It is typical of this government that they should licence the Head of MI5 to speak to the press on November 5th, the commemoration of a day when a previous terrorist plot was foiled. He spoke on the eve of a Queen’s Speech debate when one of the most contentious items in that speech will be the proposal to detain people for up to 56 days without charge or trial, if the state suspects them of terorist inclinations. He spoke on yet another day when I and my collegaues are locked out from Parliament, unable to cross examine Ministers on the content of his remarks. He spoke to the press, not to a Parliamentary committee, again giving the lie to this government’s view that Parliament should be told important things first.

I do hope the Official Opposition complains about these constitutional abuses. It would be best if a senior Minsiter, like the Home Secretary, or the Prime Minister himself, made a speech setting out the government’s view of the threat to themselves and the public from Islamic terrorism. A Minister can then assess and sift the evidence coming from MI5, MI6, the police, the education service and other sources. Ministers can put it in context, and are entitled then to draw highly political conclusions from it, like their conclusion that it requires the suppression of centuries held liberties.

What is unacceptable is to use a senior official, who knows part of the story, to tell a general story which implies the threat is so severe we should accept severe measures to combat it. The Head of MI5 is not an expert on our educational system, yet he tells us an important part of the new threat is the grooming of young people to terrorism here at home. He is an intelligent man, so he must be aware that the Opposition strongly opposes an extension of detention without trial. Why then does he allow himself to be used in this way? Has he not read the evidence of the consequences of detention in Northern Ireland during the troubles, where it did not stop the threat?

I look forward to hearing a robust renunciation of this government tactic from the Oppositon, and demands for a proper Parliamentary statement by a senior Minister to tell us why they think the therat is so severe, and to set out what they are going to do about it.

On November 5th we remember that terrorism in the name of religion is not a new problem.

We should also remember how this plot was foiled. It was not intercepted through the issue of ID cards. The police or army did not spot the plotters carrying huge barrels of gunpowder into a cellar. It was not prevented by a cordon of oak or iron - today’s concrete and steel - around the Palace of Westminster.

The murderers were prevented from killing the Parliament and government of James I by intelligence picking up a family tip off.

Surely we could learn something from this successful work by the Security services? They drew on the very successful experiences of the Ellizabethan service,who foiled many plots to kill the Queen.

Yesterday my local good value petrol station in Wokingham had sold out of diesel, as it was at least 1p a litre cheaper than others.
I reached Bicester during my travels and found one garage offering diesel 1p a lite cheaper than another. I went in and bought just about the last diesel that forecourt had on offer, choosing the one pump that did not have the "Sorry sold out" sign on it.
People are very price conscious now petrol and diesel have soared in price. More fuel is being burned as people shop around. Unfortunately we cannot shop around for a cheaper government.
When Parliament is back I will ask questions to remind people just how much of this very high price is tax. It is curious that we do not hear of Mr Darling’s plans to give us a tax reduction based on all the extra revenue he is hauling in from the petrol pumps. Could it be that he is wasting it somewhere else?

Spin is so corrosive of sensible conversation on policy.

I can imagine the Balls-Brown discussions about raising the school leaving age to 18.

They would have thought to themselves that they need a solution to the problem that 10 years into a Labour government it is no longer realistic to blame the Conservatives for the large number of young people without jobs. If they take everyone between the ages of 16 and 18 off the register and place them into school or College they have at a stroke reduced the appearance of large numbers of young people without a job.

They doubtless also thought it looked progressive. All would agree making all children go to school, and paying for their costs out of taxation, was an important social advance. If it was good up to 16 years old, why not show just how progressive this government can be by extending it to 18? The probably also saw it as another good way to increase taxes and public spending, extending the run of the state in the traditional Labour manner.

There are a number of pitfalls which have come to haunt them.

The first is the need for compulsion. All adults accept that a 10 year old or a 13 year old should be at school, and agree with tought measures to make them turn up. We believe that schooling is good for them, and understand that they are not necessarily yet at a point where they can make their own informed decisions about how to spend their time.
All adults also accept that we should not make 18 year olds go to school if they do not want to. Coercing them would be too difficult, and we do believe they are at an age when they should be quite capable of making their own informed decisions.
The problem with moving the age of freedom from 16 to 18 is that many young people will not accept they are unable to decide for themselves. The government as a result is bogged down in a messy debate about how it makes them attend when they do not want to. It has wisely ruled out sending them to prison, but still believes that fines and ASBOs are the way ahead.

Fines are silly, because they do not have money of their own other than the small allowances the government is thinking of paying some of them, presumably offered to get them used to the idea of income coming in the form of state benefits at an early age. It means the government can only fine them if it first gives them the money to pay the fines.

ASBOs have a mixed record at dealing with anti social behaviour. In this case, if they are used to try to make young people attend a school they do not wish to attend, they could even promote anti social behaviour as young people came to resent their association with a lifestyle they rejected.

The second is the impact compulsion may have on others who volunteer to stay at school or go to College. 16-18 year olds who do want to learn and see the point do not want their classes disrupted or their attention distracted by young people who oppose the whole approach. It is difficult enough in poorly performing schools to keep the attention of the 15-16 year olds who want to make something of it in classes alternately disrupted by and bypassed by children who have decided school is not for them.

The third is that you cannot force people to learn. They need to want to, and need to be willing to put in the time and effort outside the classroom as well as within it.

It is much better for the state to make opportunities available, and to offer financial support at that stage of life when a person is prepared to make an effort for themselves. For some people this may be later in life than age 16. Those who do not want to stay at school should not be made to. They should be expected to take a job if otherwise they would be living on benefit. We should not compel them to work, but we should not pay them to be idle where work is available. That might make more of them want to stay at school.

Today we learn that the government’s decision to drop compulsory foreign languages for children under 16 has resulted in a large decline in the numbers learning any language other than English. Instead of saying this was what they wanted - for surely they should have expected this result - the government now says it is going to make languages compulsory up to 11, and will doubtless spend more of our money on this inadequate response. This is not going to turn a nation of poor language skills into one which is fluent in foreign tongues.

I was made to study latin up to the age of 16 and take an O level at 16 in it. I disliked the lessons intensely. I was told I had to be able to translate from latin into English if I wanted a place at a leading University. I felt I was badly taught, but may have placed the blame on teachers for my own inadequacy at reaching a high standard. I had to translate from latin into English as part of the Oxford entrance exam, as part of the Preliminary exam for my degree at Oxford, and as part of the All Souls fellowship exam, so I carried on wrestling with the imperfections of my school level latin. It made me resentful of the Roman imperialism which underpinned the idea that studying this dead language was a good idea, and a critic of the Roman’s strong arm approach to European unity! The compulsion did not win me over to what classicists admired about this long gone civilisation. If I had enjoyed a choice in the matter I would not have studied it. Those who now follow the path I trod do not need to know any latin.

Those who defended compulsory latin would rightly point out that learning some latin taught me more about how English works than I learned in the less formal lessons in my home language. They would say the difficulty of the language represented a good intellectual challenge. As our country’s affairs were conducted in a form of latin and court french for many centuries it should have helped me understand those long gone times. Maybe this is a criticism of how we are taught English, which could include more grammatical analysis. Those who favoured the abolition of compulsory latin would say that I could have used the time I spent on latin on something more relevant to today’s world, and would argue that I have not needed the latin since other than to read the odd inscription on a monument.

Today’s arguments about French, German and Spanish are somewhat similar to the argument about compulsory latin. The truth is that English is the universal language of the present imperial power, the USA, just as latin was in the early years of the first millennium. People do not feel a need to learn these European foreign languages because they can get by in English. The most useful foreign languages looking to the future are likely to be Chinese and arabic. They are thought to be far too difficult to force children to attempt to learn them.

I was taught French to a standard where I could read a novel in the language, and opted to study Spanish to O level. The truth about this is that if you want to be good at the spoken language you need to go and live in a country where the language is spoken all the time, and be forced to use it for your daily activities. In a busy life I do not find myself picking up a book in French, and find the concentration on the written word in the way I was taught would require immersion in the oral language for a period to get up to a satisfactory standard in conversation. Maybe today’s language laboratories and more use of the spoken word has remedied some of these problems, but listening to English people abroad there is still a long way to go to create a nation of fluent French and Spanish speakers.

There is a case to say that children under 16 do not always make informed choices about what subjects are best for them, and that a modern langnuage should be one of the elements of a balanced education. Making children study a language up to 16 gives them the option to develop this interest later in their academic careers if it works for them. I would accept that each 11-16 year old should have to offer one language, even though it runs the risk of causing resentment and difficulty for them. The government should admit it got this wrong and make the necessary change. I do not think making languages compulsory for under 11s before they have a decent understanding of their own language is a particularly good idea. It is always possible to start a new subject from scratch after 16 - that after all is what we do with economics, law and business studies in most schools and universities, and what many will have to do with additional foreign languages.

In the USA the Fed has decided to cut interest rates and make substantial sums available to the markets generally, to allow banks and mortgage institutions room to adjust to the reality that they have lost money on over aggressive lending conceived when market interest rates were much lower. At the same time US banks are coming out with substantial write offs to their CDO/sub prime books, making rapid strides towards "repricing" risk. This is important, as once it is completed shareholders and market participants can see what the underlying profitability of these businesses is, what their dividend paying power is, and whether any of them need to be put into the banking equivalent of run off or need to be taken over by stronger banks.CEOs of banks reporting large losses are under pressure to resign in the media and sometimes in the board rooms. The dollar has plunged as interest rates have fallen. Markets believe interest rates will be cut further, despite the Fed’s attempt to suggest they have now done enough and there are still some inflationary worries.

The likely outcome in the USA is a rapid movement to more conservatively stated balance sheets, some management change, and sufficient Fed action to prevent recession.

In the UK the Bank of England has been most reluctant to make money available to the seized up money markets, and has refused to cut interest rates. As a result the Bank has effectively lost control of short term interest rates, which have often been considerably higher in the market than the Monetary Policy Committee Base Rate would imply. The extra tightening of monetary conditions has been compounded by the surge in the pound against the dollar, which makes it more difficult to export from the UK to the dollar zone and makes it more attractive for businesses to divert production to the dollar area from the UK. It has the beneficial effect of limiting the impact of rising commodity prices (priced in dollars) on our inflation rate. The Chancellor and the Governor of the Bank have lectured the financial sector on the foolishness of their lending and has told them there can be no bail outs.

Yet under the pressure of a run on Northern Rock the authorities then made the extraordinary decision to guarantee all Northern Rock’s deposits and to make available however much money it took to refinance Northern Rock’s lending book.We now know this has required more than ??23 billion so far. The Bank promised to make similar facilities available to any other bank in trouble.

This website has been critical of both sets of decisions by the UK authorities. It seemed crazy to starve the money markets of cash in a way designed to trigger a run on one or more bank. It seemed odd then to offer a blanket guarantee to one institution and promise a matching policy for any other in trouble. It made all the speeches on the dangers of moral hazard meaningless.

The Bank should now change both policies.

The first imperative is to extricate the taxpayer from the Northern Rock position. This could be done by
a) finding a bidder who will take Northern Rock’s assets, paying back the Bank of England loan
or
b) finding a bidder who will take Northern Rock over and who will pay off some of the Bank’s loan and accept a timetable for paying off the rest with interest against a decent covenant to protect the taxpayer
or
c) requiring the Northern Rock to run off its business in an orderly way to generate the cash needed to repay the loan

At the same time the Bank needs to reassert control over the money markets by supplying sufficient general liquidity to bring market rates into line with Base rate. Inflation control should be exerted by gaining greater control over public spending and by raising productivity levels in the ailing public sector. As this programme starts to work interest rates should be reduced.

It is so juvenile of Messrs Brown and Balls to keep saying Conservative sums don’t add up, if ever Conservatives suggest any reduction in taxes. They ignore the proceeds of growth argument which shows how growth yields a big increase in tax revenue naturally which does not all have to be spent in the public sector. They gloss over the obvious waste in public spending, and the natural growth of some taxes like fuel duties at a time of rising oil prices. It should be simple for an incoming Conservative government to afford some tax reductions, and end up borrowing less over a Parlliament than Labour are doing. It would be difficult to waste as much as Labour waste, and to expand the bureauratic public payrolls as rapidly as Labour have done.

Indeed,it is rash of Messrs Brown and Balls to lead with the chin like this, when their own sums so patently do not add up. The last few years have seen an explosion of public sector borrowing, some of it on balance sheet and admitted, some of it off balance sheet and partially concealed. We are told today the welcome reduction in standard rate income tax to 20p is affordable, yet exempting all estates under ??1 million from Inheritance Tax would not be. It is more proof that Mr Brown thinks the electors are fools.

Unlike some government Ministers, taxpayers daily witness the waste and the unnecessary spending, and tear their hair out over how their money is taken from them and misspent so grossly. They are fed up with a government which still does not change the Treasury model to take on board the way lower tax rates on income, profit and capital can raise the revenue take as they have done wherever in the world this has been tried.

It is good news that The Chancellor’s reform of Capital Gains Tax, taking it down to a more realistic 18% from 40%, is going to be modified to give small business entrepreneurs a better deal. They have been badly misled by this government, setting up and growing businesses in the belief that they would be taxed at 10% only to find the rate is to be hiked by a massive 80% to 18%. The modificiaiton of allowing them the first ??100,000 tax free is a step in the right direction but still does not go far enough. The 10% CGT rate for small business was an excellent feature of Brown’s complex tax regime, and it is a pity his successor should make it one of his first acts of vandalism to smash it.

Last night Mr Cable continued his unpleasant campaign against the shareholders and Directors of Northern Rock on Newsnight, Fortunately Professor Tim Congdon was also on the programme and wiped the floor with him.

For once Mr Cable was introduced as a Lib Dem politician rather than as an economics expert, which was just as well in the light of his performance.

Mr Cable’s opinion is that the Directors of Northern Rock made a series of bad loans to mortgage holders in the months before the credit crunch, lending more than the value of the properties they held as security. He believes the Bank of England should make the shareholders of Northern Rock sack the Directors for these mistakes.

Prof Congdon pointed out that the balance sheet of Northern Rock shows the value of property as security well in excess of the mortgages advanced, for both the complete stock of mortgages and for more recent advances. He reminded us that the FSA confirmed that the mortgage book was not a problem. The Bank of England has accepted the quality of the mortgage book as ultimate security for the large loan it has made to Northern Rock.

As Tim Congdon elegantly said, it is possible for accountants and auditors to make a mistake and for regulators and bankers to get it wrong, but Mr Cable produced absolutely no evidence of such a serious set of errors in this case. Every one else accepts that the Northern Rock has a valuable mortgage book.

Maybe it is time the Directors of Northern Rock demanded an apology from Mr Cable, and asked him to stop his one man campaign to undermine confidence in an institution where the taxpayer now has substantial sums at risk following the Bank of England’s loans. He looked ridiculous last night, when it appeared that he either had not read the balance sheet of the company he was criticising, or had no understood it.

Some people are saying that Labour has effectively nationalised Northern Rock. This also reveals a lack of understanding of what has happened. If Labour and the Bank of England wanted to nationalise the company it would have to make an offer for the shares in the market which shareholders wanted to accept, or put through legislation to buy the company on a forced basis at a price the government thought appropriate. Sensibly they have done neither of these.

What the authorities chose to do was the following:

1. Kept interest rates too high, and refused to make enough money available to the markets in the usual way, forcing any company that relied on money market funds into financing difficulties
2. Lost control of short term interest rates
3. Failed to expedite a takeover of the assets of Northern Rock by a larger bank which had the financing needed
4. Eventually decided to become Northern Rock’s banker, lending them large sums to replace the Money market loans which had dried up owing to 1. above.

The Today programme is always pushing out global warming propoganda, and the PM programme is now advertising on the web for stories from the listeners.
I have a suggestion.

Why don’t these programmes spend some of their research effort on calculating the carbon footprint of the government? We would love to know how much midnight oil, aviation spirit for first class travel, and limo fuel has been burned as Ministers hot foot it to cllimate change pow wows and meetings to lecture the rest of us on how we need to change our lifestyles? We would also benefit from knowing how much extra energy all the extra officials employed by this government are consuming. Many of them have air conditoned offices and all have centrally heated ones. Many also have access to government cars, and undertake susbstantial overseas travel. The Environment Agency spends generously from its large ??1000 million a year budget on car travel.

The government is well behind the better private sector companies in controlling staff numbers, controlling energy usage and improving the energy efficiency of their buildings. I work in Portcullis House, a fairly new building on the Parliamentary estate. It has a regulated temperature all year round from the heating and cooling system. I cannot open a window to cool it down in summer. Some people open the inside windows from the corridor over the atrium to change the temperature, making the air system work overtime at the taxpayers expense. This building replaced accommodation or added to accommodation which did not have air conditioning in summer. Parliament needed extra accommodation to accommodate the growing number of employees. It is a good example of how the public sector always increases costs, when others are seeking to replace less fuel efficient buildings with more efficient ones.

If the government is serious about curbing CO2 it should show the rest of us how to do it. It is high time they came up with tough plans to cut the carbon imprint of government. Many of us think the big feet of this government are too large, and would be happy to see the carbon imprint argument lead to a reduction in their size.

The dollar keeps on falling. The policy is working. US exports are becoming more competitive, and US export sales are improving. This week Rolls Royce announced it was switching some jobs from the UK to the US. The US needs it currency to fall more against the currencies of super competitive Asian producers, but the fall to date is going to help its balance of payments substantially.

The UK is in a more difficult position. The British authorities decided to keep interest rates higher for longer to combat an inflation which mainly existed in the incompetent UK public sector. The credit crunch is now worse in the UK, and at the same time exporters face a more difficult time selling with the dollar low and competing against the dollar area producers. The UK government ignores the large balance of trade deficit, just as it ignores the large public sector deficit. Its failure to stipulate better use of resources in the sprawling public sector, or to control the growth of inflationary spending in the public sector, is taking its toll.

Markets this week have remembered the banking difficulties associated with the credit crunch. On other occasions they look through the market turbulence to the lower interest rates and the continuation of world growth sustained by the Asian economies. The Fed helps banks out with liquidity, as does the ECB. It is just the UK authorities who seem unable to comprehend the credit crunch and apparently do not wish to gain proper control of short term interest rates again. It is symptomatic of a government that hasn’t a clue how to run the vast public sector or how to improve public sector efficiency and effectiveness. The price we all pay as a result is higher interest rates and a higher exchange rate.

The Government state that ??16 billion will be the full cost of Crossrail, but they also admit that they have not yet completed the design, so it is difficult to see how they can be sure.

The most important thing in the answer is the Government’s open-ended commitment to any cost overruns.

<strong>Mr John Redwood (Wokingham):</strong> To ask the Secretary of State for Transport, who is responsible for additional funding if the cost of Crossrail proves to be higher than the ??16 billion budget. [158499]

<strong>Tom Harris: </strong>The ??16 billion budget for the project is a fully inclusive cost, allowing for both contingency and expected inflation. Both the underlying costings and the risks around those costings have been very carefully assessed and subjected to independent external review. The Government is confident that costs will be contained within budget.

However, if costs should rise above that level and countervailing savings, or other revenue sources cannot be identified, then, recognising the scale of the project, Government would be the ultimate funder.

Today the "Today" programme parodied itself with its daily double dose of climate change propoganda.

A news story that people are going to spend four years cataloguing bird life in the UK was turned into a prove the global warming theory. We were told they would be watching to see if birds were moving further north to stay out of the fabled new equatorial climate on the south coast.

Then we heard that people are now in a state of panic about a phenomenon they have given the name "energy rebound". Apparently some clever people have just discovered that it a person or company saves money on their energy bills, they may spend that money on something else, which may in turn require some energy use! What a surprise.

John Humphries revealed his complete ignorance of a market economy when interviewing on this topic. He said that it would be surprising if companies put their energy savings in the bank, implying that he thought if they did that would prevent their savings being spent on any more energy.

Let us consider the position. A company that saves money on its energy bill may well in the first instance place the savings in the bank. If it does so the liabilities of the bank - its capital - increases. This allows the bank to expand its assets - to lend more money to more companies. This money may well in part be spent on energy use, directly or indirectly.

Subsequently the original company may decide to spend the savings on more staff or more bought in capital equipment. This spending also will entail some more spending on energy.

In either case an energy audit requires the calculation of an energy multiplier of extra spending to see what the overall result is once the full effects of the original savings have worked through.

So now we learn that the 800,000 migrant workers invited in by this government, who turned out to be 1,100,000 workers earlier this week, may be 1,500,000 or more. Apparently there have been further difficulties in government departments adding up all the diffferent categories of migrant worker. This reflects on our porous borders, and a civil service under New Labour which has been asked to produce figures to help Ministers prove their case.

Local authorities rightly complain that they are allocated cash on the basis of understated and false population figures, so the government is making a "profit" out of migrants, collecting taxes from them but not passing on a share of this to the Councils that have to conjure up more school places, extra police, and more houses.

The BBC’s Economics correspondent and others fall over themselevs to stress the economic benefits of migration, as the government wishes them to do. Yet the figures seem to illustrate two things. Firstly, there has been no progress in reducing the number of British people on benefits of working age over the last 10 years, depsite all the rhetoric about cutting the "costs of economic failure" which heralded the New Labour era, and all the subsequent claims of their success in "creating" jobs. Secondly, income and output per head have not been driven upwards by the arrival of so much migrant labour, and the government has understated the extra public spending costs of such rapid expansion.

Mr Brown says he wants "British jobs for British workers". That’s a great idea, but difficult to see how he can do that,given that he has not taken control of our borders, and has given power away to Brussels over migration from within the EU. In the circumstances he finds himself, he should apologise for misleading us by implying he has helped create British jobs for British workers. He should then go back to the drawing board, and come up with proposals for encouraging and persuading people off benefit into work. Maybe then he would not need to invite in so many migrants to fill the vacancies.