I am glad to have won the battle against Vince Cable to avoid nationalisation of Northern Rock. I am grateful to the Jeremy Vine programme and the Week In Westminster for giving airtime to the case against nationalisation. Their commonsense and fairness shows up the lamentable performance of the Today programme, the World at One and Pm who gave ample platforms to the pro nationalisation case but refused me the opportunity to explain why it was a bad idea, and to offer a more positive alternative.

In the arguments with editors I was told that my proposals were unlikely to be taken up, whereas nationalisation was the likely outcome. I explained that the government had to come up with something better than nationalisation because nationalisation would have wrecked the borrowing and spending figures. The BBCs flagship programmes as always remained wedded to an old fashioned state solution and to the Lib Dems, so their listeners were not made aware that there was a better way, and were in ignorance that the governments advisers were working on it.

I am pleased this morning that the government has decided to

1. Avoid nationalisation
2. Get some cash back more quickly by selling bonds to replace the loans
3. Seek a new private sector owner
4. Take an equity stake via warrants to give the taxpayer some profit if it recovers well.

What I want to see in addition is

1. Proper banking disciplines enforced to repay the borrowings. Northern Rock still needs an injection of tough banking controls to make it work.
2. A phased withdrawal of the guarantees ?? we dont just want the cash back, we also want to get the taxpayer off risk
3. A fair competition allowing in new bidders ?? as the basis for bidding is now very different from before Christmas. Otherwise there could be legal challenges.

The Lib Dems are playing games over the EU. They promised to vote for a referendum on the EU Constitutional Treaty in the last General Election, and like the Labour front bench are now walking away from their commitment. They say they now want an In-Out referendum instead, but cannot table one in the Commons as an amendment to the present Bill. Doubtless they realised this when they promised one! Never believe a Lib Dem promise. They are simply manoeuvring to get themselves out of the promise that should have mattered

The government needs to:

1. Get a grip on its lending to Northern Rock and set out how and when it will be getting money back from this bank.
2. Remove wasteful and unpopular public spending, like ID cards, regional government, extra contributions to the EU, too many spin doctors and consultancy contracts.
3. Start applying pressure to raise public sector productivity in those areas where we do need spending. Impose a staff freeze on the civil service.
4. Cancel the increase in CGT from 10% to 18%, and leave the new 18% rate in place of 40%.
5. Issue more index linked bonds to finance the remaining deficit, as inflation will come down after this winter’s fuel and food rises.
6.Create an employee ownership scheme for the Post Office and press ahead with its privatisation involving employees.
7. Open the water industry up to competition, to bring prices down and open up new supplies and new investment.
8. Get on with commissioning private sector investment in energy capacity by granting the necessary licenses and planning permission.
9. Introduce more private capital into railways, reuniting track and train in regional private companies.
10. Call a halt to the overregulation of financial services from Brussels, and put through deregulatory legislation which starts to lift the burdens on business.

This programme would at one and the same time

1.Lower prices by using competition to cut monopoly prices
2.Increase investment in infrastructure where we are short of capacity by harnessing private capital
3.Reduce public sepnding
4.Allow lower interest rates as a result of 1 and 3 above.

The idea that Northern Rock loans will be packaged and sold to the private sector is not a solution to the crisis, especially as there will be a government guarantee on them. Instead, this represents a decision by the government to lengthen the period over which it is prepared to lend to Northern Rock.

It means that all interested bidders wanting to buy a share of the action in Northern should; be invited to rebid, as the terms on which they are bidding are now so much better than they were. It appears that a bidder now has the government as its bank manager, guaranteeing substantial lending, for a long time period. This is a much better proposition than the one they sought bids for before Christmas.

No-one writing up the story seems to grasp the importance of adopting the recommendations that readers of this blog know well, recommendations to the government and Bank of England to get a grip as Northerns most important bank managers.

Whether Northern is to be nationalised, sold to a private bidder or remain independent, the need is the same. It is high time the authorities toughened up the terms of their lending to Northern Rock, and set out a timetable for repayment that is demanding but realistic. It should be up to the management to decide if they can repay from trading profits and cash, or if they need to sell assets to meet the demands for money back by the taxpayers.

I find it almost unbelievable that Mr Darling and the Bank should make maybe £55 billion of loans and guarantees available to Northern Rock with no public statement of how long they can have the money for, how the asset cover has been secured, and when the money has to be repaid. All these things should be public because they have such a big impact on public spending, and so bidders can form a proper view of the value and the liquidity of the business. More worrying is the likelihood that there is no private agreement about how and when the loans will be repaid. What private sector banker would ever lend large sums to a distressed company without first asking and answering the questions How and When do I get my money back?

The governments decision to back the “solution” of selling bonds to the private sector to release cash to the government that it has lent to Northern would work well if there were no government guarantee, but the existence of the guarantee keeps the taxpayer on risk. At the very least if they wish to go this route they should look at time limiting the guarantee, or phasing it out.

This could prove to a dear way of avoiding the ruin of nationalisation. Maybe one day the Treasury will wake up and understand that they have a banking problem. The way out is by applying proper banking disciplines to this business, and making the shareholders and directors of Northern Rock confront the simple truth either they trade their way out of the borrowings, or they sell assets to repay the borrowings. Nationalisation, or lengthening the terms of the loans and guaranteeing them take the pressure off the management. A sensible bank manager with that much money at risk with a single client would want to hold their feet to the fire, not let them off in the way the latest proposal does.

Things are bad enough without talking ourselves into recession.
Some banks and commentators have already called a recession in the USA, when the figures for the last quarter of 2007 show the US economy was still growing well. Here in the UK the retailers have added to the sense of gloom by concentrating on their sales figures on a ??like for like?? basis, leaving out all the sales in new shops.

The current position is both better than the pundits admit, and worse than the government will let on. The bad news is that the banking systems in both the USA and the UK are damaged by discovering that some of the lending they carried out in the heady days of low interest rates and easy money has been in their balance sheets at values that can no longer be sustained. We are living through a difficult time as banks adjust for the losses they have made, and rein in their lending as they are short of cash. In the UK commercial property values are falling fast, undermining the security for some of the loans. Residential property values are under attack from the UK government, who want housing to be more ??affordable??, but are being held up in part by the high Stamp duties and the imposition of Home Information Packs which is deterring people from selling their homes and buying a different one. There are too few homes coming onto the market at the moment to cause a crash in prices. The UK authorities have made the problem worse by their ham fisted approach to Northern Rock and by their failure to keep markets liquid enough during the last four months of 2007.

The good news is that many companies are still trading well. Profit margins are good in many cases, and on both sides of the Atlantic activity is higher overall today than it was when the Credit crunch first hit. Both the US and the UK have experienced a falling currency. As both economies need to divert much more activity into exports, or into import substitution, that will help. Both economies can export so much more to the rich parts of the world ?? China, India, Russia and the Middle East. Both economies now have to seek inward investment from these new giants that have built up huge cash surpluses at the same time as we have built up huge deficits by buying their oil and their manufactures. It is repayment time.

Few forecasters expect a downturn in the UK this year ?? just a sharp slowdown. Some commentators expect the US to get away with a slowdown rather than a recession. The US Fed is very keen to stop a slump, and is taking the right action by making cash available to banks and by cutting interest rates. Now the US President is also promising tax cuts, would boost activity as well. The US authorities recognised earlier than the UK that they had to shift from inflation fighting to recession fighting, and they have been bolder in their actions. They will probably succeed in avoiding recession.

The UKs position is weaker because the UK has increased public spending by too much, wasting too much of the money. At a time when other countries were reining in their public deficits and controlling their spending, the UK government went on a spending binge. This limits the UK governments scope to cut taxes and relieve the pressure on consumers. As consumption is the largest part of activity, this means we are going to experience a slowdown which consumers will feel badly. If the government really wanted to help us out of this change of fortune, it would get a better grip on its spending immediately, cancelling the needless parts like ID cards, computerisation schemes, regional government, and larger EU contributions as well as keeping wages down. Then it could follow the US example and cut taxes to help the hard pressed private sector.

Instead the UK is only going to tackle one of the twin deficits, the balance of payments one, through the mechanism of a cheap pound. Our best hope this year is that the strategy works and the private sector does shift a lot of activity into exports. That could be helped if the government would relent on its planned increases in small business tax and CGT. They need the goodwill of entrepreneurs to right the imbalances in this economy. Its a dangerous time for the government to be sandbagging the very people on whom they rely to recreate their much quoted ??economic stability??. Our economy at the moment is as stable as a row boat in a storm.

There is no need to talk ourselves into recession ?? we can get through with a period of slow growth. To do so, the government needs to curb its own appetite for waste and be realistic about how much it can squeeze out of us in tax.

What price an ethical foreign policy?

Today sees Mr Brown in China trying to act as a super salesman for British business. It is a relatively harmless use of his time, forced upon him by the dire straits of the UK economy under his policies.

Mr Brown has debauched the strong economy he inherited. His first couple of years wisely continued Conservative spending plans and repaid public debt, but elsewhere the long march of this government to a malfunctioning socialist economy had begun. The undermining of the Bank of England proved to be a long fuse to the explosive Northern Rock crisis. The taxation of pension funds began the route march to most people no longer having the benefit of a final salary scheme, whilst burdening too many companies with large deficits to repay.

Worse followed after 2001 when Mr Brown embarked on an irresponsible twin track ?? easy money, and massive spending increases on public services. Because he wrongly saw all public spending as ??investment?? and felt large sums were proof of better service, he failed to ask the obvious question ??What am I buying for all this cash??? The answer turns out to be a whole load of extra civil servants, spin doctors, consultancy contracts, pay awards, quangos and regulators.

Ten years on the UK is one of the world leaders for twin deficits ?? a record balance of payments deficit, and a large government borrowing requirement. Alarmed by the record deficits on the balance of trade figures which he used to pour over to harry the Conservatives when in government, he decided on a trip to China. It is a sign of his desperation that he feels the need to act as pied piper to the British business community to sell more there, and to see the need to ask the Chinese government for more Chinese funds to be invested in the UK. He is right we require the money, to pay for our double deficits.

When the Labour government first came into office its then Foreign Secretary Robin Cook claimed they would run an ethical foreign policy. The phrase was chosen to imply that all previous UK foreign policies had been other than ethical. The Labour knight was to wear the purest white, and would charge into world Councils with morality as the billowing pennant on the lance.

Today that seems a very long time ago. We look back on the invasion of Iraq, the continuing fighting in Afghanistan, the lack of any action over Zimbabwe, the skirting round North Korea, the inconsistent approach to other countries gaining nuclear weapons and the erratic response to human rights abuses and have to ask what ethical or moral stance now lies behind these actions? Arent they all driven by media, by events, by US pressure, by EU argument, by a growing sense in the present Foreign Office that there are many obvious limits to British power?

Worse still, when many want Mr Brown to raise Chinas human rights record as the central issue whilst there is still a window of opportunity before the Olympics, many of us are embarrassed to say this when we look at the deteriorating record of human rights in our own country. Now the UK wants to have the western record for detention without trial or charge, seeks to stifle public opinion by ratting on the promise of a referendum, spends a fortune on clumsy physical ??security?? at so many places and events, treats travellers like suspects or criminals and intensifies the range of thought crimes that preoccupy the elite, we are no longer in a good position to lecture China even if we wanted to.

Mr Browns visit recognises the reality of the new world order. China is emerging as a superpower, with a fast growing economy, a large population, and a wish to project its power. When a country has more than $1 trillion in the bank it is difficult to argue with it, especially when our country has been newly impoverished by Mr Browns policies. He sold our gold holdings for a fraction of its current market value, ransacked our long term savings, failed to stop a run on a British bank and now needs to go cap in hand to China to seek inward investment to the UK. These are sorry times for our country. They have been brought on by incompetent stewardship of our money. It is humiliating to see our Prime Minister ask for sovereign wealth fund money from China to keep us afloat. If he really wanted to improve the UK economy he should have stayed at home, working on how to get more value from his public spending, and how he could curb spending so we do not need to borrow so much.

On 17th January 1912 Captain Robert Scott of the Royal Navy reached the South Pole. On his arrival he discovered that his Norwegian rival Amundsen had made it a month earlier, claiming the title of first man to set foot on the southern most place on earth.

This event became one of the most heroic quintessentially British feats, because Scotts failure to reach the Pole first was transformed by tragedy and his diary into a gripping story. The tired, hungry and defeated British team turned from the Pole after their brief visit on 17th January to attempt the journey back.

They encountered atrocious conditions. They finally had to stay in their tents on the Ross Ice Shelf because the weather was sp bad and they were so weak. One of Scotts last deeds was to write the memorable words of his

Yesterday I was invited to lunch in the House of Commons by the Thames Valley Economic Partnership.

It was the kind of invitation I usually decline, as I do not approve of lunches at the public expense for public servants. I went because the rules of the game to get approval and money for important transport projects in my constituency require that I express agreement with other MPs, Councils and quangos over the needs of the

Not

Yesterday Parliament debated the great European take away. The rebate of our contributions, so brilliantly negotiated by Margaret Thatcher against the odds in 1984, was thrown into the dustbin of history for extra spending on the enlarged Union. Our partners succeeded in overcoming the UK veto on preserving the full rebate, so the other rich countries of Western Europe could pay less..

The Chief Secretary to the Treasury showed his respect for Parliament by doing the bill himself. It is unusual these days for a Cabinet Minister to get their hands dirty, preferring to leave such matters to their juniors. He also went to great lengths to set out the governments case as well as it could be done. I admire hi pluck, for the case was threadbare, hanging in tatters before the Opposition got to it.

We were told it represented a good deal for the UK because the value of the remaining rebate would continue to rise. Even a Labour MP exploded at that, pointing out that was only true because our gross and net contributions were going up so much.

We were told it was essential for enlargement to go ahead

Gordon Brown has claimed to issue his vision of Britain, in his Observer interview s few days ago. There are slightly warmer words for those of us who believe in defending and strengthening our civil liberties, with a promise that ID cards will not be compulsory. Why not just drop them altogether, as an unwanted expense and a temptation to government to intrude too far? Why not introduce proper border controls, and use the passport and visa system, to deal with immigration?

In contrast there are tough words for those who want to preserve Englands green and pleasant land

Yesterday, speaking to a sixth form in a school in my constituency, I tried a new approach to combat negative feelings about politics.

I reminded my audience that they were all volunteers. Whilst it was true that at 9 am on a wet Monday morning they were told they had to be in an hour long class with their local MP, they were all of an age where they could decide to leave school and do something else. In the light of their choice to stay and accept the discipline of their courses, surely I argued it was sensible to get something out of the hour with me - and the hours that would follow with representatives of the other main political parties. The challenge was more theirs to use my time productively for their purposes, than for me to lecture them that politics is important.

I put to them my thoughts on compulsion for 16-18 year olds from yesterday’s blog, and invited discussion. I am pleased to say there was a good flow of questions and points, on a wide range of subjects. I told them that as they apply to leading universities they are in competition with people from the leading independent schools, where there are strong traditions of taking an interest in public affairs and in grilling external speakers. I want to help in a small way to balance the competition at the university gates and urge other adults in the community to offer their encouragement to do the same.

The debate about Northern Rock on Newsnight yesterday failed to produce a thought through alternative to nationalisation, to protect the taxpayers interest and avoid more damage to markets.

As readers of this blog will know, there is such an alternative. Maybe I have to spell it out again.

The government and the Bank should set Northern Rock targets to

1. repay debt
2. generate cash and profit
3. sell assets

These targets should be tough but achievable. The rate of asset sales should be geared to what the mortgage market can absorb, so the assets can be sold for a reasonable price, leaving the taxpayer with sufficient cover to get our money back.

Putting Northern Rock into administration could lead to a fire sale of assets, and might result in taxpayers not getting all our money back.

Nationalising Northern Rock could lead to huge losses for taxpayers, as taxpayers became responsible for all the rest of Northern Rocks assets and liabilities, including paying the staff, any redundancies, and the pensions shortfall.

Northern Rock has started to follow this managed run off strategy, selling ?2 billion of mortgages recently and using this to repay some of the taxpayer debt.

The meeting today at Northern Rock has been called to try to limit the managements scope to make decisions. This could be used to limit the Companys ability to reduce its debt to taxpayers, so it is not a helpful development from the governments or managements point of view.

The meeting is also a reminder to those who think nationalisation is an easy option, that it could be bitterly fought by existing shareholders. Taxpayers would not take kindly to existing shareholders being offered a good price for their shares, whilst existing shareholders are likely to contest nationalisation for a nominal or low price. I cant understand how anyone sensible can think this would be a good route to follow.

The Education Bill we will debate today in the Commons contains the worse kind of gesture politics. Frustrated at the lack of progress in raising standards in schools, and worried by the continuing difficulties of getting 16-18 year olds into work where they are not studying A levels, the government has come up with the proposal to require 16-18 year olds to study and train, whether they wish to or not.

The government protests when we say we oppose raising the school leaving age form 16 to 18. They point out that the compulsory education for this age range could include day release courses and properly structured apprenticeships, as well as staying on at school.

None of this apologia overcomes our main objection to the scheme. If you compel young people to study at school or College, you recruit unwilling learners into the midst of academic institutions, sixth forms and Colleges

It appears that the government is flirting with nationalisation because it is having trouble persuading the shareholders of Northern Rock to see things its way. It is a very cumbersome and potentially very expensive device to try to get shareholders to do as the government wishes, when the government has a much easier way of doing it.

The government still does seem to have grasped how powerful its position is as Northern Rocks bank manager. It stepped into this role, and is now committed massively to it. As of today it is clearly the only bank manager Northern Rock has that is prepared to extend the huge sums needed for the bank to be able to carry on trading.

As bank manager the government needs to assert itself in the following ways:

1. Set out how much asset cover it wants for any additional lending ?? and make sure it has taken enough asset cover for the loans so far.
2. Set out how much money it expects Northern Rock to repay on specified repayment days.
3. Establish targets for cash generation and profit in the underlying business with management, and make them report variances with explanations of action to be taken to get back on target.
4. Establish the usual banking covenants that Northern Rock has to hit to keep its facility

I read that the shareholders are not happy about selling assets. There should be no argument about this. The government/Bank of England should tell them what repayments they expect. Northern Rock then has four ways of making those repayments:

1. Sale of whole business to an owner that can meet the repayments
2. Refinancing of Northern Rock in the private market to repay the state borrowings
3. Cash generation from the business
4. Sale of assets

The government should just insist on the repayments. It is up to the shareholders and management of Northern Rock to do the hard work and decide how they can meet the need for such repayments. If selling assets is the only option ?? as it appears to be at the moment ?? then they must do that. The government does not need to dictate how Northern Rock refinances itself ?? just has to insist on the taxpayers getting their money back in sensible tranches over a realistic time scale.

As I stated on this blog before, the taxpayer should also be rewarded for making these huge loans that no commercial business would make in the event of Northern Rock recovering well. That can be done by the government taking options to buy shares at the current price at any time over, say, the next five years. This should also be a condition of continuing the lending to the company. Should it then do well the government can buy the taxpayer shares at a favourable price and sell them on to make a profit as a reward for carrying so much risk for so long. I read that this idea is now being taken seriously by the advisers.

There are at least ten good reasons why Northern Rock should not be nationalised:

1. It is bad enough for taxpayers to have ?57 billion at risk in Northern Rock. Nationalising the bank would put more than ?100 billion at risk, a very large sum even for the government and taxpayers.
2. Once nationalised, taxpayers become liable to pay all the wages and salaries. Ministers would have to sanction redundancies if these are needed to cut costs, and taxpayers would have to pay for them.
3. The taxpayer would become liable for the whole pension fund, which has a deficit.
4. The management of Northern Rock appointed by the government would doubtless expect substantial new funding from taxpayers to invest in and develop the business, adding to taxpayer woes.
5. There is nothing the nationalised management could do that cannot be done now to try to cut the liabilities and repay some borrowings.
6. Nationalising would make it more difficult to persuade the management of the bank that there is a crisis which requires exceptional efforts to increase business revenues, cut business costs and sell assets to repay borrowings. It would take the pressure off.
7. Politically it would become a long term reminder of the governments failure to handle the credit crunch well. The bank is unlikely to have been privatised again before the next election.
8. Given the growing pressure on public spending ?? difficulties in finding money for police pay, hospital improvements and the rest ?? it would be an embarrassment to see spending rising on a nationalised bank at the same time as cuts elsewhere.
9. The pay of people at the top of such a bank is likely to be high even by the standards of modern higher pay in the public sector, leading to further embarrassment, especially if they do not perform well.
10. All the spending on Northern Rock would then have to be accounted as public spending, whereas at the moment it is kept off the governments balance sheet to make the public accounts look better.

Today we learn that some Labour MPs are very critical of parents who arrange the baptism of their children in to the Catholic Church so they can go to a Catholic Church School.

These Labour MPs seem to think it is wrong that parents should be able to exercise choice. They always blame the parents who take action to get their children into a better school, rather than taking action themselves to raise the standards of the other schools the discerning parents do not favour.

This criticism of these parents is doubly unpleasant. It firstly implies that all these baptisms are arranged just to get a child into a better school. They do not allow for the possibility that parents are believers and think baptism of the child when the child is old enough to have some understanding is a good idea.

Secondly, even if a parent is organising the baptism to secure the school place, that is not an unworthy thing to do. It shows parental concern and determination to do the best for their child within the framework of state educational provision.

To work properly, there needs to be more choice for parents in state education. I am fed up with the apartheid in UK schooling, between the fortunate few who can send their children to excellent schools by paying fees, and the many who have to send their children to local state schools, whether they are good or not. The answer is not to reduce choice and stop people being able to send their children to good schools. The answer is to give more parents more power to choose good schools, so more schools will become good in order to stay afloat. At least the Labour government has not tried the closure of the best independent schools, which would simply force them offshore, but it has sought to damage them by challenging their charitable status.

There was depressing news this week from a survey of teachers attitudes towards Oxford and Cambridge Universities. The survey showed that there are teachers who wrongly think Oxford and Cambridge charge higher fees than elsewhere, and who are unaware of the bursaries and scholarships available for children from low income homes who achieve the necessary standard. The survey also showed some teachers think Oxbridge mainly takes children from independent schools.

In order to break down the educational barriers between public and private we need more confidence in the state system, so more pupils are told they too can go to the best universities if they apply themselves to the task.

Today I have received a draft chapter for a new book on the thinking of the right in the UK. In the first draft I am accused of being muddled because I both object to the erosion of national sovereignty by the EU and assert that a globalised world makes the EU irrelevant as it demonstrates the great power of international corporations. I have written back to the author with the following comments:

I am afraid here you are simply wrong.
The important distinction that I always make but Euro enthusiasts fail to grasp is the distinction between sovereignty and power.
No single country - not even the USA - is all powerful. Every country has to take into account world opinion, the attitude of neighbouring countries and the world institutions, the approach of larger corporations and the variable ability of people from one country to move to another if they do not like their country’s approach.

The USA is clearly more powerful than Iceland as the USA can project its views and values more widely thanks to its economic, diplomatic and military power. However, both the USA and Iceland are sovereign countries, in that their elected governments can do whatever they like in a democratic way without intervention from other countries/ regional blocs. They have to work within the framework of international agreements they have consented to, but they remain free to remove themselves from such agreements and institutions if need arises.

Both the USA and Iceland are natural government areas, where the governed think they belong to the same nation and wish to belong to it, and where they wish their government to make the best decisions it can within the limits of its powers both internal and external.

Members of the EU are no longer in that sovereign position. In large areas of activity they can no longer pass or repeal the laws they wish to, and in many areas they have to accept the judicial interpretation of Treaty law and Directives from the Federal court. As I do not think most people in the UK regard the EU as their country or natural governing area, I have opposed so much power passing to EU institutions.

At the same time I counter the Euro enthusiast argument about power, not sovereignty, that we need to belong to a larger bloc in the world to have more power to stand up for our interests in a rapidly globalising world. My case is that the regional bloc is too small to regulate or tackle the problems of the global market - international banking requires world wide standards and surveillance, not regional regulation for example. The EU is short of energy, so the solutions to its energy problems lie outside its borders. The EU is in long term decline (its own forecasts say it will decline from 18% of world output in 2000 to 10% in 2050 and that is optimistic). The Uk’s future will be based on the global market, and on working with like minded countries to ensure sensible styles and levels of regulation for the new global industries and corporations that characterise this phase of globalisation.

I am a defender of sovereignty in the UK as I believe our natural allegiance is to UK governing institutions not to EU ones. I am a believer that we need to work with other like minded countries to influence and improve the global regulatory framework for big business, which is too big to be contained by the EU. I am not a “little Englander” but a “big worlder”

Click on the link below to download John Redwood’s presentation on globalisation.

globalisation-2008.ppt

I was pleased to hear that Northern Rock is selling ?2 billion of mortgages with a view to repaying ?2billion of its debt to the taxpayer. We need to see more of such progress as markets permit - the skill is selling at the right pace so you receive a sufficiently good price to ensure taxpayers get all our money back.

Yesterdays statement in the Commons concerning nuclear power was a strange event. The Conservative benches were full, with many shouting agreement to the governments measures. The Labour benches were not so full, with obvious signs of distress punctuated by disagreement shouted from sedentary positions. The Lib Dem benches got behind their snarling spokesman, expressing disgust at anything with the word nuclear in it.

We have waited a long time for this statement. We were promised a great debate on whether we wanted a new generation of nuclear power stations or not, another one of Tonys grand gestures that never materialised. We have had two consultations, the second necessitated following a successful legal challenge to the first. We now know what we have long suspected from reading the informed briefings in the newspapers

I was pleased to learn today that Goldman Sachs are looking at the possibility of selling on the taxpayers loans to Northern Rock. It would be excellent news if taxpayers can get their money back. Then idea apparently is to turn the loans into bonds and seek some other institution or intermediary to grant a guarantee of repayment, then selling them on to the private sector.

There is also at last some movement away from the lunatic idea of nationalising the bank which would mean taxpayers moving from a position where we have ?57 billion at risk to a position where we would be responsible for all ?100 billion plus of Northerns liabilities. (see previous blog entries on why that would be bad news for taxpayers and shareholders alike). We learn this morning they are looking at the government acquiring a minority stake in the company, so taxpayers will get some upside from their shareholding if the rescue works well.

I would suggest there is no need for taxpayers to buy any shares at the moment in Northern Rock. Taxpayers should continue as bankers of last resort. What Ministers could demand to continue in this role is the grant of options to buy shares in the company at a future date. The taxpayers long term interest would be best protected by having the right to buy a substantial minority stake in the Northern Rock at around the current share price at any time over say the next five years. If all goes well and the companys share go up substantially, and taxpayer can then buy its shareholding, the company will get extra share capital, and taxpayer can sell on the shares in the market to make a profit. If the companys shares do not prosper the taxpayer has no share capital at risk and does not have to buy the shares. That would be less risky than buying a stake in the company today and would reward taxpayers if our lending to the company enables it to recover well..

Yesterday was another black day for those of us who believe in Parliamentary democracy.

The government decided to cram the whole of the report stage and 3rd Reading for the Criminal Justice and Immigration Bill into just one day of debate. The Opposition warned that this would not allow enough time for a number of very contentious issues. We asked for a second day. We opposed the timetable motion which limited debate, and duly lost. On report the whole House is invited to debate and vote on a rage of different amendments to the Bill, highlighting a number of important and contentious issues that the Committee did not resolve.

As a result by the time the guillotine fell ending debate on the bill the following groups of amendments had not been considered:

Prostitution
Other sentencing provisions
Pornography and sex offences
Personal data
Compensation for miscarriages of justice
Appeals
Violent offender orders
Nuisance on NHS premises.

The government put all its own amendments to the vote to secure them, and the Bill received its third reading with so much unconsidered.

Worse still, we only reached the twin issues of repeal of the blasphemy laws and the incitement to hatred proposals at the end of the time available. Many of us who wished to speak, and to hear the views of others, were unable to do so. These two questions were decided without the proper debate the House wished to have on them.
These were the issues where there was both public interest and concern, with constituents emailing and writing to us about them.

The Conservative party had granted its members free votes on the blasphemy repeal and on the incitement to hatred proposals. Free votes increase the publics interest in Parliament, making it more worthwhile to lobby an individual MP, and increase MP interest in the speeches of other backbenchers in the chamber, making it more likely an MP will attend and be swayed by the views of fellow MPs during the debate. Any government which claims to want to strengthen Parliament would welcome more free votes, and would allow enough time for justice to be done to free vote matters. Yesterday the clunking fist of the government tightened around the throat of Parliamentary debate just when it was becoming interesting, and stifled the life out of it yet again.

Some Labour people implied there was no extra time available to give these matters proper consideration. That simply is not true. We could have gone on later last night, as we used to when we had a stronger Parliament. Alternatively, time could have been made available today, thursday.

Instead today we have another of Labours so called topical debates. This could have been a good innovation, and the time of the topical debate today could have been used to discuss the incitement crimes or blasphemy properly. Instead, as is the pattern, the so called topical debate is a topic chosen by the government based on the Prime Ministers spin theme for the week.

No wonder people are cynical about Parliament, and no wonder Parliament does not get as much serious reporting as it would like. Mr Brown said all the right things at the beginning of his term as PM, claiming he wanted to rebuild trust in Parliament and politicians, and wanted parliament to have a more central role. This week, yet, again, by his actions in stopping debate on what we want to talk about and inviting debate on what he wants to talk about he has shown he does not want a stronger Parliament, but a poodle Parliament.

There are wise words and sensible recommendations to be found in the Better Government Initiative report on how to improve government.

The recommendations centre around reducing the volume of legislation passed by the House, requiring post implementation appraisal of how the new legislation or government programme is working, strengthening Parliamentary scrutiny and improving the reports to cabinet and Parliament on what is proposed and how much it might cost. All of these would be most welcome.

One of the dangers of more and more people coming to Parliament without having held posts outside in senior management in the private sector is that all too many Ministers have no relevant experience when it comes to tackling the policy issues and management problems of their department. There are proposals to bring in some training for Ministers. Watching how many of the current crop of Ministers do their jobs, it would be most welcome.

Few of them seem to understand how to motivate civil servants and quango staff. Few of them seem to manage the spending of money and the use of other resources in the way they should. Most seem to concentrate on press relations and trying to manage the reporting of unsatisfactory outcomes, instead of concentrating on creating more and better outcomes from the spending, the legislation and the other decisions they make.

Redwood calls for fundamental change in Governments approach to railway management

Ministers ought to demand much more from Network Rail in return for the

Yesterday in Parliament John Redwood urged the Europe Minister to see that targets on carbon emissions are not producing the desired results. The exchange with the Minister, taken from Hansard, follows.

Mr. John Redwood (Wokingham) (Con): If the EU is making such progress, why is it that several EU countries will not meet their Kyoto targets, and why are carbon emissions going up in Britain?

Mr. Murphy: The UK is the first and so far the only country to have set binding targets for reducing carbon emissions. We are leading the way in Europe and throughout the world, but carbon emissions can be reduced only through international co-operation. We cannot set up a patriotic front against climate change, as such change does not recognise the national boundaries and borders that the right hon. Gentleman seems to believe in. In fact, I understand that he opposes the binding targets on carbon emissions.