Yesterday in seven badly chosen words Mr Darling announced the death of New Labour. To many of us it has been a slow and lingering death for some time, but Mr Darling put a stake through its heart.

New Labour was a spin story devised by Mr Blair and Mr Brown in the 1990s to make Labour electable. It said that New Labour would offer economic efficiency allied to social justice. At face value it was a good offer, attractive to many Conservatives. Who doesn’t want economic growth and prosperity, and who doesn’t want that to be used to help the less well off? it sought to banish memories of Labour’s previous economic mismanagements. Every previous Labour period of government had been short, including too much public spending and public borrowing, a balance of payments and a sterling crisis, a devaluation and cuts or slow growth in living standards.

The Conservative Opposition under David Cameron has been doing a good job showing that the social justice side of the offer has not been delivered. New Labour, like Old Labour, thought social justice could be created by taking more money off the richer half of the country to give to people living on benefit. It didn’t work in the 60s or 70s, so there was no reason why it should work in the noughties. Mr Brown thought that the problem in the past had been a shortage of money to do it on a big enough scale, so he simply threw even more money at it. The result was even more people living permanently on benefit. He thought that if he paid benefit to people in work as well as out of work it might tempt more into work, but underestimated how much had to be done to educate, train and motivate the 5 million plus still living on benefit as a way of life. Many people now know that the government has not delivered social justice. The left will urge Mr Brown to do more of the same – spend more money on those on benefits. He will do some of that and it will have the same result as before. He now does it when the puboic accounts are in a dreadful mess. He runs the risk of a government financing crisis to go with the sterling devaluation he has already triggered.The Blairites and modernisers will tell him to look at the detailed work of Iain Duncan Smith and others on how to mend a broken society. He will lift some of their soundbites and back a few pioneer projects, but not on a scale likely to have any impact.

Now Mr Darling has demolished the more important half of the New Labour offer, the promise of economic stability and efficiency. Labour won 3 elections on a few soundbites. Readers of this site will know what I have thought throughout of the spin that Labour made the Bank of England independent and that guaranteed economic stability. Any lingering doubts people had about my analysis must have been cast aside by the convulsions in markets since last August. The bigger soundbite from the point of view of popular impact was the often repeated mantra “There will be no more boom and bust”.

“No more boom and bust” was the most effective of all the New Labour songs. It was audacious and all encompassing. It was audacious because it reminded people of the mistakes of the Tory years in 1992-3 when the Exchange Rate Mechanism fell apart, the only Tory economic policy Labour had ever supported and had urged on the then government! Any sensible critic would accept that had Labour been in office then they would have inflicted exactly the same misery on the British public. As one of the few MP critics of the ERM throughout, it was a lonely business when the main Opposition party would not help us expose and fight against it. It was effective, because people wanted assurances that interest rates and house prices would be stable, or not go down.

The soundbite worked brilliantly in 1997, as part of the reason for change. What change did people most want? “No more boom and bust”. It worked well again in 2001. After all, leaving aside the disgraceful tax raid on the pension funds and the sale of the gold holdings, most of the period 1997-2001 was characterised by prudent management of public finances and produced a reasonable economic performance. That added some credibility to the slogan. Labour still allowed boom and bust in manufacturing, but that was disguised by the strength of services in general and London’s service sector in particular which helped the national figures considerably.

By 2005 it should have been apparent to more commentators that we were back in boom and bust, but because we were enjoying the boom part of the policy too many people were still prepared to ignore the obvious signs. I highlighted the excess and waste in public spending, the build up of far too much public borrowing, and the change in inflation targets to keep interest rates lower than desirable. I also highlighted wrong headed mortgage regulation and the Basel I banking regulations, which became an important part of the disaster.

Mr Darling has told us it cannot work again. Even if his new forecast is too pessimistic, as many private sector commentators imply by their forecasts, we all now know that we have lurched from too much borrowing, too much price inflation, too much house price inflation, to too little growth and to a Credit Crunch. In Mr Darling’s words we have lurched from pretty good economic conditions to the “worst in 60 years”.

Perhaps he did this with the full knowledge of the Prime Minister, with both men thinking that lowering expectations drastically was the best way to create a new start and to get an audience for whatever actions they will take next. Polls must tell them people did not believe the old spin line about how well placed the UK economy was to weather the US sub prime crisis, as if people would not see the other crisis made here in the UK.If he did, the PM is now offside, and others are at work to undermine the Chancellor in favour of Mr Balls. Perhaps he did it to cut loose from a Prime Minister on the slide, telling us that he the Chancellor recognises that his inheritance from his boss was not all it was cracked up to be at the time.

Either way, it transforms British politics. It now allows us a more honest debate about what went wrong and what needs to be done to put it right, if only the media will start to listen to those voices that have dissented throughout from the nonsensical spin that has prevented proper economic analysis. It will anyway confirm the public view that New Labour is dead – it has delivered neither economic efficiency nor social justice- whatever the media now do.

We do need both social justice and economic efficiency. To achieve them we first need a government which can get a grip on public spending and borrowing, and reform our monetary and banking arrangements, so they will deliver prudence and low inflationary growth in the future. That was what we tried to set out in the Economic Policy Review last autumn, published just before the Rock crisis, written in the expectation that the monetary mismanagement we were witnessing would end in tears.

The idea that the treasury should guarantee and underwrite £40 billion of housing values is absurd. Have they learnt nothing from nationalising Northern Rock? The more they spend on such ventures, the more they waste, and the more confidence drains away. IT IS TIME TO STOP DREAMING UP NEW SPENDING PLANS, TIME TO GET A GRIP ON THE STATE BUDGET.There are limits to how much the state can borrow. They are well into the danger zone already.

The Chancellor’s devastating interview shows we need a Parliamentary statement on Monday to give us a completely new set of forecasts for the UK economy. Parliament should be in session to cross examine him over one of the biggest downward revisions to forecasts ever made by an incumbent Chancellor.

In March 2008 the Chancellor in his budget told the Commons the economy would grow by 1.75% to 2.25% in 2008, by 2.25% to 2.75% in 2009 and 2.5% to 3% in 2010. He said “My forecast shows the UK economy will continue to grow throughout this period of economic weakness”.

Today we learn that he now thinks the prospects are the worst for 60 years. That must mean, for example, a bigger fall in GDP than in 1979-81, when it fell by 1.76%. He also says now “It is going to be more profound and long lasting than people thought” which must mean he expects downturn next year as well as this. If just one year shows a drop of 2% (Chancellor’s implied new forecast) that means 4% less National Income, a loss of £60 billion compared to budget forecast. That also implies a loss of £24billion of tax revenue at the average 40% tax rate on the economy as a whole.

We have already had one quarter’s figures showing no growth compared with the reasonable growth the Chancellor was forecasting. He now tells us to expect a bad downturn, worse than any of the private sector forecasters are expecting.

This means more job losses, more increases in public spending to help people who lose their job, less tax revenue as the economy falls. The figures involved will be huge. There will be a vast black hole in the government’s accounts.

It is high time the government recalled Parliament, made an honest statement to the Commons, and produced some new figures. The rest of the country is now very worried by the situation. It is not good enough for MPs to be away for a further five weeks, and for the government to delay new figures until the Autumn Statement. Mr Darling’s careless language may be just that – but as it has been his only attempt to revise his optimistic March forecasts we have to take it seriously until he corrects the record again. The man who told us not to talk ourselves into recession has now conjured a far worse picture for us than any mainstream commentator!

The portrait of the Chancellor in the Guardian today by Decca Aitkenhead is devastating. Intended to lift the veil on the private man and to help him project his image and his message, the interview reveals a man completely out of his depth without a clue about the financial crisis swirling around him.

The first incomprehensible error is to give such an interview and to use it to make serious statements about the state of the economy. If Mr darling must show his human side and invite people to his holiday home has should stick to talking about the scenery and the marmalade. It is is not the right time or vehicle to adjust the nation’s view of how serious an economic crisis we are in. A few casual remarks about how conditions will be the “worst they’ve been in 60 years” will travel the world and lead to fundamental reappraisals of forecasts everywhere. There is no revision to the Treasury forecasts accompanying this statement. So we now know the Chancellor thinks the optimistic forecasts from HMT about growth prospects this year and next are a bunch of lies, but his forecast of a recession remains unquantified. If we take him seriously he is saying the Treasury have now to revise their forecast down to show big drop in GDP 2008-2009, bigger than the recession in 1974. Why couldn’t he make a proper statement from the Treasury accompanied by proper revised forecasts? I have felt for sometime waiting for the Autumn Statement before we get a revision to forecast is to wait too long. In this situation markets expect up to date information. They get it from companies, who have to tell us of worsened trading expectations, so why can’t we get it from the Treasury?

The second error is to reveal just how out of touch with the financial world this man is. He tells us the first he knew of the financial problems in money markets last summer was when he saw an FT article about the ECB pumping money into their money markets! He tells us he rang the office from Majorca, but of course did nothing. The rest of us were writing and worrying about the lack of liquidity all that August, telling the government to act. Clearly they were too busy holidaying. The next he knows is when back in Edinburgh and he spots a run on Northern Rock, which forces him to London! The rest of us were watching the grisly events around Northern Rock unfold before the run began. In such circumstances I would expect the Head of the tripartite regulatory structure to be getting daily reports on the situation, and to be using his grace and favour house in London to manage the crisis from there. The Guardian journalist did not seem to recognise just how serious this admission is.

The third error is still thinking Labour’s main problem is presentational. “We patently have not been able to tell people what we are for”. Labour’s problem is not presentational. We all know what Labour is for. It is for an ever bigger public sector, it is for more and more spin doctors and presentational gimmicks, it is for more government advertising, it is for keeping them in power, it is for higher taxes and higher benefits, it is for an ever bigger money go round with Peter paying Peter via the intermediary of the government, it is for incompetence at managing the financial affairs of the money markets and the public accounts, it is for massive borrowing. The issue is not the public’s lack of understanding of Labour, but Labour’s inability to deliver the fairer society and the stronger economy they promised.

Knowing our Chancellor had “no idea” of the severity of the crisis facing them until recently is not going to help build confidence. Knowing that he knows the public is “pissed off” with Labour undermines his position further, as the choice of language is not what we expect of a senior figure. There is still a deafening silence on what Labour is actually going to do about the falling house market and the mortgage famine, still a silence over when and if they are going to exert some discipline on the public accounts, still confusion over how they are going to sort out the muddle in the money markets and the problems with banking. The botched nationalisation of the Rock has made their position so difficult. It is eating cash the government and taxpayer cannot afford, whilst having to throttle back its lending and sack many of its staff because it is in the public sector. Returning it to the private sector at almost any price would help to tackle the mortgage crisis, and save the public money.

Readers of this site will know I have long been advocating that the Bank of England cuts interest rates and concentrates on fighting recession. Inflation will fall next year anyway. This has proved contentious with some of my readers. I ask them, how much more evidence do you need of slowdown, how much bigger a fall in property prices, how much more of a squeeze on incomes and lending before you accept that conditions are disinflationary, even recessionary?

Yesterday I was delighted and amazed to read the words of David Blanchflower, Monetary Policy Committee member. He delivered an extraordinary broadside against his own Committee. He accused the Bank of relying on “wishful thinking” in its forecasts, and condemned the whole monetary policy as “misguided”. He agrees that next year inflation will fall, and states “18 months down the road and inflation is going to plummet like a rock”. In a now famous remark he said “ To sit and worry about inflation expectations and what is going to happen to those, rather than worry about the fact that the economy is going to go into recession seems to be misguided”.

Of course, under the requirements set down by the government to the MPC, they are required just to worry about inflation expectations. Their remit prevents them from considering the impact of their actions on the real economy, unless that has an impact on inflation. For years we have been fed the soundbite that the UK has an independent Central Bank and that is a guarantee of economic stability. The truth is we do not have an independent Bank, and the actions of the MPC have helped destabilise the economy. They kept money too loose allowing a credit binge, and they are now keeping money too tight, assisting a Credit Crunch. They have been aided in this by pro cyclical regulation of the banks – too loose on the way up, too tight on the way down – and by a government which does not seem to understand money markets.

We will now see many of those who have spent the last few years praising the mythical independent Bank demanding a change in its government remit. The truth is that in a democracy if any institution or group of actors gets things wrong and inflicts economic misery on the public, their roles, jobs and remit will be debated and changed. No quango or Bank stays “independent” for long if its actions do not please. The politicians have to respond to the popular anger about failure or mistakes. The government will have to look at adding a requirement to the MPC to consider its impact on the real economy, just as the Fed has to in the USA. In the last quarter the USA produced annualised growth of 3.3% (where are all those pundits who told us the US is in recession now?) whilst the UK slowed to a standstill and Euroland fell. The USA has a Central Bank that has to work with the government to influence the level of economic activity as well as prices. Euroland and the UK have central banks which just concentrate on inflation, and manage to get that wrong.

Perhaps the most important thing David Blanchflower said was “We need to actually get ahead of the game and it appears that we are now behind”. Exactly. It is as if all those clever economists have forgotten one of the basic things they teach their students – there are leads and lags in economic policy. Changing interest rates has a delayed effect, as it takes time for all rates to adjust and for banks and borrowers to adjust their behaviours to the new levels. Many people have protection from higher mortgage rates for a period. Larger companies can use interest rate futures to protect themselves for months ahead. Many people and companies have a bit of money for a rainy day, but not enough for a rainy year.

The present high inflation reflects mistakes of the MPC and others a year or two ago. There is nothing the MPC can do in the short term about that. The issue is what are conditions going to be like a year or two ahead? Most commentators agree they will reflect the current squeeze. It is difficult to see inflation staying high against such a background, and strange to see a government and a Bank so keen to intensify the squeeze by most of their actions. The rest of the MPC need to join David Blanchflower, by trying to project themselves into the future. Most of them seem to be at best living in the present, if not stuck in the past. Applying a second load of bolts to the stable door after the horse has bolted won’t bring it back. The issue is how we get a new horse into the stable in times of slowdown or worse.

I remain strongly of the view that the US has got its policy response right to the Credit Crunch, and the UK is still getting it wrong. It will not be easy for the US authorities to chart a successful course, given the magnitude of the mistakes made on the way up. They still have to contend with a very weak banking sector, with more bad news still to come, and with a very weak property market, which adds to the banking weakness. So much lending is secured against property, so falling property prices undermines old loans and puts people off making new ones. The Fed’s slashing of interest rates helped, but it cannot get all the market rates down in line with its rates, because the banks are short of cash and reluctant to lend. There will be some excitement about a change of President, and the two main candidates seem to be lining up to continue fiscal stimulus to assist low interest rates, with the emphasis on tax cuts to alleviate the squeeze on personal incomes. All that means the US is better placed than Europe.

Meanwhile Euroland remains mesmerised by inflation despite the obvious evidence that the slowdown has now hit Germany as well as Italy and Iberia. Destocking is adding to the woes of companies, as they fight to become more liquid against a backdrop of declining turnover. The UK is going for a huge fiscal stimulus based on increased public spending with revenues falling from the downturn. The fact that the government sector is as overborrowed as the private sector before entering the downturn leaves it in a weak position, at the mercy of the markets. The pound is now falling against the dollar, having devalued against the Euro, increasing the cut in living standards.

(Previous blogs on this topic on www.johnredwood.com include
“Halve interest rates and cut wasteful spending” 18.7.8
“The lies about the EU economy” 14.8.8
“The Bank of England is fighting the wrong dragon ” 9.8.8
“An inflationary or inflammatory letter?” 17.6.8
“Why have the government and the Bank of England failed us on inflation?” 17.5.8)

The Taxpayers Alliance today have published another good piece of work pointing out just how much extra tax the government collects in the name of greenery, over and above the calculations of the cost of CO2 and pollution.

Others have worked out just how much more than the cost of road provision motorists have to pay. Whilst bus and train operators are allowed tax concessions on track use and fuel purchased, motorists and lorry owners have to pay tax after tax to use the public highway and burn fuel.

The public worked this out for themselves a long time ago. All the polls show that a majority of people have thought for a long time that the green argument is used by many politicians as another excuse to raise more money in tax so they have more of other people’s money to play with. Nor is this the only misleading spin and ill thought through policy we experience daily from this government.

Let us look at some of the other green contradictions we get from this administration.

They tell us that travel by car or plane is bad for the environment because these vehicles emit carbon dioxide. They tell us trains and buses are good for the environment, perhaps because these vehicles also emit carbon dioxide! They never truthfully tell us that all vehicles with diesel, mains electric or petrol engines emit carbon dioxide when the power is burned or generated. You need to do a proper audit of each journey someone undertakes to find out which is the greener way of travelling. Sometimes it is greener by car than by train or bus, depending on where you are going and how many other people are going there too. You need to consider the energy burned to get you to and from the train station as well as the per person energy used by the train. If you want to go from the village of Little Known to the village of Lesser Used in the Marsh at 11 pm it would not be economic or green to lay on a bus just for you.

We are told that travel by car could be made greener and safer if we limit the speed of cars on good roads. So we have to drive cars that would be quite capable of travelling at 80 or 90 miles an hour on a motorway at a maximum of 70. Meanwhile we are told that trains are better if they travel at 125 miles an hour, whilst the government subsidies the industry to spend a fortune on trying to achieve speeds of 150-175 miles an hour, in the knowledge that anything that gets in the way of trains travelling at that speed does not have a chance of survival. Trains cannot be steered round an obstacle on the track, whereas a high speed car has a chance of steering round an unforeseen obstacle on a motorway. The government strengthens its arguments for slower running cars by saying they then burn less fuel per mile travelled. Why doesn’t the same rule apply to a train?

Ministers and officials in air conditioned and poorly insulated offices tell the rest of us we need to improve the insulation of our homes, and lecture us to turn out unused lights and turn off appliances at rest. How often do you see a Minister or senior official turn out a light when leaving a room where the taxpayer is paying the electricity bill? Who turns their computers and screens off when they go for a break at work in the public sector? I find people at home are much more motivated than the public sector to use energy wisely, because we are paying our own bills. That’s why I have been drawing attention through Parliamentary Questions to the need for better performance from the government itself at saving us money by raising its game on energy efficiency.

I heard this morning that UK house prices are now down by more than 10% so far this year. I listened in vain for a government Minister to come on to claim success from their policy. For years Ministers have told us we needed to make houses more affordable. They have become mighty shy now their policy of starving the Money markets of cash last summer and nationalising the UK’s most aggressive lending bank, Northern Rock, is delivering lower house prices with a vengeance.

Could it be that they have at last worked out that lower house prices do not automaticallly make houses more affordable, if there are too few mrotgages to buy them with? Could it be that at last they understand there is one thing worse than house prices soaring, and that is house prices falling? Aren’t we owed some explanation of their latest thinking, and some comments on where they want to take the mortgage market next? After all, they now own and manage one of the largest mortgage banks, and intervene regularly in the money markets, so much of this is down to their efforts.

We should be told by the government how much further they intend to let house prices fall before taking the necessary money and mortgage action to stabilise them. We should be told whether they think that the shortage of housing they identified in previous years has now corrected, given the lack of buyers for new homes. Does that make them want to alter their targets for new house construction, as they think new home starts determine house prices?

Commercial property has already fallen by more than 20%, twice the fall so far in houses. There is more and more empty space available as developers finish building projects in progress. As migrants from overseas return home in search of jobs elsewhere, and as people staying here give up on trying to find a mortgage for a better home, we should expect further falls in residential property prices. There will be more repossessions as people struggle to pay the mortgages they already have, forcing more properties onto the market.

No more boom and bust? That does not seem such a clever soundbite now ownership of Northern Rock and clumsy mismanagement of financial regulation and the money markets has made the UK government into an architect of bust in the property market, presiding over the collapse of the mrotgage book of one of our bigger mortgage lenders at a time of general mortgage shortage. And how does Vince Cable now think about the outcome of nationalising Northern Rock, having acted as the government’s spinner to win over fashionable opinion to such an ill judged course? Is he happy with the collapse of house prices, the shortage of mortgages and the redundancies at the Rock?

The West has aroused the Russian bear through its contradictory actions over Kosovo and Georgia. Russia now sees the West as asserting its power too far, recognises the West is now overstretched in the east, and thinks the West is becoming too intrusive close to Russia’s borders.

I wish to stress that I like most Westerners condemn the invasion of Georgia and the military actions taken by Russia in the Georgian war. I also disagreed with some of the actions taken by the EU and the USA during the Yugoslav wars, which are an important part of the background to Russia’s attitudes today. The West is in danger of reaping what it has sown.

Now the bear has awoken we need to analyse carefully what are the legitimate and illegitimate aims of Russia, and how might it use its growing military and economic power? We need to think before we speak, and plan and act before we commit ourselves too deeply, beyond the range and strength of our power.

The irony of the present situation will not be lost on the Russians. The West is paying Russia to re-arm, thanks to the failure of the UK, the US and other western governments to take the necessary action to cut dependence on imported oil and gas from parts of the world that are unstable or unfriendly. The more oil and gas we buy from Russia at these new higher prices, the more missiles they can finance and the more tanks they can manufacture. The first thing the West should do, if it wishes to strengthen its hand vis a vis Russia, is take urgent action to cut its dependence on imported fuel. I have set out before some of the steps the UK should be taking now to do this.

The second thing the West should do is think through its position more clearly on whether it should help defend all existing borders of states or not. It has been normal in the post 1945 world to attempt to defend existing states borders, buttressed by the UN. It required UN agreement and action to ratify changes in states borders. That changed with the recognition of Kosovo, opposed by Russia, a UN Security Council member with a veto.

This doctrine is also in conflict with another Western doctrine, the self determination of peoples. Under this doctrine, if a dominant majority in a substantial region of a larger country wish to secede and form their own state, they should be allowed to do so following referendum and legal process. This is, for example, the view of the Scottish Nationalists over how they should take control of their country, and the growing view of many English nationalists who want a vote on the independence of England from the UK and the EU. It is a view that the US set out as a war aim in the 1940s, seeking to liberate European countries from German control, and favoured by the US when supporting the removal of colonial powers from Africa. Czechoslovakia was allowed to split in two when the popular wishes were so clear.

In the modern complex world we live in there should be no reliance on one of these doctrines to the exclusion of the other. Sometimes they will be in conflict, and decisions need to be made. In practise each case has to be settled on its merits. The judgement will be better if it is supported by more countries, including all the important global and regional powers who can help maintain the peace around whichever decision is made. I incline more to favouring self determination, but accept there may be occasions when that cannot work. There have to be some limits to it to avoid a constant state of flux and an endless movement to ever smaller states.

So how should the West respond to Russia? Today the West needs to understand why Russia is so alarmed by NATO’s current stance, and to understand how there is no acceptable military option for the West to dominate in Georgia and to determine borders so close to Russia. In other words, we need to talk to Russia, and to discuss the issue of splinter regions from Georgia. We need to discuss the whole architecture of states around Russia’s western and southern border, to avoid committing NATO to maintain borders we cannot in practise enforce at an acceptable military cost, and to allay Russian fears to make Russian military action less likely. We need to see how big the disagreements are and to assess if any other state apart from Georgia is in danger of a Russian invasion. So far the West has not won over enough independent world opinion to strengthen its hand in negotiation with Russia.

At the same time we need to strengthen NATO and the Western economies, so we are less dependent on Russian fuel and more capable of acting if Russia pushes too far and uses her military in even more unacceptable ways.

The USA has been the world’s only superpower for a couple of decades. It has got lazy about using its power and enforcing its will. Only asymmetrical warfare and terrorist attacks have challenged it for years. Now US power is coming up against other important powers in China, Russia and the Middle East that it would be unwise to attack head on. Worse still, the US is in danger of creating too many different enemies and threats, fighting a live war in the Middle East, a cold war with Russia, and engaged in a superpower struggle of various kinds with China, primarily in the economic sphere in the first instance. There are flash points in all of these relationships – in each border state near Russia that the US guarantees, in Taiwan, in Iran and Iraq. Even the world’s superpower has to be careful not to overstretch. It is dangerous to create so many opponents who might one day help each other against their common enemy. The US needs to ask itself what are its long term interests? How many of them can it pursue backed with effective military force? The EU needs to stop posturing as a major player when its words can be inflammatory and when it lacks the military capacity to enforce. I am not recommending it has military capacity – I am recommending it should remember its limitations. The UK needs to look to its economy first - it is now so weak it cannot afford its current defence commitments properly, and is vulnerable thanks to the lack of a cogent energy policy. We need some strategy rather than more foreign policy spin.

David Milliband is playing a dangerous game. His visit to Ukraine and his support for places close to the Russian border is a further incitement of Russia, without the force to back up the position he is setting out. He comes across as a boy cold warrior without weapons, playing with fire in a part of the world he understands but dimly. Maybe he is still planning his first cabinet, and too distracted by the slow collapse of the government he represents to do the homework he needs to do to understand the world of the Caucasus.

He has chosen the weakest and worst of all the possible responses to the ill judged Georgian adventure and the unacceptable Russian invasion. He has decided to talk tough and act weakly. What we need is a proper analysis of the problem, and longer term measures to rebuild the UK’s strength – and the strength of our Western allies – before presuming to dictate to Russia things we cannot control. How does he think the UK can guarantee the independence of all the states clustered near the Russian frontier? Does he understand why the West’s actions in encouraging and recognising an independent Kosovo have been seen by Russia as a green light to supporting independent states out of Georgia’s regions?

How can he belong to a government which set up a Scottish Parliament which now wants a vote on Scottish independence, and yet argue that people should not be allowed to change their states if they wish? He is muddled on self determination and how you redraw Europe’s borders. Apparently what is allowed in Kosovo is not allowed elsewhere. Time to do some reading and thinking, Mr Milliband, before putting your foot in it again.

Today the government’s favourite think tank is being given air time to tell us how important migrants are to our economy. It is true that in the boom time migrants often came here to do jobs others were unwilling to do. The government made the labour market much less flexible for people born here, through its new labour laws, and its tax and benefit regime. The evidence of that is there to see in the 5 million people of working age who do not have a job. It offset this inflexibility to some extent by inviting in large numbers of migrant and temporary workers. That was better than leaving the economy ossified , but not as good as making the UK labour market strong enough and flexibile enough to get many more people back to work or into work for the first time.

Now we are entering a very unpleasant downturn, brought on by government waste and overborrowing, as well as by the loose monetary policy of past years and the overborrowing in the private sector, the market will partly adjust by some migrants going elsewhere where there are better job opportunities.Nonetheless, there will be all too many job losses, and some rise in overall unemployment, as the economic winter sets in. The inward migrantion kept wages down at a time of boom, and will offset some of the job losses in times of downturn, but not all of them.

What will the government do to show it is tackling the problems of joblessness and income squeeze? It will spend and spend, as it still does not realise governemnt over spending is much of the reason why the UK is in such a poor position to correct the excesses of past years of easy money.It will offer one off help this winter with fuel bills and maybe with food bills. It will seek to augment people’s income in the short term by borrowing more money which the same people will have to help repay with interest in later years! At a time when people struggle to get a mortgage or afford a mortgage to buy themselves a home we will all be forced to help pay for a collective mortgage to offer sops to people faced with a struggle to pay the family bills.What we need is a governemnt which can deliver much more for less, and eave us more of our own money to pay the bills.

The government should be more cautious. Offering benefits rather than tax cuts is an expensive and complicated way of easing the squeeze, involving too sets of extra officials to collect the money in and then dish it out. Doing it all on borrowing risks the ultimate wrath of the markets. This autumn the government will have to come out with revised figures, showing just how much above its own budget its current spending now is, and revealing just how much worse both spending and revenue looks in the months ahead thanks to much slower growth than forecast. If the government is honest in its figures it will help, but the figures will be bad. If it understates them it will undermine market confidence even more, as markets are getting ready for a lot of red ink in the government’s budget. The more red ink there is, the worse the downturn and the longer will recovery be delayed.

I am busy this week-end but will do the responses tomorrow. Apologies for the slight delay in service.

It’s typical that at a time when the issue is Why is the government spending so much more and borrowing so much more than it forecast some should want the issue to be Tory spending plans.

The issue today must be How can this government get a grip on the public finances? It wrongly thinks spending borrowing and wasting more is the right approach, when it will make the squeeze and the Credit Crunch worse.

My comment to the Sunday Telegrpah said that the Tories should not yet produce spending and taxing plans, because the rate of deterioration in public finances is so huge and we cannot be sure yet just how bad an possible inheritance will be come 2010. Instead we must highlight the large black hole in the governent’s own numbers, and urge them to take corrective aciton - not by cutting nurses and doctors, teachers and police, but by stopping so much waste and needless bureaucracy. Above all they need to stop the losses at Northern Rock and return it to the private sector so it can make mortgage advances again.

There will be a crisis in public finances if the government carries on at its present rate of overspend and overborrowing. It is crowding out an already emaciated private sector, and intensifying the squeeze on incomes. It will leave the government as both unpopular and incompetent.The first thing they should do is place a recruitment freeze on more burearcrats, as we are groaning under the weight of their salaries and pensions.This country is one of the worst placed to tackle the global imbalances, because it has such a top heavy government with so little being achieved for all the money spent.

What I said to The Sunday Telegraph was if Labour wanted to get back to their budget plans they had to stop spending money like water and cut out waste and less desirable spending. They are going to need an emergency package to put right all the damage they are doing by wasting and borrowing too much, and to cut taxes like Stamp Duty and VED which they raised too high.
I think George Osborne has been exactly right to refuse to offer us the 2010 or 2011 budget in advance, given the huge Labour black hole already apparent in the figures. THe likely development is an even bigger black hole in the government’s figures, given the way they are spending.

Today we celebrate the remarkable feat of a great swimmer. Captain Matthew Webb became the first person to swim the English Channel through his epic swim on the 24th and 25th of August 1875.

Webb first attained fame through diving into the Atlantic in an attempt to save a drowning passenger from his ship. He subsequently resigned as a Cunard Captain to take up professional swimming. On August 12th 1875 his first attempt to swim the Channel failed. 12 days later he covered himself in porpoise oil to keep warm and swam out from Dover. 21 hours 45 minutes later he staggered ashore in Calais, after swimming 39 miles in a roundabout course, battling against the outcoming tide from France.

His feat earned him instant fame and fortune. He was acclaimed on his return journey to his native Shropshire. The story goes that even a pig put his trotter up on to a wall to see the returning hero. He went on to float for 60 hours in the Westminster Aquarium, to beat his own floating record in Boston, and to defeat the US champion swimmer.

Unfortunately in 1883 he jumped from a boat into the swirling waters below the Niagara falls. 10 minutes later his vigorous swim ended in disaster as he was pulled down by the strength of the currents and killed.

Such pioneering spirit was a proud part of Victorian England. It is good to see our young athletes today capture this spirit again, believing they too can perform great feats. As it says on Webb’s grave “Nothing great is easy”. So swimming across the Niagara river proved.

Some of my friends are both Catholics and Eurosceptics. They are sensible people, and rightly see nothing contradictory in that stance. The once Catholic kingdom of France is now a secular Republic, and once Catholic Spain is no longer an aggressive exporter of the faith by force of arms. Protestant Germany is an important motor of the EU. The forces which impelled England to the Protestant anti Spanish anti French side in the wars of religion have mercifully dissipated.

I make this point because I was thinking about yesterday’s anniversary of the Battle of Bosworth. It wasn’t much of battle in many ways. 5000 troops loyal to the invading Henry, the Lancastrian, took on maybe 12000 troops of Richard, the Yorkist King. In less than two hours the Stanleys switched sides and the battle was over, as their substantial force completely changed the odds.

There were two remarkable things about Bosworth. The King himself died on the battlefield, with no obvious Yorkist successor capable of claiming the title. His early death ended the battle. Henry Tudor and his heirs arrived in triumph, and proved able enough to unite England and Wales under their rule and put an end to the long and miserable history of succession squabbles and mini wars which had characterised much of the fifteenth century.

So I asked myself, What did the Tudors do for us? Time and space does not permit a full answer, for there is so much. If you like me saw any of the Globe productions, then just look around you. The flowering of English poetry, drama, music, art and architecture in the later Tudor period was remarkable.

The Tudors certainly knew how to spin and to brand. They blazoned the portcullis and crown logo on so much, the constantly travelled their country bringing government to the people. They left us a version of history which portrayed their achievements in a good light. Whether it was Henry VIII on the field of the cloth of gold, or Elizabeth seeing off the Armada, they established England as a force to be reckoned with. They played the courtiers off against each other, ensuring power was mainly brokered by them at court.

Above all they led England and Wales decisively into Reformation Europe. This was much more than a religious choice which some of my readers will now regret and criticise. It was a general statement of foreign policy and even of economic policy. It meant our country aligned with the smaller countries of western Europe, with Holland and the German states, against the bureaucratic Empire and against the Catholic superpowers. It meant the property of the monasteries passed into new landowners hands which helped power and economic advance based on enterprise and family capital. It meant the anti clericalism of the English was allowed reasonable freedom. I see the anticlericalism of the 1520s and 1530s as the forerunner of the scepticism about big government and expert opinion we still see today.

The Tudors ensured England and Wales would be a united country, a unity that has never been split to this day. They established a stronger rule of law from the centre, but relies on substantial devolution of power to local JPs, municipal authorities and local landowners. They had to recognise the limits of their power in an age before instant communication and huge government budgets.

NICE has been in the firing line recently. This body which has the duty to decide which drugs the NHS can buy and which are unsuitable on grounds of efficacy and cost has been caught in the crossfire. On one side the pharmaceutical companies have been running effective campaigns to claim NICE was wrong to reject their latest drug. On the other side patient groups have started to lobby in ever more media friendly ways for spending on the latest drug that they hope will alleviate or cure their symptoms.

It is what you should expect when you have a near monopoly health service provider controlled by this particular group of politicians who live by the media. Because the NHS has such colossal power in its buying decisions drug companies have to throw everything in in England to selling to the single purchaser. They are very disappointed if it does not work.

Similarly, patient groups have come to realise with this government that only media friendly prominent lobbying is likely to get Ministers attention and possibly lead to a change of policy. One of the newer features of an MP’s life is a stream of invitations to attend functions organised by groups whose sole aim is to change the drug purchases and the medical and clinical protocols of the NHS for treating a particular disease. Most diseases now have their action group. They feel forced to behave like this, competing for the attention and money of Ministers in this heavily centralised top down system Labour has devised. Too much rests on the decisions of just a few people at the top, in the Ministry, and in NICE. Sometimes constituents write to me urging a particular treatment that they heard about, so I add my voice to those wanting the drug to be available.

The government has invited people to make the NHS the central concern of modern politics, They have shown them how to lobby and use the media, and they have so centralised the NHS that people conclude the only thing that matters is to get to the Minister. They have ended up fashioning a boomerang that is beginning to hurt the very government that fashioned it as their own political weapon.

Labour believed that if they spent lots more on the NHS most of the problems would go away. If they centralised decisions they could guarantee good standards across the country and claim the credit for all that was going on. Such a strategy means they must also be to blame for things that are not working well, and to blame when people cannot get access to the drugs they think they need or the treatment that would make them better.

I have been meeting GPs during the summer break from Westminster. They complain to me that too many top down targets are making it far more difficult to serve their patients well. They dislike features of the very expensive centralised computer technology being introduced into their lives. They too are unhappy about the endless fiats from the centre and from too many judgements being made by too few people.

Labour had better be careful. Its attempt to play politics with the health issue, showing itself as the beneficent provider of more cash from the centre, is becoming a cause of angst with patient groups, with drug companies and with GPs. That is a very powerful alliance of interests to turn against you. Never has so much money been spent by so few people with such negative effects.

Well done to our Olympians. I recently talked to St Crispin’s School about how you can live your dream if you really really want to. If you put the hard work in and take the reverses in your stride, you too might make it. It is great to see just how many young athletes from the UK have lived their dream so spectacularly in the last few days. We are proud of them all. It is good to see our local area represented on the honours board. May they inspire many more to live their dreams too.

The government’s own “Fuel poverty” adviser has been on TV and radio telling us that we will have more people in fuel poverty this winter than at any time for the last ten years. Well, there’s a surprise! I wonder how much he and his staff get paid to come out with such obvious statements. If energy prices go up by a third or by half, and people’s incomes scarcely keep up with general inflation, of course more will find it difficult to pay the fuel bills. Apparently fuel poverty is when your fuel bill is more than 10% of your net income. They will also find it more difficult to pay the Tax bills, having to pay for all those fuel poverty advisers and civil servants workign out the figures. Fuel poverty should be set alongside food poverty, travel poverty, and TV poverty, when those things rise too high as a proportion of income, or alongside my favourite and the most common, Tax poverty.The truth is there is Poverty, pure and simple, and it’s getting worse thanks to this government’s failed economic strategy.

Of course I think it is worrying that many people this winter will fear both the fuel bills and the food bills. The recent price rises have hit those on low incomes and no incomes harder than those on higher incomes. But if you don’t want to call it simple poverty why not call it Tax poverty, for the 10 p tax band abolition hit many of those people very hard, as does the increased petrol tax and the prospective rise in VED on older cars. If they paid less tax, people on lower incomes would have more to pay for fuel.

We need not wonder why the Government’s Fuel Poverty expert was let loose on TV. It clearly means a benefit package is coming soon. The PM is preparing a benefit pay out to people struggling with fuel bills, to show he is in touch and cares. No worry that the nation cannot afford any more public spending. No surprise if it has to be paid for out of increased borrowing rather than from making savings elsewhere. Do not expect a proper programme to increase energy capacity and to generate more power at home any time soon. The government has been dithering for 10 years without a proper energy policy, waiting for the lights to go out as power stations age and give up. This is the government which has given us more dependence on imported oil and gas and then wonders why it is all so dear.

Clearly the PM still has not learnt anything from recent by election defeats and from the sorry run of Opinion Polls. The more of our money he spends, and the more he borrows, the less popular he becomes. People on low incomes do not want one off winter hand outs to see the government through a political hole. They want an economy with job opportunities to lift them out of low income altogether. They want energy industries that are expanding capacities and putting prices up by less.They want enough money to pay all the bills.

George Osborne produced a very detailed and well researched speech this week demonstrating that people from low income areas and low income backgrounds are doing worse educationally and in terms of job opportunities now than when Labour first came to power. Far from narrowing the gap, they have allowed the gap to grow. The gap has not just grown because the rich have got richer – nothing wrong with that – but the gap has grown because the poor are struggling more and even less likely to get A levels, get a degree or get a decent job - everything wrong with that. It is the failure to lift and boost the poor that matters. A decade of throwing more money into regional aid and into benefits has failed. More fuel poverty, according to the government’s own adviser, is just a small part of the wider truth. There is more poverty. It’s a poverty of achievement and ambition as well as a shortage of money. That’s why we need a new approach to schools, to training and to incentives for work. That’s why we need to tackle tax poverty, for too many people at the bottom end of the income scale are trapped by Labour’s benefit and tax system.

You would have thought after all the fuss over data loss so far under this government Ministers would have got a grip by now. The hapless Home Secretary once again has to apologise for the incompetence of her department, after all her lectures and promises to have put it right. This is another serious data loss. It shows Ministers are not in control of their departments.

The more this government takes action to make us “secure” the less secure I feel. I will feel a lot less secure if they carry on with their ghastly 1984 plan to put us all on a central ID computer base, at enormous expense to taxpayers. We might as well publish all our personal data the day it goes live, on their record so far with other people’s data. If The Home Secretary wants to keep her job she shouold cancel the project so we can dance in the streets about that, if nothing else.

This is one reason why Parliament should be allowed to sit - to cross examine her. The war in Georgia is another.

John Redwood has thanked all the people who voted to make his website, www.johnredwood.com, the top ranked MP’s website as chosen by the readers of the top sixty political blogs in the UK and Total Politics magazine. John Redwood’s blog was voted the best blog produced by a Member of Parliament. The full results will be published in the “Guide to Political Blogging in the UK 2008-2009”, which is published on the 5th September.

John Redwood said: “I am pleased so many people nationwide enjoy my blog and log onto it regularly. I produce at least one daily story to keep it topical. I am setting up a seperate local issues page, and would like more people from the Wokingham and West Berkshire areas to write in with their views and issues on local matters to complement what I do on the national concerns that I deal with in Parliament”.

As one of many people who is delighted by the huge success of UK competitors in Beijing my delight is the positive one for them, not the negative one that we are beating the Aussies. The rash of stories saying that the true competition is between us and them, and our victory over Australia is sweet is far from the Olympic spirit, and certainly does not chime with my feelings.

There are two things I like about this Olympics.

The first is to see new faces on TV of people I have not been told much about in the mainstream media, winning Gold and Silver medals. It is stunning that so many Brits are the best in the world at their chosen sports, and have reached that pinnacle without the media boring us all rigid with details of their private lives, the contents of their fridge and their behaviour on their last night out. Celebrity may sell papers, and personal lives exposed may be what many want, but there are people like me who want to read about what people are good at without having to wade through endless details about which supermarket they use and what they wear. Usually we hear about just two or three competitors who have a “profile” – and sometimes flop at their event. This time we are hearing about an army of great sportsmen and women who have the blessing of little profile, but are just great at what they do.

The second is to see just how many people from the UK can excel at what they do through their own graft and application. We are told that it’s the money and the coaches and the facilities. I am sure they help, but you can’t get away from the fact – and should not want to – that it is also down to the guts, determination, and will to succeed of a new generation of British sports people who will not take losing for an answer. No coach can make a person win a medal unless they make the mental commitment to wanting one, and put the time in to benefit from the coaching. So let’s hear it for our athletes.

The joy is no greater for me because we are taking more medals than Australia. Indeed, I apply a different kind of cricket test to who I support. If there is no Brit in a final then I would naturally support the runner from Jamaica or the swimmer from Australia, as I like to see the cricket playing countries of the world do well. I find I am always welcome in them, that we can do a lot of business in them, and that there is a natural camaraderie and friendship.They do not want to lecture me about the need to change the way my country is governed.

For those who do like joy at others’ failings it is more likely for Eurosceptics to be in our position well above all those EU countries that are constantly lecturing and hectoring us to be “better Europeans”, to learn from their success using the “European model”. Whenever I visit many continental countries I am made to defend my Euroscepticism and told that I am wrong to want a freer Europe with less government and less petty minded officiousness everywhere. The more they lecture me to love “European solidarity”, to sign Lisbon, and give away the remaining birthrights of our freedoms, the more I feel the opposite. I suspect many Brits who do harbour negative feelings are keener to beat some European countries than Australia.

Today brings the judgement of the Competition Commission on the BAA. As an early advocate of competitive airports for London, I look forward to being able to offer at least a couple of cheers for getting some of the way there at last. In an ideal world there would be different owners for each of the three BAA London airports at Heathrow, Stansted and Gatwick. Failing that, the Commission should demand that BAA chooses either to own Heathrow, the major airport, or the other two. Even requiring the sale of one would be progress.

Why does competition matter? The current level of service to airlines and to travelling passengers is not good enough, and the prices charged are high. If airlines and passengers have some choice of airport under competing managements, each airport will have to try harder to raise service standards and to cut prices. The current owners of BAA have substantial borrowings. New owners might have more borrowing capacity, to make faster and more substantial improvements that require capital outlays.

Improving the service requires new technology and new thinking. It requires collaboration with the government to raise their game over Passport Control and Security. How many times coming back into England do people face long queues to have their passports checked, simply because there are not enough staff present to deal with the numbers? For outbound passengers the delays are mainly at Security, where too few lines are offered and where the checks are clumsily managed. Passengers who do not know the routine are not asked to use their time in the line to prepare themselves for sending their belongings through the machines, so more time is wasted when they do reach the staff. Each time a disaster or attack occurs more retrospective checks are added on the odd assumption that the next attack will mimic the last one. Instead of using intelligence and detailed checking on people more likely to be terrorists, the system produces general checks on everyone. In contrast Customs where there are never queues target their searches and enquiries, choosing sensible random checks to supplement Intelligence driven thorough checks on people they suspect.

A new owner could seek a sensible security review with the government to seek to streamline the service and make it more effective at the same time. It would also allocate more space to the security checks function so we could have more lines for whatever checks are needed. Passport Control probably has enough space, it just needs more people some of the time. A new owner would talk to airlines about streamlining their check in systems, and raise the game on baggage handling. Above all it would provide more capacity, to cut wasted fuel and delays through aircraft having to circle or taxi awaiting a stand. That would be greener as well as better.

Let’s hope the Competition are bold. This could usher in a much needed improvement for the UK’s airports. Maybe they will even demand a similar disposal in Scotland. It will be interesting to see Scottish reactions. Usually MPs from Scotland favour monopolies rather than the “waste” of competition, and favour more rather than less government involvement in things. That is one of the reasons why Scotland remains poorer than England. Perhaps this time they will be offered a dose of something that works? Will they like it? Could it ever prove catching in the Northern air? It will be an interesting challenge for the Scottish economy, and for Labour struggling to explain the poor economic performance of Scotland compared to London .

The only refrain most Labour people in power seem to know is the demand for higher taxes.
No sooner has the Income Tax hike unravelled, than the Vehicle Excise Duty increase comes under fire.
Learning nothing from this, today we hear from the Local Government Minister that Councils should put up Council Car Park charges, as another way to tax motorists off the road.
Using a cloak of green policy and a further urge to nanny us into walking more, the true aim of this Minister is to tell the municipal raiders seeking more cash that they should get it direct from motorists, rather than demanding it in grant requiring the government to get it from motorists.
Any Council which puts Car Park charges and Council taxes up by more than inflation in current conditions is asking to be unpopular. People have had enough and cannot afford any more.
The Chancellor has had to rule out windfall taxes on utilities, urged by many in the Labour movement, and is thinking what to do about further noisy calls to tax the rich who are still here after the last round of taxes on rich foreigners who come to do business in London.
The economic problem the government faces is not the shortage of tax revenue, but the failure to spend all the tax revenue they do raise to best effect. The problem is not that the public sector spends too little, but that it wastes too much for the productive potential of the economy. So often the spending achieves the opposite of what they intend.
I am sure the government intended the huge sums they spent on Northern Rock to protect jobs in that northern business and to shore up the mortgage market. Instead, thanks to EU Competition rules, it does neither. The workforce will be more than halved, and the mortgage book will suffer a similar fate. Huge sums are being wasted on running down the very asset they bought.
Similarly, the move of Railtrack to the public sector Network Rail led to a huge surge in costs to deliver the same amount of track, running up massive borrowings which the markets regard as public sector borrowing (with a Treasury Guarantee) even if the government doesn’t think of them like that.
We now see the public sector is some disarray. This week there will be tube strikes, thanks to Union unhappiness about the pay regime following the financial problems within one of the government’s most expensive and absurd Public/Private Partnerships. The taxpayer was predictably left picking up the bills when it went wrong.
There will be a long period working through this government’s creative borrowings and expensive projects. I expect them to sign up as many as possible in the next few months, to tie hands of an incoming government. If they do it will represent a further deterioration in the UK’s already very overstretched public finances, and mean more grief sorting it all out in due course.

It comes as no surprise today to see a poll telling us that David Miliband would be no more successful against David Cameron than Gordon Brown. The problem is primarily economic. Mr Miliband has not put forward an alternative, is not a critic of the PM’s over his poor handling of the economy, and offers no reassurance to the British public that a government under his leadership would change things for the better.

When John Major was in a similar position to Gordon Brown, with the two Michaels (Heseltine and Portillo) widely tipped for his crown and endless speculation about their possible leadership bids, John Major told all of us in Cabinet to put up or shut up. I felt obliged to resign and take the argument to the country that I had been waging for years against his economic stewardship - as a fierce opponent of the ERM, the higher taxes he imposed and the failure to curb public spending. I had been putting (in confidence within government) a consistent alternative and felt I could not “shut up”. Major’s device stopped the two Michaels from prosecuting their leadership ambitions at that stage, and sealed their fate never to lead the party. Unfortunately John Major did not listen to the need for an alternative economic strategy, so that also sealed his.

Gordon Brown would be less at risk of a challenge if he tried what John Major successfully executed as a personal survival strategy as Leader. David Milliband would not run. He would not be able to show he had consistently opposed the mistaken economic policy the government has pursued. I find myself in agreement with both the government spin machine and the official Conservative one that David Miliband is neither the answer to Labour’s problems nor to the country’s. It shows a complete lack of political judgement to allow the story to emerge that Alan Milburn would be his Chancellor. That is no way to win more hearts and minds for a Leadership bid in the left inclining Labour party. It shows a lack of political maturity for someone to be counting so many chickens so soon.

NICE has been in the firing line recently. This body which has the duty to decide which drugs the NHS can buy and which are unsuitable on grounds of efficacy and cost has been caught in the crossfire. On one side the pharmaceutical companies have been running effective campaigns to claim NICE was wrong to reject their new drug. On the other side patient groups have started to lobby in ever more media friendly ways for spending on the latest drug that they hope will alleviate or cure their symptoms.

It is what you should expect when you have a near monopoly health service provider controlled by this particular group of politicians who live by the media. Because the NHS has such colossal power in its buying decisions drug companies have to throw everything in to selling to the single purchaser in the English market. They are very disappointed if it does not work.

Similarly, patient groups have come to realise with this government that only media friendly prominent lobbying is likely to get Ministers attention and possibly lead to a change of policy. One of the newer features of an MP’s life is a stream of invitations to attend functions organised by groups whose sole aim is to change the drug purchases and the medical and clinical protocols of the NHS for treating a particular disease. Most diseases now have their action group. They feel forced to behave like this, competing for the attention and money of Ministers in this heavily centralised top down system Labour has devised. Too much rests on the decisions of just a few people at the top, in the Ministry, and in NICE.

The government has invited people to make the NHS the central concern of modern politics. They have shown them how to lobby and use the media, and they have so centralised the NHS that people conclude the only thing that matters is to get to the Minister. They have ended up fashioning a boomerang that is beginning to hurt the very government that designed it as their own political weapon.

Labour believed that if they spent lots more on the NHS most of the problems would go away. If they centralised decisions they could guarantee good standards across the country and claim the credit for all that was going on. Such a strategy means they must also be to blame for things that are not working well, for the hospital infections, the delays and shortages,and to blame when people cannot get access to the drugs they think they need or the treatment that would make them better.

I have been meeting GPs during the summer break from Westminster. They complain to me that too many top down targets are making it far more difficult to serve their patients well. They dislike features of the very expensive centralised computer technology being introduced into their lives. They too are unhappy about the endless fiats from the centre and from too many judgements being made by too few people.

Labour had better be careful. Its attempt to play politics with the health issue, showing itself as the beneficent provider of more cash from the centre, is becoming a cause of angst with patient groups, with drug companies and with GPs. That is a very powerful alliance of interests to turn against you. Never has so much money been spent by so few people with such negative effects.

I awoke this morning to be reminded by the Today programme that 100 years ago a British explorer first struck oil in Iran, and began the dash to the Gulf to set up an oil industry.

My sources tell me that the first oil was found at Masjid-i-Suleiman on May 26th 1908 by George Reynolds, working under William Darcy’s licence. This discovery led to the formation of the Anglo Persian Oil company, which proved a very popular investment in 1909, subsequently to become BP.

In an era when it is fashionable to decry oil for its environmental impact as well as for its impact on the politics of the Middle East and the great powers, it is perhaps timely to remember the huge leap forward in our living standards which a hundred years of relatively cheap oil has brought us.

Oil as a fuel has kept us warm and powered our transport. As a chemical feedstock it has enabled scientists and chemical companies to develop flexible plastics, bitumens and other crucial products that play such a role in modern lifestyles.

Doubtless if mankind had not had oil to go to war about the bellicose would have found other pretexts and causes of dispute.

This week-end was the week-end of transformation in the UK’s feelings about the Olympics. Scepticism bred of Chinese politics and spin, of government targets and the government elite piling out to Bejing at our expense has been banished by the sheer guts, determination, skill and talent of Uk competitors. Many of them have decided to live their dream. Many of them have made their dreams come true. It is wonderful to read of their exploits. Congratulations to them all. Best wishes to all those still to compete. They are a reminder to everyone that if you really really want something, you might be able to obtain it - after you have put in hours, days, years of effort and concentration.