the UK in recent years has lost great swathes of capacity. JCB recently told us how small a proportion of their vehicle components they can now source from the UK. If you go into most clothes shops there are racks and racks of Asian textile products because the UK industry has been cut to the bone. UK steel plant is closing as demand falls.

We need policies that will help industry recover and build new capacity. That requires changes to taxes, regulations, and bank regulation.

One of the triumphs of Labour spin over the last twenty years has been to caricature Thatcherism. Because they so feared its success, economically and electorally, they set out to associate it with a set of unpleasant characteristics so we would “never go back to it”. Their presentation of Thatcherism was a tissue of lies, but quite successful with some people.

Labour sought to endow Thatcherism with five disagreeable features:

1. The economics of boom and bust
2. Belief in or acceptance of great inequalities
3.Run down of manufacturing
4.Intolerance of minorities
5. Cuts in “front line public services”

They also attempted to tarnish popular Euroscepticism with these alleged failures, branding the “old” Conservatives as too Eurosceptic, and seeking to associate this mindset with the rest.

The truth is, of course, the opposite of most of this. Thatcherism was based on

1. Honest money – economic policy was grounded on targets for the amount of money that could safely be allowed in circulation to fuel non inflationary growth. Boom and bust was introduced by shadowing the DM and by John Major’s policy of joining the Exchange Rate Mechanism against Margaret’s better instincts, a policy urged on him by Labour and the Lib Dems in a consensual act of folly. The one Conservative economic error was to become too Euro friendly and to join a European scheme of economic management which was bound to fail.

2. Encouraging a land of opportunity for all, where anyone could get on in life whatever their background, whoever their father was, wherever they went to school. High Thatcherism was based on shares for all, more small business activity,sharing wealth and income through hard work and access to opportunity.

3. Manufacturing was seen as an important part of our economy. It was in the Tory years that the motor industry was rebuilt in the UK by attracting foreign captial and management following the collapse of the nationalised UK industry. The pharmaceutical, aerospace and other leading industries flourished with appropriate government help.

4. I never heard Margeret Thatcher express any hostility to people on the basis of creed, colour, religion or lifestyle. We sought a Britain that used all its talents, whatever their background. We did not wish to make windows into men’s souls or to send in the thought police.

5. In the 1980s the government pursued a radical policy towards nationalised industry, but a very traditional cross party policy rowards Health, education and the police. Each year saw real increases in funding, and the PM regularly made speeches explaining how much extra the government was spending. She did not seek cuts to front line services and valued new schools, hospitals and the additional teachers, nurses, doctors and police which she recruited.

If we compare this with Labour’s recpord, the irony is that they have come closer to their caricature of Thatcherism than the Thatcher government ever did.

1. They followed a policy which created a far bigger boom and bust than the ERM
2. Inequalities rose under Labour
3. Manufacturing output fell under Labour , compared to growth under the Conservatives
4. Labour promoted some minorities, but attacked other groups in society which it did not like. Do not be a Nimby or a motorist under this government.
5. Labour continued with the policy of real increases in spending on most public services, yet it failed to fund the army properly for the wars it wished to fight, and allowed so much of the extra cash to be absorbed in administration and pay increases that some cuts did take place despite the record funding.

The changes Conservatives are calling for today are changes to the way the UK is run. We have been run by a government of spinners for too long. Their cariacture of Thatcherism is one of their successes. It is time we swept it away, pointing out it is a tissue of lies. If only we had had the same success with growth, industrial growth and rising living standards in the last decade that we enjoyed in the 80s we would be a lot better off. The Conservatives have “changed” from the caricature of Thatcherism – mainly because most of it is myth not reality.

Recently I was keen and happy to support Bill Cash’s proposed legislation to “reassert UK Parliamentary sovereignty.”

His five clause Bill states “The sovereignty of Parliament is hereby reaffirmed”. It goes on to protect sovereignty from treaties, other legislation and the European Communities Act, itself the fount of EU power in the UK. It would send a clear signal to UK courts that they need to follow UK law, even if this is in conflict with EU law.

I look forward to William Hague telling us if this is the way he will propose his own Parliamentary sovereignty legislation which has been promised, or if he has some other way of doing it. The Cash short simple Bill looks good to me.

I do not always agree with business lobbies, who often argue the case for larger and well established businesses at the expense of innovation and new competitors, and who often favour bigger government than is ideal.

Today the business voice seems united in saying we need lower tax rates to allow more business and jobs to grow in the UK. I entirely agree. They could add to their case that that would be the best way to increase tax revenues. If we carry on with Labour’s tax and pillage policies more and more companies will go abroad, cut their activities in the UK, be deterred from new investment or will simply not start up. 28% is an uncompetitive Corporation Tax rate, 50% an uncompetitive higher income tax rate, and National Insurance is a substantial tax on jobs when we need to be encouraging jobs.

A government keen to promote jobs and growth, and keen to cut the deficit, would cut the rates of tax on earning and making profits.

Today there will be a strike of some public sector workers over cuts in redundancy payments. I don’t expect the government to suddenly give in owing to industrial action. The strikers might be disappointed at how little impact there is from their inaction. I can understand employees’ frustration at unilateral changes to their terms and conditions. They are paying the price of their employer’s failure to run the public accounts sensibly and to motivate and lead staff professionally to get better results.

It is the culmination of bad handling of recruitment, training, retention and dismissal in Labour’s public sector. The strike reflects badly on both sides. A good employer should not need to make too many employees redundant, because he would not have over recruited in the first place. Redundancies can be an unhappy necessity in a business where demand suddenly collapses, often owing to government financial and economic mismangement of the economy. It should not be common in the public sector, where traditionally spending goes up every year regardless of economic performance. This year again spending will rise.

It demonstrates that the public sector still does not get how grave the national financial situation is. The government needs to sit down with representatives of all its staff and hammer out how the total pay bill is going to be cut. Will it be done by work sharing, by recruitment bans, by pay freezes, by selective closures and redundancies in non front line services, or some combination of all these? After years of overexpansion of numbers and pay we need something new to the public sector – a fall in the total pay bill. Industry has had to do this on a big scale in the recession, and has done so without large strikes and with substantial co-operation between managers and employees. When will the public sector wake up to what it needs to do?