I have always been worried about British military intervention in Afghanistan. Over the last year I have been calling on the government to rethink its strategy. We have been at war for eight years. Many fine and brave soldiers are being killed. There has been a sense of drift over the direction and political strategy from the top.

It was never likely that the allies would commit sufficient troops to fight and win control of the whole of Afghanistan. It is a vast country, and every village and hamlet may offer resistance, given the mobility and penetration of the Taliban. The aim should not be to conquer and then garrison this country with foreign armies. The Russians showed how difficult the task was when they tried.

It appears from the recent statements of President Karzai and Prime Minister Brown that any idea of military victory by foreign armies has now been shelved. The new strategy which is emerging is a welcome improvement on the old “win and control”. There is now a proposed timetable of five years to transfer all security tasks from allied troops to local personnel in Afghanistan.

So far so good. The questions to raise now are these. Why does it need five years to train the Afghan army and police to the point where they can do the job? Will our troops in the meantime be taken off fighting duties and put onto training duties, with local forces leading the attack on the insurgents? If not, how long will it be before they can?

Why do we now think this present government, elected in such a contentious way, can command the support of the people of Afghanistan and why is it worthy or our support backed by the lives of our troops? Will President Karzai’s own new strategy include a successful political plan to win over the many disparate groups in Afghanistan who currently harbour, encourage or put up with the insurgents? All those who know Afghanistan better than I do tell me it is tribal and local in nature. Local forces and loyalties need to be respected and harnessed against the insurgents. This is more difficult to do if the central government appears corrupt, divisive or oppressive to the rest of the country.

Last week was a watershed in British politics. It was a most significant week for all our futures.

There, in the middle of a Queen’s speech widely criticised for being thin and highly political, was a Bill to curb the UK’s ballooning budget deficit.

Let’s forget the absurdity of a government seeking to legislate to control its own budget. They can control the deficit in the normal way by choosing spending and taxing plans that are closer together than the current ones. We need not ask if they plan for the Chancellor to go to prison if he borrows too much.

The importance of this Bill is the recognition by this high spending high borrowing government that the party is almost over. After months of being told we need to spend, spend, spend our way out of recession, after being told the choice at the next election is between Labour “investment” and “Tory cuts”, we are now told whoever wins the election it will be cut, cut and cut again for ten years.

The Budget Bill will require the government to halve the deficit in the first four years, and reduce it every year thereafter. That means that in the first four years after the Bill the deficit has to be cut by around £100 billion or £2500 for every adult in the country.

There are only two ways this can be done. You can cut spending or you can raise taxes. As I do not think our country is undertaxed, I see it has to be done by spending less. If you tried to do it by taxing incomes and businesses more, you might end up in a vicious circle, with static or falling revenues as many companies pulled out and entrepreneurial individuals went elsewhere.

Cutting £100 billion out of a £700 billion budget is larger than anything the public sector has ever tried in my lifetime by a mile. It is not larger as a percentage than many companies have had to do to get through the recession. It is less proportionately than I have just done on the tiny part of the public sector under my control. It means doing more for less in the crucial areas like schools and hospitals, and doing less for much less in the less important areas. It certainly means a big attack on the overheads of government itself, cutting down the numerous quangos, central departments and local Council fiefdoms that have grown in the years of excess.

This Bill, and the huge and growing debt overhang that prompted it, will dominate British politics for the next decade. Gone are the easy choices. The jobs of Ministers, MPs and Councillors will be about making hard choices between spending options, and driving cost down and value and quality up remorselessly as we try to stretch every pound.

As international bodies have made clear, the UK is in a league of its own among the larger rich countries when it comes to borrowing and money printing. Far from speeding our recovery, we have stayed longer in recession than the other major economies. A sustainable recovery requires discipline over public spending and borrowing. If we do not make the changes soon, the markets will force them on us. If we do not curb the deficit we will end up with higher interest rates and higher inflation than our competitors. Our price rises are already far faster than the main economies of the world, and taking off into the new year. Last month inflation shot up by 0.6%, the fastest for 20 years. Expect more of that in the next four months, as VAT goes up and the effects of higher commodity prices flow through. We are taking too much risk with our future. That’s why we need new lower budgets, to back up this Budget Bill.

One by one the excessive borrowing bubbles are punctured. Now everyone knows the banks overdid the borrowing and lending in the US and the UK. All are wise in retrospect over sub prime mortgages. Most now see that Ireland and the Baltic states overdid the borrowing. Now all recognise that Dubai built its property on too much borrowed money.

So the question is, why isn’t everyone equally wise over the UK government borrowing too much? How many more warnings will it take? Why do some commentators still seem to think the way to solve a crisis brought on by the private sector indulging in too much credit can be resolved by the public sector borrowing too much?

The temporary answer is printing money. The Bank’s creation of money has allowed them to keep interest rates on government borrowing low, and helped them raise the huge sums the government needs to borrow this year. More should be asking, what will happen to interest rates and to the sums the government still needs to borrow when the printing stops, as it will have to do sometime next year?

It is true they have built into the regulatory framework of the banks the continued need for them to buy more government bonds – to lend more to the government on reasonable terms. This will mean continued distortions, with the government enjoying more favoured access to credit than the hard pressed private sector.

The irony of their money go round is acute. Because the credit is pre-empted by the government the private sector remains operating at low levels of activity. This then leads the government to say it needs to spend even more to provide additional stimulus, so requiring the government to borrow even more. This in turn pre-empts more credit and perpetuates the two tier interest rate and credit structure. Far from encouraging a smooth and sustainable recovery, this is storing up trouble for the future. It has also slowed down the recovery. The Uk is going to be about the last out of the recession.

The government deficit is the elephant in the room.One day it will become clear that it is not affordable, that it is impeding private sector recovery. Then most will come to realise what should be obvious in advance.

There is clearly an appetite on this site for reasoned analysis of global warming theory and the policies that flow from it. There are now several different camps of sceptics setting out their thoughts:

1. Global warming sceptics. This group argues from recent temperature data that the world has not been warming for the last ten years, despite the theory and predictions of the models. They also point out that there have been cold periods during periods of industrialisation and rising population when man made carbon outputs were rising, most recently from the early 1940s for about 30 years. They argue that there is climate change but it is difficult to predict and is unlikely to succumb to human control. There has been violent cliomate change in the past before mankind was born.

2. People who do not believe that man made carbon causes warming. They argue the world may well be warming. They argue that man made carbon is tiny compared to natural carbon dioxide levels. There have been long periods prior to mankind’s efforts when the world has generated high levels of carbon dioxide. They suggest mankind cannot control carbon dioxide levels and/or that it is not established that these levels cause warming.

3. Lawsonists. Nigel lawson and his followers argue that they do not know whether the science is right or wrong. They go on to say even if the global warming theory is scientifcally correct, it makes no sense to spend large sums on trying to stop the rise in temperature. The correct economic response is to spend lesser sums on adapting our planet to the new circumstances as and when it warms. The economics is based on the likely fact that future generations worldwide will be richer than we are and more inventive, so we only need spend on those things – water supply/flood protection – that need immediate treatment.

4. Pragmatists. They argue there is no point trying to prove the science wrong, given the force of the scientific estalishment on this issue. Time will eventually resolve it one way or the other. The thing to do is to plan for the likely effects of warming, and spend money appropriately on tackling the consequences.

These four groups are pitted against the funadamentalist global warmers. They believe the climate will warm. They believe this is caused by man made carbon emissions. They believe it must be prevented by creating less carbon, rather than by tackling the consequences. This group has both left and right wing advocates, with the more free market people wanting to do more by tax incentives and working with human nature, whilst the left of centre advocates favour more heavy handed tax and regulatory responses to change lifestyles. Global warming theory requires you believe
a)The world is warming. It would help if it warmed continuously in proportion to man made carbon increases.
b) Warming is caused by extra CO2, rather than by sunspot cycles, changes in weather and wind patterns etc.
c) The extra CO2 that matters is man made, not natural in origin
d) The right response is to cut man made carbon emissions massively to stop warming.

I have been working in Parliament and outside to try to ensure policy responses make sense anyway. I think it is the case that tackling consequences as and when they arise is the cheaper and more sensible approach. Reducing carbon output worldwide is a political impossibility in the next few years , given the attitudes and needs of large countries like China and India. We are clearly short of water in the east of the UK,and should put in more capacity now to handle the rise in population and in individual demand. There is an enhanced flood risk, thanks mainly to too much building on flood plain. We need to put in more anti flood measures. There is a sea risk, especially to the much battered east coast. We need to be planning the next Thames barrier and other measures now.

We also need to work toward energy self sufficiency and to more fuel efficient processes in all that we do. It is best to do it by tax incentive rather than by higher taxes and more regulations.

It was good of some British footballers to go to the aid of property developers and the Dubai government when they started selling their Palm Jumeirah development at fancy prices. It was a way of recycling their cash through the world economy. Their private money is their concern, and let’s hope they are at least enjoying the sunshine. Well done to any of them who got out before the Dubai property bubble burst.

The more worrying issue, is will British taxpayers be expected to bail out this development as well? Has RBS lent large sums to the government of Dubai and its property and development arms? If so, what are the prospects for getting the money back? How long is the moratorium going to be on payments? Will we lose interest income permanently? Might we lose some or all of the capital?

The shock that the Dubai announcement offered to world markets is a timely reminder that the banking crisis is not yet resolved. We know that governments will stand behind the main banks, so depositors need not panic in these cases. We also know that the banks are sitting on a whole series of dodgy loans. The extra shock in the case of Dubai is to be reminded that sovereign risk, lending to governments, does not prevent non payment or delayed payment. In our case in the Uk that means further possible losses for taxpayers, the owners of RBS.

Quite why the Uk government wanted to own RBS and take responsibility for losses on vainglorious overseas projects is beyond me. The fact that the UK and some other western governments do so is almost an incitement to other governments around the world to cut loose from their crazier commitments and let western governments pick up the bill for the losses. If the Uk government had done the minimum to prevent a run on UK deposits, whilst forcing restructuring, asset sales and cost reductions on the bad banks, we would be in a much stronger position by now.

Instead, owning banks will be one long parade of embarrassments. We have had several over bankers pay and bonuses, which continue even under nationalised management. Now we have embarrassing losses, where the public will see that some of RBS’s large loans were for bad projects in far away places. Parliament needs a statement about this on Monday. Doubtless Ministers will ignore yet another case of wasted public money, as it is too embarrassing to admit UK taxpayers are standing treat for luxury property in Dubai.

PS I have just read a piece by Mark Bathgate ( OF Tweeddale) who has looked up the figures. UK banks have lent a massive $50 billion to the UAE/Dubai. We still do not have the figures for how much state bank exposure there is within this to the Dubai property schemes, but they represent a large proportion of total UAE/Dubai debt.

In Australia the Opposition party has just plunged itself into a huge split, with senior resignations against the Leader’s policy of backing an emissions trading scheme announced by the government. Some of the dissenters do not agree with the science on which global warming theory is based, others object to the extra costs, taxes and regulations in the government’s response to the issue.

It would be helpful if in the UK there was a proper enquiry into what has been happening to the evidence and its interpretation at East Anglia. Where public money is being spent on scientific research we need to be assured the standards and independence of the research are worthy of public support.

On the other side of the world the first day of the Commonwealth Heads of Government Conference is being turned over into a sherpa session for the Copenhagen summit seeking a world agreement on carbon reductions. It is likely to bring out the sharp divide between lower income countries wishing to grow faster, and higher income countries wishing to defend their livign standards. The one group will say they need to be able to grow their carbon outputs as their economies grow, just as the current advanced countries did in previous years. The advanced countries will say there are limits to how much they can cut their carbon outputs without damaging their competitiveness and their living standards. Western people like their cars and high speed trains, their central heating and air conditioning.

The USA and China have come up with their own compromise on these issues. The USA has offered 17% off its 2005 levels by 2020. Their recent recession and slower growth from here will help that, as would milder winters. China has proposed a bigger cut in the additional emissions its growth will generate, which will still mean China makes a very large overall increase in its output of carbon given the fast growth that most still forecast for its economy.

My view is straightforward. I think pursuing alternative energy sources to oil and gas makes sense in a world of limited fossil fuels. Increasing energy efficiency and reducing harmful emissions to the atmosphere and to the water systems is good as we prefer to live with clean air and pollution free rivers and lakes. A good test on whether a green proposal makes sense or not is to ask does it make the process cheaper or cleaner? Good green strategies save you money and make the world a better place.

The only effective carbon reduction strategy the UK has followed in the last twenty years was electricity privatisation. That led to an end to new coal power stations and their replacement by much more fuel efficient combined cycle gas power stations. I was pleased to be one of the main architects of that policy, as it cut prices as well as cutting carbon, and was designed to give customers and business a better deal. It is amusing to see Labour dining out on that policy, constantly reminding us we have hit our Kyoto targets without remembering the policy that enabled us to do so, which they opposed at the time.

Wokingham MP John Redwood has co-authored a new pamphlet for The Bow Group which highlights the large sums of money spent by Government departments on administration and bureaucracy.

“More for Less: Cutting Public Spending, Protecting Public Services” looks at the annual accounts for the main Whitehall departments, which were published just before the summer recess. The pamphlet uses the Government’s own figures to identify what they are spending on staffing, human resources, pensions and programme costs, how much they think they will have to cut from each department’s budget to balance the books, and what can be done to deliver great efficiencies and reduce the cost of public provision without harming essential front line public services.

Among some of the points highlighted in the pamphlet are the following:

* The Government has over the last year gone on a spending splurge for the banks in the form of quantitative easing, bank guarantees, equity purchases, borrowing and bailouts totalling more than £750 billion. By way of comparison, the annual NHS budget is £117 billion.

* When the Conservative Party suggested that public spending could be reduced by £34 billion in 2005, Alistair Darling claimed this would be the equivalent of sacking “every teacher, every GP and every nurse in the country”. Yet the Government are now planning their own cuts of £35 billion in 2009-10 as part of a value for money programme.

* Going through the accounts of the main Whitehall departments, certain themes are common to them all. They all have too many quangos, expensive top staff, and bloated advertising and spin budgets. The Department for Communities and Local Government has 75 members of staff employed in communications, and 123 staff earning more than £100,000 a year. The Home Office employs 92 staff whose function is “unknown”.

* The public sector pensions bill dwarves our existing financial commitments. The civil service pensions bill totals £7.1 billion, while unfunded public sector schemes and deficits in funded public sector schemes are now around £1 trillion – on top of all our existing hundreds of billions in debt and obligations.

* There is a big gap between the best of the public sector and the best of the private sector. The error rates in some Whitehall departments are very high. The average number of staff sick days per year in the private sector is three; in the DWP it is nine and in the Ministry of Justice it is ten.

* There is much that an incoming Government could do on its first day in office to curb spending and instil a more responsible attitude towards taxpayers’ money in Whitehall, such as freezing external recruitment, slimming down senior management structures, halving the advertising budget, banning consultancy contracts and scrapping wasteful and unnecessary programme spending.

You can download “More for Less: Cutting Public Spending, Protecting Public Services” by John Redwood and Carl Thomson by clicking here.

Last night after a Newsnight interview the BBC asked me how long I thought we would live with very low interest rates. I had to explain that it was only the public sector that benefitted from the ultra low rates, thanks to the government money go round. They print the money to effectively buy the bonds from themselves on unrealistic rates of interest. They are likely to try to keep this running until the election. Interest charges for overdrafts and loans to business are high. Bank margins are very high on new business. Mortgages are no longer available at a half per cent over base. Our damaged banks are under a regulatory cosh to spend less and save more, so they see no need to be competitive on the price and availabilty of credit to the private sector.

This morning I awoke to another regulator telling me how much water companies could charge for the next five years. This item was followed by opinions on how bankers high pay should be controlled by a financial regulator. In my drowsiness I thought I had awoken to the Soviet inspired system. Then I realised it is still 2009 and it is the UK.

We are all suffering from the failure to run a strong competition policy in crucial areas. If successive governments had been brave enough to make water companies compete, by now we would have more cheaper better water. A competitive industry would charge less and offer more, just as telecoms and energy did when they were forced to accept competition. Instead we have a monopolists with an excuse. Our sewers may flood you because the Regulator did not leave the companies enough money for investment in their view. They will stop you watering your garden in the summer when its hot, but you can water all you like in this very wet autumn. They will put your bill up to the maximum the Regulator allows. It’s high time we allowed new competitors to use the main pipes and sell us a better service.

It’s an even worse story with the banks.The Competition authorities did not just fail to put enough competition in. They with the active encouragement or insistence of the government allowed takeover after takeover, creating a couple of mega banks that were too big to fail and have proved very epxensive to bail, given the cack handed way the government has decided to do it.

If we want enough good quality water at an affordable price we need water competition. As we need banks that will lend to sensible businesses and individuals at realistic interest rates we need banking competition to be greatly strengthened. The government has it in its power to do that. It should start splitting up RBS and Lloyds HBOS now. Yesterday I checked the mortgage rates against a backdrop of an official rate of interest of 0.5%. The best offer in the first big bank I went into was 3%, on up to just 60% of the value of the property. There was a large arrangement fee of almost £1000 to allow an apparent rate discount in the early months.

This morning Paul Myners gave a faultless government spin performance on the Today programme. His main concern was to stress that the government and Bank of England had fully informed the Lloyds Board that HBOS was receiving special loans from the Bank of England to see it through a difficult time, when Lloyds was considering purchase of HBOS.

The BBC interview was feeble. The interviewer pressed him on why we hadn’t been told earlier that the Bank of England was making short term loans available to RBS and HBOS of a large scale, but failed to press him on the much more important issues of

1 How is the government going to halve the deficit over four years if still in office? What tax increases and spending cuts will this require to plug this £100 billion black hole?
2. Why did the government recommend the purchase of HBOS by Lloyds, knowing what it did about HBOS, and the purchase of shares in both RBS and the expanded Lloyds by taxpayers? Why didn’t it just prop the banks with short term secret loans and demand privately that they raised capital, sold assets, cut costs and did whatever it took to sort themselves out?

Paul Myners not only knows all the government spin lines and says them well, but also knows where they are skating on very thin ice. The ice is thinnest over these two issues.

I have no problem with the Bank of Engand’s actions in lending substantial sums to a couple of banks in distress. They were right to do so, and right to do so in private. If they had made it public it might have triggered a run on either or both. During the crisis I advocated using the lender of last resort facilities for just such a purpose, and recommended that this be done in confidence. There is a debate to be had about how long after this happened it should be properly reported to taxpayers. As the loans were lent at a commercial rate, against double security for taxpayers, and were repaid within two months, a delay of thirteen months in telling us does seem excessive.

I have been very tolerant of UKIP contributors on this site, allowing them to make their case and to attack the Conservatives as they choose. I have done so because I do agree that we need to prevent a European supersate enveloping Britiain and undermining our inheritance of democratic self government and because I believe in democratic exchanges. Unfortunately, the more I read their words the more I conclude that they are part of the problem, not part of the solution.

Their case is based on two falsehoods. The first is that a vote for UKIP will take the UK out of the EU. It never has, and on current polls is miles away from doing so. To make that a honest proposition UKIP would need to be polling 40-45%. It is currently polling 3%. Far from strengthening the Eurosceptic cause, this specialist Eurosceptic party claims an embarrassingly small portion of the vote allowing federalists to say it proves people are not very worried about the issue. They ignore the much larger Eurosceptic vote accruing to the Conservatives, as this is a broadly based party that has a following on many issues.

The second is the proposition that a vote for UKIP will force the Conservatives to be more Eurosceptic. Instead UKIP targets mainly Conservatives. If it detaches the strongest Eurosceptics from the Conservative party to itself, far from making the Conservative party more Eurosceptic it makes it slightly less Eurosceptic in its membership each time it does it. By showing how little support its cause has it fails to bully the Conservative leadership, who see most of the extra votes they need to win a General Election in the poll findings of the Greens, the Lib Dems and Labour.

The UKIP experiment aimed to detach leading Eurosceptic MPs to itself in the Commons. The Eurosceptic cause has found its strongest advocates in Conservative MPs like Bill Cash, Philip Davies and David Heathcote Amory. None of these has joined UKIP. None of them are “careerists,” as UKIP likes to sugggest of any Conservative who fails to defect. UKIP needs to think again, instead of attacking the people most like to further its aim of power back from Brussels. There is a democractic Eurosceptic opposition to the Labour and Liberal Democrat federalists in the Commons. It is not UKIP. Why doesn’t UKIP turn up the heat on the federalists who have done most to damage our constitution, the federalists in the current UK government?

Today George Osborne proposes cuts in departmental budgets for their energy costs, to make them provide their service whilst wasting less energy. It is a modest and practical proposal, with useful savings. It is something which many private sector companies have been doing for years.

Labour’s response is revealing. They first complain that this is just a budget cut. They still do not get it. They still do not see we need some budget cuts. They would rather waste energy in the public sector than save the public some money. They do not want to see their public sector fiefdoms reduced, even by saving energy.

Secondly, they say he has not told us how to do it. Can it be true that after all these years lecturing the rest of us on how we ust use less energy, burn less fossil fuel, government itself has no clue on what it can do to improve its own position? Dosn’t that speak volumes about the triumph of posturing over doing, the rule of spin and lecturing others over any move towards better administration. I have set out before practical greenery which results in doing the same for less. Let me briefly remind Ministers.

You turn the lights off when no-one is in the room. You put in sensors and automatic systems in public areas. In the office building where I work the corridor lights stay on all night and are still ablaze when I arrive in the morning. You have room or area controls for heating. So many public offices and buildings heat too much of the space to too high a temperature for too long a period in winter, and sometimes cool it too much in summer where air conditioning has been fitted.You review the efficiency of your heating systems and boilers, put in better insulation and concentrate the use of your buildings in areas that can be heated most cheaply and easily.

In private business I have found it possible to save significant sums by greening in this way. Why does this government find it so difficult? Why do they keep on about the priority of tackling global warming, if they have no intention of doing the mundane things they need to do to cut their own enegry use? Could it be that they so hate “cuts” that they refuse to make sensible cuts that both save energy and save the public money? So much of the public sector has not started to take enegry efficiency seriously in the way leading companies have done.

Click here to view the introduction.
Click here to view the second part of the video.
Click here to view the third part of the video.
Click here to view the fourth part of the video.
Click here to view the conclusion of the seminar.

The latest Mori poll shows the Conservative lead over Labour down to 6%. Since September on this poll Labour has gained and the Lib dems have lost support.

The poll shows the two and half main parties accounting for just 85% of the firm voting intentions. 15% favoured others. This included 3% for Scottish and Welsh nationalists, 3% for Greens, 3% for UKIP and 2% for BNP.

Any sensible person has been saying for months that a Conservative victory cannot be assumed, given the large number of seats the Conservatives need to win and the movement of political views away from the main parties that has been going on for some time. This was always going to be a very hard fought election, with scope for an indecisive result which shifts power from electors to the politicians in a hung Parliament.

What these polls also show is that UKIP and the Greens are unlikely to win any seats. Their prospective voters can back their chosen cause, or they can vote for either Labour or the Conservatives to help choose the government. If they do the former they will have to accept whatever others decide to do. The nationalist vote is concentrated so they have more chance of winning something even under a First Past the Post system.

The week-end press as always had been well briefed by the government. The spin lines for the next few months in the run up to the election are becoming clear.

The government recognises dwindling support for the war in Afghanistan. They will use a conference in the new year to highlight their new policy to transfer responsibility for security from British troops to local forces, and try to find a way of signalling actual troop reductions before the end of 2010. They will hope the Conservatives demand more troops and more commitment as a contrast.

The government sees that inflation taking off over the last quarter of this year and the first quarter of next year could alarm people. They are out in force complaining that anyone who mentions this is an “inflationist” or an old fashioned “banker”. The media is told that inflation will spike near to the election and then fall away again, so there is no need to worry. They gloss over the fact that at a time when private sector incomes are only going up 1% a year, inflation at the forecast 2.7% represents an unpleasant cut in living standards, especially for the lower paid.

The government is hoping some positive economic figures will turn up before the election. Given the earlier and faster recovery elsewhere in the world, the level of interest rates and the amount of money they have printed it would be surprising if they didn’t. Meanwhile we will all be reassured that inflation will come down again and the troops will come home, even if we can’t see that at the time of the election. The problem is that at some point next year whoever is in power it will become obvious that we cannot carry on borrowing such huge sums at such low rates of interest. Then tough choices have to made. If we delay those choices too long they may be forced on us by the markets.

The briefing for some weeks had been suggesting there is not going to be a great “deal to save the world” in Copenhagen. The President, worried over the economy, scarred by the health battle, and dithering over Afghanistan, may not be able to deliver votes for more green taxes and regulation from his Democratic majority in both houses. It felt as if he was shying away from opening up another difficult political front.

Now the other leaders have put pressure on him and on China. They say they will turn up at Copenhagen to try to get a deal after all. It will be a fascinating few weeks, to see how strong the President’s commitment is, and to see if he can be any more decisive on this issue which he used freely as part of his campaign. I guess the measures he thought it needed now poll badly. Higher petrol prices and higher fuel prices in the middle of a recession are unlikely to go down well.

The argument is swinging in the winds of public opinion. Even the BBC this morning ran a piece about the science of global warming, allowing Lord Lawson to point out there has been no warming for the last ten years. The representative from the University of East Anglia, now famous on the web for email exchanges on this subject, said he agreed with Lord Lawson, but went on to say it still confirmed the global warming theory. The emailers had apparently choosen their words foolishly, but he remained sure the evidence was strong with or without selection. This kind of incident does not make it easier for the scientific establishment to tackle the considerable scepticism of the public.

Today’s lead story in the Sunday Times shows Labour splits comes form the EU. The wish to put Mr Miliband into the EU job caused others to jostle for promotion. His refusal to move has caused trouble around the reshuffle. Lord Mandelson is in a strong position. Will he get what he wants? How will the others react?

Many contributors to this blog are badly shaken by the way the Lisbon Treaty has been forced upon us and all chance of a referendum denied, when all three main political parties promised one in 2005. I am asked what should they do. Some advise me to leave the Conservatives and join UKIP. Let me explain why I think the only thing to do is to support the Conservatives.

My readers should understand two things about me. Firstly,I believe in our country and its long march to democratic self government. The story of England was until 1972 the story of the enfranchisement of the working man and woman, the democratisation of political and economic power. That became the story of other parts of the UK as they joined our Union. It is a moving tale, and one which has always been in my heart. I voted “No” as a young Conservative County Councillor in 1975 when we had a referendum on the “Common market” because I read the Treaty of Rome and saw they had much more in mind than the Common market UK politicians were recommending to us. I have always since accepted the democratic view of the British people that they wished to stay in “Europe”, but always believed what most thought they were voting for was a set of trading arrangements, not a superstate. I have fought every inch of the way against successive Treaties that wished to extend Brussels power, and above all against the single currency which was the guts of the Maastricht Treaty. Secondly, I did not stand as an MP because I need a job and it is the only one I could do. I do it because I regard it as privilege to represent people, and because I want to make a contribution to the recovery of our country in several senses.

On Friday night I spoke at a Conservative Association dinner. There were 130 people there according to the organisers, a larger crowd than they have been used to in recent years. When I went round all the tables during the dinner I asked each one what was the most important issue to them. Every table said it was the unacceptable power of the EU and the appointment of the President and High Representative. When I asked what else mattered they said the Credit Crunch, unemployment, poverty, bad state schools,high taxes, the Council Tax increases and even open primaries. So my frst message to those Eurosceptics outside the Tory tent is you would have a lot in common with the membership, as like you they think the damage done to our democratic self government is fundamental.

Why have so many strong Eurosceptics joined or remained within the Conservative party? Our thinking is as follows. A re-elected Labour government would carry on the sell out. They after all have given more power away in 12 years than all previous governments over a much longer time period. They signed Nice, Amsterdam and Lisbon. So it is most important to stop Labour winning. As bad would be a Lib Dem/Labour coalition, as the Lib Dems are Euroenthusiasts, keen on the whole plan of more central European power and more regional government power, putting our national democracy into a nut cracker. It could also be bad to have a Lib Dem/Conservative coalition for all sorts of reasons, but especially for European policy where Lib Dem federalists would be pressing the Conservatives not to seek the return of powers or to resist further power grabs.

Some Eurosceptics outside the main parties are so disillusioned they say Eurosceptics should support no party. The trouble with that is abstention looks like apathy or acceptance. It is not a clear voice of protest, so no sensible Eurosceptic would do that.

That leaves supporting the Conservatives or supporting UKIP. The polls indicate that UKIP will come nowhere near winning a single Westminster seat. Whilst many of us may be concerned about the EU issue, most voters are more concerned about jobs, taxes, schools and what they see as other domestic issues. UKIP’s strategy is mainly to pressurise the Tories by targetting the Tories. It is the reverse of a helpful strategy for Euroscepticism. If they put their best known people into high profile campaigns against the main federalists, the Lib Dem and Labour leaders who have got us into the current EU mess, I could understand it. If they pinned down Lib/Lab figures whilst Eurosceptic Conservatives got on with winning the Con/Lab marginals that would be helpful. Instead the idea seems to be to try to prevent maybe 20 Conservatives winning marginals, delivering them instead to federalists. When you add in UKIP’s difficulty in keeping MEPs in their party and out of trouble, their difficulty in settling down with one leader and it is difficult to see why any true Eurosceptic would think they are our salavation.

Will David Cameron and William Hague give strong Eurosceptics everything they want? No, because they do not wish to undertake unilateral withdrawal from the whole thing. The best we can hope for is some reversal of direction, after years of a strong flow of powers to Brussels from the UK. If we do not take this oppotunity to have a Eurosceptic majority in the Commons to represent the Eurosceptic majority in the country, we should expect more of the same that has so saddened some and maddened others over the last decade. We need even more Eurosceptics within the Conseravtive party, to press from within for a strong renegotiation of powers, and for a clear and effective reassertion of British sovereignty through UK legislation.

Underneath the crude politics of the Queen’s speech were two great watersheds. This week was the passing of an era.

The government seems to have moved on from any idea that we can win a war in Afghanistan by pitching troops into battle to win and hold territory. The impossibility of putting in enough troops to garrison that vast and difficult country has at last dawned on Ministers. Whatever they may say, the hunt is now on for an honourable exit that can leave us with some reason for past sacrifice and with some hope for the future. Even if reinforcements are sent in the short term, the remit will be fundamentally different. The aim will be to support the civilian power and to reinforce a political strategy rather than to win and hold territory. The West needs to talk more and fight less in the Middle East. It now also needs to pursue its own self sufficiency in energy to curtail the power of King Oil.

The second even starker watershed was the one on public spending and borrowing created by the government’s Deficit Reduction Bill. This Bill has two origins. The first is the Treasury led market imperative. The deficit sums are so implausible that it is only a matter of time before the markets force up interest rates on government debt. Even this government will have to stop the printing presses soon. The Treasury is seeking to reassure that sometime soon the government will take its deficit in hand and start to return it to more realistic levels. The second is the manic politics of this dying administration. Labour strategists think it would be a good idea to force the Tories hands, to smoke them out, to put them in a straightjacket for a future Parliament should they win. The government wants Conservatives to have to run on Labour spending plans for the next Parliament so they can portray them as the party of cuts.

It is one of the stupidest attempts at digging a poltical trap I have ever seen them attempt. No incoming Conservative government need feel bound by Labour spending plans, even if they are set out in law. All would expect a Conservative Chancellor, if one is victorious, to review the public finances urgently and produce a new set of spending plans tailored to the needs of the economy, the fears of the markets and the priorities of the new Parliament. It would be a minor matter to repeal or amend any Budget Law he inherits as part of his first Budget, with the Finance Bill offering the obvious legislative route to put things back on a more normal budget footing. There is no need for a Tory to walk into Labour’s trap. It can be sidestepped by behaving normally.

It will instead prove to be a trap for Labour. Now the Opposition does not need to have its own answer to the question how big need the cuts be. It will be able to say that halving the deficit by spending cuts is a necessary good start recommended by the government to its successor. These can rightly be seen as Labour cuts on Labour spending plans. Some of the balance of the deficit may be curbed by economic recovery. The Conservatives may wish to shift the priorities when they see the small print of the Labour plans in the Pre Budget statement. They need not incur Labour’s wrath by suggesting a different total, as Labour itself is proposing almost £100 billion of spending cuts or tax increases.

Dear Shareholder,

What a great week. We were able to announce record October borrowing levels, and a big leap in inflation. Our strategy of never knowingly underborrowed is going so well. You know you can rely on us to waste more and spend more than anyone else in the market.

Even better news was the coup I managed at the European sales conference with other state companies. We pretended to want to make our former CEO of UK PLC boss of the whole European outfit. That got them scared. He was even more disliked over there than here, and the last thing they wanted was more of what we had to put up with for ten long years when he was running the company. Do you remember those dark days? As Finance Director I had to follow some strange rules about borrowing and turn down some requests for more spending, whilst finding the money for dangerous missions in the Middle East.

So when they were all wound up about the possible return of my predecessor, I said we could be persuaded not to press his suit if we could be given the job of Overseas Director instead. They fell for it. So now we have been able to promote one of our former sales ladies to this role. I am sure having a representative placed in the higher escelons of the European structure will help us in our task of spending and borrowing more. I am pleased to say our financial contributions to the European joint venture are rising strongly, which helps with the expansionary budgets we are setting. They are masters at wasting other people’s money. I do so admire that in them.

Yours in delight

CEO

I was asked again yesterday on this site what I would do to cut the deficit.

Just to recap, my advice to the government for this year has included:

1. No more banking subsidies – saving £31 billion cash and £8 billion contigent liability
2. Public sector wage freeze – saves around £6 billion
3. Recruitment ban on all public sector jobs other than front line ones like teachers, nurses and doctors – saves around £5 billion by end of first year
4. Scrapping ID cards, regional government and some other quango overheads- £4 billion
5. Not cutting the VAT rate – collects £12.5 bn more revenue

Total saving £66.5bn or one third of the current deficit. In following years there need to be bigger cuts in the size of the government overhead, welfare reform to cut the cost of benefits by getting mroe people back to work, and substantial reductions in local spending along the Fulham and Hammersmith lines.