I was delighted to see there are readers now from 175 countries worldwide. All are welcome. A happy and successful new year to all of you.

We were promised no more boom and bust. We were told Labour would be kind to manufacturing. It would all be so much better than the Thatcher years.

We know the claim of no more Boom and Bust proved to be the most absurd. We lurched from super boom to mega bust. What is less well known is just how bad a decade it has been overall, despite the boom. In the noughties the Uk economy grew at only 1.7% per annum on average, well below the post war consensus view of a trend rate of growth of 2.5%, and even further below Mr Brown’s estimate that he had raised the trend rate of growth to 2.75%. The UK economy grew more slowly overall during the noughties than it had under the Conservatives in either the eighties or the nineties.

Manufacturing fared particularly badly. In the 1980s manufacturing output expanded at 1% per annum on average across the whole decade. In the noughties it contracted at an average rate of 1.2% per annum. In other words manufacturing did better by around one quarter in the 1980s than it did in the noughties. This is the opposite of the misleading Labour spin about the contrast between the two governments and the two decades. I remember running a campaign to say how Labour would be bad for business and bad for manufacturing when I shadowed the DTI at the end of the 1990s. Even I would not have put such pessimistic figures on the outturn for the whole decade, though it was obvious that the government’s lethal mix of bad monetary policy, too much regulation and damaging tax policies was bound to do harm.

The government has also failed to help its heartlands. I am sure they wanted to balance things up, and get the North and West growing faster to catch up with living standards in London and the south. Instead, as we pointed out in the Economic Competitiveness Report in 2007, the gap between London and the rest grew ever wider in the Labour years. In the 1990s London grew at 2.9% each year on average, compared to 2.2% for the UK as a whole. In the noughties London grew at 2.7%, whilst the UK average slumped to 1.7%. In other words, over the last ten years, London has seen an improvement of more than one tenth in its living standards that the rest of the country has not enjoyed, despite starting from a much higher average income level.

The UK faces trouble ahead. The growth figures of the expiring decade, poor as they are, are still flattered by the artificial bubble based on borrowing too much in both the private and public sectors. Everyone, including the government, now accepts that the levels of debt have to be brought down. As we deflate demand by repaying borrowings, so we should expect a lower rate of growth. I forecast a fall in the trend rate of growth from the Treasury’s 2.75% and the post war average of around 2.5%, to something under 2%, maybe to 1.5%, in the Economic Competitiveness report published before the crash. That now looks optimistic. We will be doing well if in the decade ahead we grow at 1.5%, slightly below the 1.7% achieved in the noughties with the benefit of all that extra borrowing and artificially created money.

The UK economy needs a dose of realism. It needs to curb public borrowing by controlling public spending. It needs to boost the productivity of the public sector substantially, so we do more with less. It needs to offer a more competitive tax and regulation package to business, so it is better made in the UK. We need to work harder and export more as a nation. We need to start earning our way in the world.

This Christmas and New Year has seen the end of the fairy tale It is still possible to go into the shops and buy great products at low prices, made by the ingenuity and hard work of many Asians, especially the Chinese. Much of this buying has been on borrowed money, now largely borrowed through the public sector, and passed on in public sector wages, benefits and direct public sector purchases. If we do not get a grip on our financial affairs as a nation the markets will take further fright. Despite the money printing, the cost of government borrowing has been rising in recent weeks. If we do not take control and start to sort it out, the markets could drive interest rates higher still, doing damage to any recovery and forcing change upon a reluctant government. The government is wrong to think we need to keep spending and printing to have a recovery. Now the biggest enemy of sustained recovery and well balanced growth is overspending by government itself.

I have received a number of complaints about the state of pavements, side roads and main routes. I am taking these up with the Highways Agency and with the Wokingham Borough Council CEO. I would like the authorities to be better prepared next time.

I am also pursuing the question of legal liability if you clear your own section of pavement or tarmac area near your home or shop. It does seem bizarre if you run a risk by trying to clear it, but run no risk if you just leave it.

In 2004 I wrote Superpower Struggles (published in 2005). I concluded:

“By the time of the Beijing Olympic games in 2008 we should expect China to be the third largest economy of the world when measured at market exchange rates, and the second largest when measured taking into account the relative cost of living.”

“The riches and technological might of the USA has to take seriously the sheer scale of China emerging as the world’s largest economy, with by far and away the biggest military machine in terms of the number of people in the armed services”

Today, I reinforce that forecast. The next decade will see China lengthen her lead over all other economies as she becomes the world’s second largest, and will see her narrow the gap with the USA. China will divert substantial resources into armaments and expect to be taken seriously in the world’s councils. She will likely leave the annexation of Taiwan until it is clear the USA will not seek to protect it militarily, as China will not want a political reversal through overstretching or a war with the USA any time soon. The USA has to show it remains strong as a political and military force despite the obvious economic weaknesses, if she wishes to be respected and feared by China and if she wishes to preserve Taiwan’s independence for longer. Taiwan is the most obvious possible flare point in the crucial US/China relationship, but there will be others. The negotiations over the debt and currency exchange rates will be difficult. China’s attitude towards US adventurism in the Middle East will come to matter more as the decade advances. The US will be outplayed by China in Africa, which China takes more seriously than the USA. The USA is unlikely to dig in hard over human rights issues, particularly with President Obama who is taking a softer line generally. If Mr Obama softens the lines too much it will bring trouble more quickly.

In Superpower Struggles I also concluded:

” the trial of strength between the US and those rogue states and terrorist movements that have a very different world view is still in its infancy. The US will find it does not have all the cards on its side. Some religious movements will claim more loyalty than western consumerism in some societies. Some newly created democracies will elect governments the US does not like, or even vote to be less democratic than the US thinks is necessary…..However susccessful the war on terror, the US will come to recognise there are limits to the number of such regimes even the US can tackle, and there will remain movements, groups, even whole nations who reject the US model. Some terrorist movements will not be curbed until the underlying injustices that generated them are solved. Others will continue whatever the justice of the US position. ”

The greater demographic growth of Asia and Islam means “the US as well as the UK has to understand that we share a world with these people and we need to work out a way of living together in peace and mutual understanding”.

Again, more than five years on, I would reinforce that view. Although President Obama has decided to continue and intensify George Bush’s war on terror, there is a growing sense that this is temporary and even the US is now looking for a way out. Just as feared, Afghanistan and Iraq have both elected regimes that annoy their western supporters and creators. The tensions in the relationships between “sovereign” elected governments, and the US and allied military and political establishments can be acute at times. It is proving very difficult to establish strong flourishing democracies free of corruption with plausible oppositions and smooth changes of power following elections.

In the end the US and her allies will recognise there are limits to how far they can go in remodelling government in the Middle east. Today the President will doubtless decide he cannot invade the Yemen as well, though the last attempted terrorist outrage came from there. They will come to see that jaw jaw is preferable to war war, and even at times might work. The west will only gain more power over the world situation if it can free itself of dependence on Middle eastern oil and gas. The delay in developing an energy sufficiency strategy is one of the most surprising features of the current situation. Both the USA and the UK will have to spend the next decade reining in debt and learning to export more and borrow less, to restore their respective economic power. The continental EU will try to assert itself, but will fail to do so owing to the disunity in its midst and more importantly to the economic weakness that comes from a sharply declining population and a passion for too much government.

You can star in your own drama. One of the best ways of doing this is to set up your own business. Our country needs a new generation of entrepreneurs, a new drive to make, shape and sell.

They say you cannot teach entrepreneurship. That’s not entirely true. I am not one of those who thinks the answer to most things is to shape them whilst they are young, and to demand new items on the national curriculum to fix society. I appreciate the resentment that can cause in the teaching profession. It will not work if you make people do things they do not want to do or they do not believe.

Governments can create conditions in which enterprise is more likely to flourish. Schools and Colleges can equip people who want to have a go at their own business with some of the skills they will need. You can teach how to comply with the rules, how to set up a company, how to hire staff, how to keep the books and how to forecast and manage your cash flows.

If you want more small businesses government needs to keep the number of things they have to comply with to a minimum. Keep taxes low and regulations under control. The present government has been going recently in the wrong direction on tax, after a middle period of its life when it did some sensible things on profits and capital gains tax to encourage more business activity. Our current parlous economic condition requires lower rates of profits, income and capital gains taxation on entrepreneurial activity. It also requires a purge of the regulatory jungle, in ways we have often talked about on this site. This government has been going consistently in the wrong direction on rules for all too long.

Entrepreneurs can come in all shapes, sizes and ages. There is no one perfect CV that can lead you to become an entrepreneur. Often entrepreneurial activity is born of hardship. The executive who loses his or her well paid job in their late forties or early fifties may be the ideal candidate to venture on their own. They should have the cushion of some savings or a pay off to get them going. They will have some business knowledge. They may from their old business contacts and networks see an opening for sub contract supply or service work. Sometimes the canny ask not for a larger pay off when they are on the verge of being fired. Instead they ask for a bridging contract to supply services to their old employer, so they have the first customer of their new business.

Sometimes entrepeneurship is born of boredom. The most likely source of new business ventures comes from the ideas and drive of previous successful entrepreneurs. He or she sold a business for a good sum, but grew bored with life around the swimming pool of the Spanish villa where nothing exciting ever happened. They fiind that what worked well as a welcome holiday, a contrast to life in the fast lane, is no substitute as a permanent lifestyle. They plunge back in, with cash to back their venture and with experience from the last time. Second time round they are often even better entrepreneurs.

These two groups should not overshadow the opportunities for many more people. You do not need to have a pile of cash, nor loads of business experience, to set up a small business. You only need that if your ambitions for your business are larger from day one. You can set up your business from your bedroom or your living room. If you have tools in your garage you can go out and offer your services as a gardener or handyman. If you have a passion for flower arranging or baking great cakes you may find others would like your offering.

Young people today are finding it especially difficult to get jobs. This recession has seen much improved co-operation between management and employees in many firms, leading to work sharing, pay cuts and other methods to keep more of the existing workforce on. The price of this is few opportunitites for the new arrivals in the job market. Expecting a 16, 18 or even 21 year old to set up their own business from scratch is a tall order, but some will be able to and should be encouraged to do so. There are some great examples of digital age entrepreneurs who have built large e businesses by their early 20s.

I remember when I was looking for my first job from university I heard a talk from a leading publishing firm exectuive. She was responding to the big interest in jobs in a publishing house from new graduates, who fancied it as a bridge from the academic world they were used to the business world they did not know. Her talk was far sighted. She said she didn’t want lots of bright graduate trainees for the business. What she wanted was capable young people prepared to set up companies that could bid to do parts of her firm’s job – she wanted to outsource distribution or proof reading or whatever if that made financial sense. It was an interesting challenge. Then graduates could ignore it. Today there may be no choice but to explore it.

In some ways setting up your own business is easy. If you like doing something or are good at doing it, why should it just be a hobby or an interest? Why not do it for real, and check out the market value of what you do? You can do it from home and see if it is going to work. You can advertise it on the web or hire a local market stall. In other ways it is difficult – you do need to preserve and develop the passion, improve the skills, and keep on selling. The rules limiting what an unemployed person can do to get their business started and up and running need revisiting. We need to be more generous to those who do want to do something and achieve something from the adversity of joblessness.

You can live your dream.

One cheer for the Today programme. They ran today a piece on civil liberties, centred around a rare answer to a Parliamentary Question (asked by a Lib Dem, who tend to be allowed more answers than some Conservatives)which told us Labour have created another 3600 criminal offences during their period of hyper activity with new legislation. I found myself in agreement with something, with the Today programme asking why government tries to control us all so much, and why it spends so much of its fruitless effort and our money cutting our freedom. So many of these laws do not achieve what they ostensibly try to do, but they do create a minefield for the rest of us.

It’s only one cheer, because I still do not expect this week to hear the case for free enterprise and markets anytime soon.

This morning the one item I heard sent me rushing for the off switch. Today’s guest editor wanted to give airtime to the case that choice is a bad thing. Apparently people find it confusing, it is wasteful and it allows some people to do better than others! Sell them all the same type of loaf and send them to the same type of school. Don’t give them much choice of flavours, types and sizes of jam.

Choice drives lower costs, higher quality, more opportunity, more jobs, higher living standards – that is surely what the collapse of communism in Eastern Europe proved.

I expect for the rest of this week we will have a parade of lefties coming forward to “edit” the programme, to reinforce tired soundbites and anti freedom views. What’s the betting there will be no guest editor who believes that freedom and choice in an enterprise economy is the best way to raise the welfare and justice of all? I am not expecting anyone to be allowed on with radical ideas for public sector reform and sensible public spending reduction.

Labour’s failure to stem the tide of inequality should come as no surprise. It is an unfair but amusing jibe to point out that we have had a Labour government for more than twelve years, yet still half the people are on below average incomes.

Labour’s years have seen an intensification of globalisation and the accompanying celebrity culture. As a result the elite super rich, the footballers, singing stars and most successful entrepreneurs, have been able to make far more money. If you played football for Manchester United 40 years ago your wages were largely determined by how many tickets the club could sell to Mancunians on Saturdays to watch the game. Today the footballers pay is largely determined by how much the worldwide TV rights can be sold for, which will be a far higher sum.

Because the successful few in each country earn such fabulous riches, a sense of hopelessness can set in for others. People watch the celebrity elite on TV and think they cannot emulate them. Alternatively, they see their only route to riches being through the TV or newspaper world itself, anticipating that they might win a talent show or become an instant celebrity through a Big Brother type apppearance. They might buy a lottery ticket, which panders to same sense that you go from nothing to millions overnight. The odds for each of these happenings are unrealistically poor for all but the perennial and very lucky optimist.

Only those who worry about inequality too much find it offensive that the gap between top pay and average pay has widened because top pay has grown so much. If average pay has also grown, and we are all better off, it is not so bad. The real worry is that from here the super rich go offshore or leave the country, whilst average spending power contracts as the state takes more and more of our income and as the delayed squeeze gets underway post Election whoever wins. In these conditions inequality may fall, but we are all worse off.

Part of the task for the next government will be to put in place the framework of law and a smaller state which enables more people to change their own lives for the better. Over the next few days I will be writing about how we can each enlarge our freedom of action, and how the government can do less to let us do more.

The truth is that many of us can change our lives for the better if we really want to. Waiting for the government to do it for you is unlikely to be productive. There needs to be a massive adjustment in our economy to get it back into balance. On latest figures we are saving more – or more accurately borrowing less. We are importing less and the balance of payments gap is narrowing. So far so good. Unfortunately the inherited private sector debts and the rapidly rising public sector debts which we all owe are so huge that there is a squeeze ahead as the country is forced to start the repayments. We will need to earn more, save more, repay more debt, export more and consume less. It’s not a great prospectus, but that is what Labour’s own plans imply after their massive blow out on borrowed cash.

Today we will be drowned by the usual Pavlovian cries after another alleged terrorist incident. Physical security will be “tightened”. Millions of innocent travellers going about their business or wanting to visit friends and relatives will be made to jump through more complex hoops. There will be a “stronger” security presence at our airports. All this will be intended to “reassure” the public, who will pay for it and be made to suffer. This approach was caricatured by our own government when in response to some alert or other they stationed armoured cars near Heathrow, as if they could ever use the big guns somewhere near the M25 in rush hour.

Why didn’t the tightening after Lockerbie prevent 9/11? Why didn”t the tightening after 9/11 prevent the attempted shoe bomber? Why didn’t the enhanced security after the shoe bomber prevent this latest close shave with mass murder, if the allegations are to be believed? The reason is simple. It will never be possible to design a system that allows you to check thousands of people a day in the airports of the world, which still allows some semblance of timetable flying for the mass market. It will never be possible in democracies to put everyone through such an intensive and intrusive search that explosive underpants will be removed and discovered.

What I would have liked the authorities to say after this incident is they would look at their Intelligence system and ask why it was they did not draw the correct conclusions from what they knew about this man? After all, the alleged bomber’s own father contacted the US authorities and warned them about his son. This individual should either have been on a no fly list, banning poeple who are known to be extremists likely to murder, or on a suspicious persons list. Such a second list would trigger an extensive body and bag search on that individual each time he or she wanted to fly, in a separate room or closet at the airport. There would then be a price to expressing extreme and murderous views, paid by the individuals concerned rather than by the rest of us.

The US and UK governments have also agreed to spend more on Intelligence each time there has been another terrorist plot or attack. They do accept part of what I say. They should think more clearly about it, and realise the plots they have foiled have been prevented by good Intelligence work. They have not foiled plots by catching people at airport security carrying bombs. It may never be possible to prevent every terrorist attack, but you have more chance of doing so if you concentrate on the categories of people most likely to represent a risk to the rest of the public. If you target your resources on those known to be affiliated to terrorist groups, those expressing extreme views, those with a history of mental illness and violence, those who are travelling to and from known terrorist centres you will be more successful.

The House of Commons has witnessed someone throwing a harmless item down into the Commons Chamber, it has seen protesters on the roof of Westminster Hall and a protester climbing Big Ben, despite large expenditure on guns, gates and guards. MPs should know from their experiences at their place of work that it is possible to spend a lot of money on physical security and to make a place far less friendly, without ever stumbling across perfect security.
We should concentrate our resources on prevention, not knee jerk reactions after events. We should above all concentrate our searches on those who are suspicious. Those searches then have to be long and thorough.

Just as expected, Labour’s class warriors are out early on the day after Christmas. We can expect a detoffication agenda through to the election, if Mr Brown has his way. “Banning” hunting with hounds was always the flagship measure of this approach. It caused rancour when legislated. Now Labour hope to rekindle the passions and emotions of that debate at the expense of their Tory opponents.

So let’s shine a little light into these dark areas of spin. The first thing to grasp is the Conservative Opposition is not pledged to repeal this Law if elected to power. Conservatives have always regarded it as a free vote issue, not one for party whips to insist. If there is a Conservative majority government there will be no government flagship Bill to change hunting arrangements. The main immediate task facing any new government will be to grapple with the deficit and sort out value for money in the public services. There will be many other Labour laws that would be better repealed, which could save us real money. We have often talked about them on this site. The Opposition has merely said it will provide time in the Parliamentary timetable sometime in the ensuing five years if backbench MPs of all parties wish to look again at the Hunting Act.

The present legislation was an unhappy compromise in a very dificult area. Banners of foxhunting are disappointed, because many people still ride out to hounds. If anything the “Hunt” is better followed today than before the measure was enacted. Supporters of foxhunting are angry, because their sport is now enmeshed with legal constraints on what the dogs can do and how the humans can direct them. Class warriors are angry because men in red coats and with top hats still ride around the countryside for fun. Farmers are unhappy because more foxes now roam, able to kill their chickens and raid their farms.

So why after all these anti hunting Labour years is the law still in this state? There are two main reasons. The first is the class warriors really wanted to stop well off well dressed people riding, but felt they had to tackle the killing of the fox instead. The second is there are limits to how far you can make people responsible for animals whose instinct is to kill other animals.

We have never been faced in Parliament with an attempt to legislate to control the serial killing cats many people keep as pets, because MPs realise it is difficult to make owners repsonsible for their animals to that extent. Rats and even mice have less appeal as victims worthy of help than foxes, to urban dwellers brought up on picture books stories of apparently furry and cuddly, cheeky and intelligent foxes.

As Parliament struggled with the wish of the majority of MPs to limit or ban fox hunting, the following became the parameters of the debate:

1. You could not stop people wearing top hats and red coats.
2. You could not stop people riding horses.
3. You could not stop people owning hounds and wishing to exercise them.
4. You could not prosecute an individual hound or its owner if the hound tackled a fox without the owner’s approval

This left the law in the position where Parliament had to make the offence organising the hounds to follow the scent of a live fox and encouraging them to do so. This is the compromise which some accept and many dislike from their very different vantage points.

This piece of legislation is destined to become the fulcrum of Labour’s atttempted class war. Labour still hasn’t found a way legitimate way to ban people riding around in red coats and top hats, so there is still an animus for a true class warrior.Indeed, there is also a vulnerability for Labour in highlighting this, as it reminds all those who do want the Hunt banned that in many respects it lives on even after all Labour’s huffing and puffing.

One of the best cartoons I saw at the end of the Fox hunting debates was of an urban fox. He was asked if he was celebrating now that fox hunting had been banned. He replied that he wasn’t because urban foxes never faced the hunt. Asked why he wasn’t happy for his country cousins, he replied he had no sympathy for them because they were so stuck up.

Let the turkey be roasted
And the chestnuts toasted

Ring out the Christmas bell
Stoke up the fire well

Sample the yuletide wine
On Christmas pudding dine

Kiss under mistletoe
Look out at moon and snow

Bring cheer, love and comfort home
Spend not your time alone.

Dear Shareholder,

Be merry. Drink, eat and spend all you can. All those on our payroll will be delighted to know the holiday pay is coming, and it has all been printed specially. I have every pleasure in sending most of you the warmest seasons greetings.

We have focus group tested these well researched remarks. I felt it most important to be as inclusive as possible in the circumstances. Polling told me that any Christian element to the message would be unwise. This after all is a national festival, not just one for one religion.

The message from Bethlehem all those years ago was about the need to tax. In those days the main company in Israel had been taken over by a foreign company, and they made people travel to pay. We are looking into that idea, but not before the Board elections.

This time of year is now a celebration of consumption. We need to consume and spend more, as I keep reminding everyone. It is the ideal festival to help our recovery and to further our aims of never knowingly being underspent or underborrowed. I am not pleased that some of you have been trying to repay your personal borrowings. At a time when our company is making heroic efforts to exceed all past borrowing levels, it is not helpful to have you individually trying to hold us back. So please be joyful, please spend, spend spend. It has in the past been called a bank holiday, but we are banning that phrase in the circumstances.

Some of you will have noticed that I did not feel able to extend my warmest greetings to all. This is because, as you will have seen, we still have a terrible problem with Toffs and Tories. I partly blame my predecessor, who was weak on the toffs. Unkind people say he was partly one himself. I want to reassure you all, my potential followers, that we intend to be very tough on toffs from now on, and on the causes of toffs.

We intend to enforce our laws very strongly against red coated toffs riding horses. We thought we had got this one sorted, but they still persist, even without a fox to chase.

We are mulling over plans for further high taxes on expensive houses. We find it offensive that some people still live in bigger houses than others, despite our big increase in Stamp duties and Council Taxes.

We will continue our attack on posh cars. We reckon our anti motoring policies combined with our new higher taxes on owning and running show off vehicles should start to do the job.

We will extend our attack on high pay. Monstering the bankers has gone very well, as a lot of these wanna be toffs are bankers. We need to ensure that the antagonism to bankers pay does not extend to the pay of our own very successful executives at the top of UK PLC, who deserve their modest rewards that we have managed to extend to them.

So I warn people now. Do not aspire to a large house, for we will tax it. Do not aspire a nice car, for we will seek to drive it off the road. Do not dress up and ride around the countryside, for we will ban it. Do not be enterprising, for we will regulate you tightly. Above all do not try to be cleverer than us, for we are more powerful than you.

I am sure most of you will agree this is the way to a fairer society.I want your seasonal holiday to be happier, safe in the knowledge we care about you and about tackling our class enemies.

It should also give most of you an inner warm glow to know how your company is looking after your interests in this period of global warming. Our priorities are your priorities, which is why I spent last week in a five star hotel in Copenhagen saving the world. Now it is well and truly saved, I can wish most of you the best seasons greetings. Have you noticed how cold its been since we reached that historic agreement? UK PLC delivers results Concon can only dream about.

In the New Year our detoffication policies begin in earnest, so that’s something to look forward to as you cook the turkey.

Yours battling Conco

The CEO

John Redwood has criticised the quality of answers given by Treasury Minister Sarah McCarthy-Fry in response to his questions about the UK’s exposure to Dubai’s debt crisis. When asked if UK Financial Investments is seeking representation on the Dubai World creditors’ committee, the Government refused to answer. When asked the likely level Dubai debt held by Royal Bank of Scotland and Lloyds Banking Group, which are largely owned by the taxpayer or receive significant Government support, the Government refused to answer.

The Government did confirm that UK Financial Investments did not undertake currency cover in respect of the £170 billion of foreign currency loans covered by its underwriting for RBS.

John Redwood said: “The Government’s response is wholly unsatisfactory and tells us that not only are they not taking the debt crisis seriously, they have no idea as to the level of exposure. It was wrong of them to take a huge stake in the banks, only to then show such little interest in how they operate”.

The full text of John Redwood’s Parliamentary Questions, taken from Hansard, follows:

Mr. Redwood: To ask the Chancellor of the Exchequer whether UK Financial Investments is seeking representation on the Dubai World creditors’ committee. [307159]

Sarah McCarthy-Fry: In line with its Investment Mandate, agreed with Treasury, and the Institutional Shareholders’ Committee Statement of Principles, UKFI acts as an engaged and informed institutional shareholder for the banks in which Government have shareholdings.

Day to day management of the banks’ business is a matter for the banks’ boards.

Mr. Redwood: To ask the Chancellor of the Exchequer what estimate he has made of the likely level of financial exposure of the Royal Bank of Scotland and Lloyds Banking Group to Dubai World debt. [307157]

Sarah McCarthy-Fry: The Treasury is unable to disclose such information as it is commercially sensitive.

Mr. Redwood: To ask the Chancellor of the Exchequer whether (a) UK Financial Investments and (b) HM Treasury is undertaking currency cover in respect of the £170 billion of foreign currency loans covered by its underwriting for Royal Bank of Scotland. [307151]

Sarah McCarthy-Fry: United Kingdom Financial Investments does not have the remit to undertake currency cover in respect of foreign currency loans.

The Treasury does not normally buy insurance against risk.

I got up and about early to see what conditions were like for those going to work and going to the shops. All the main roads in the Wokingham area were passable, with many of them largely clear. It was important to drive carefully and gently, as there are a few patches of black ice even on the apparently clear ones. Side roads and car parks are often lethal, frozen solid. The pavements are poor in many places.

I will contact the Council again and suggest more treatment today. If it rains or snows on top of what we now have it will be very treacherous.

In the days before devolution a General Election was about all the main public services and everything to do with government. Today, as many of you have been pointing out, it is rather different.

Because Labour decided to drive through lop sided devolution, a General Election is still about all public services and main policies for England. It is very different in Scotland, Wales and Northern Ireland.

The UK Parliament we will elect in a few months time has no power to decide schools, hospitals, law and order, planning and a whole range of other important issues for Scotland. It also has limited powers in the other parts of the UK with devolved Assemblies. If the Leaders of the three national parties appearing in the debates concentrate on schools, hospitals and police they are having a very English debate.

To make sense of the present Union, and to make the programmes of interest to the 10 million people in Scotland, Wales and Northern Ireland, the debates should centre on Foreign Policy, war and peace, defence, the economy, banking and monetary policy, relations with the EU, benefits and unemployment. These are the principal Union matters. There is then a need for debate about English matters , as under both the Labour and the Conservative proposals these matters fall to be decided by the Union Parliament. In the case of the Conservatives they will be decided by English MPs only. This would be better in a different debate, perhaps involving the relevant Secretaries of State and their Shadows and Shadow Shadows. Otherwise it is best strictly limited in time in the main debates to keep the interest of the audience from the devolved parts of the Union.

As in all things, lop sided devolution has made it more difficult to frame a series of programmes that are balanced, make sense, and are relevant to all voters in a Union election. If the three main debates do spend too much time on schools, hospitals and police, the Nationalists and others will have more a of a case to demand representation. Maybe the answer is to have one debate entirely on the economy, unemployment, total spending and borrowing, banking and other financial and employment issues, and one debate entirely on defence, foreign affairs and constitutional affairs. These two programmes would be of equal relevance and interest wherever you live in the UK. This would leave just one mixed programme which might pay more attention to the problems of England.

Yesterday we learned there wil be 3 debates between 3 party leaders. What people want to see most is the debate between the Prime Minister and the man who could succeed him. The rules to qualify for the debate could be easy – the two top polling parties in the six months prior to the General Election.

If you want to be nice to the third party as the broadcasters clearly do you could say their Leader could join in if that party commanded a given proportion of the vote. I would set it myself at 20%, but to guarantee Lib Dems a place these days you might have to choose 15%. It would be better to have objective criteria for participation, in case another party did streak ahead of the Lib Dems in the polls, as happened in the European elections.

The Nationalist parties who say they want to join in cannot command anything like 15% of the Uk vote, and have no chance of their Leaders becoming Prime Minister. That is why they are correctly excluded from the UK debate. A system of allowing the best placed third party in GE polls would allow for any surge in a none of the above party, whilst excluding the range of single issue and small minority parties that seek publicity during a General Election but cannot command many votes. We can concentrate on the main protagonists and their main arguments.

As a sop to nationalist sentiment the broadcasters are offering Scotland and Wales their own national debates with their own local Leaders. That’s fine by me, but what about England? It just reminds us how lopsided UK devolution is under Labour, and just how much the EU hates England, wishing to break it into unloved regional units.

Now even the good guys of last week have fallen down on the job. The Thames Valley hit gridlock on ungritted roads yesterday. The Highways Agency did not do nearly enough to keep the roads open over the last few days. I will be taking this issue up with the government when Parliament meets again. I have been in touch with WBC over local gritting today.

I am pleased to say that by this evening, 22nd December, the Wokingham main roads are flowing freely again. The Council got back on the job, as they did so well last week.I want to say thank you to all the people who took the lorries out and cleared the roads.

The English have always been anti clerical by instinct. The reformation was fanned by distrust and scorn for the behaviour of some clergy. Lawyers have had a consistently bad press in the English novel and elsewhere. Political cartoons used to be even more scatological than they are today. Our Kings and Queens have long had to mix it with the common people, and take the rough with the rough when it comes to gossip and criticism.

These trends of scepticism and healthy disrespect for the professional or the powerful have been increased by the poor performance of the professional and political elites in recent years, and by the anarchic power of the new media at exposing folly, error and worse. In the noughties we have seen the bankers brought low , as some of their businesses came close to collapse when the money dried up. Now a metaphorical lynch mob says “Off with their bonuses”. The regulators have fared no better, pushing through more regulations, claiming they were deregulating, and allowing the whole financial system to get into deep trouble despite their expensive and detailed interventions.

Many voters are at screaming point with the cost and the needless detail imposed by the regulators, when so often the main point of the regulation goes undelivered. Where was financial stability when we wanted it? Where was control of our borders when there was a terrorist threat?The Bank of England began the deacde as everyone’s darling, from the government to the City, but ended with serious questions to answer about its past conduct of monetary policy and its current policy of quantitative easing.

The politicians have fared even worse. Parliament has been brought low. It has given too much power away to the EU and to quangoland. It has failed to debate many of the big issues. It has watched helplessly as government has told the whole world before it tells Parliament anything. Daily freedom of information requests from outside prize out more useful information than Parliamentary Questions from inside. Parliament meets too litttle, so the government can cry “No time, No time” whenever we want to debate something that matters.

Ministers have been brought low, by their own clinging to the spin cycle, and their inability or unwillingness to put in the full daily grind in their departments to try to make sure policies work and are followed through. Their word is no longer their bond. Their word is often a spin doctor’s, and so often their word today will be different from their word tomorrow.

The bastions of excellence and style are under attack from a government that dislikes our traditions and misunderstands our history as it tramples it underfoot. The army is the one part of public spending which faces regular cuts depsite being made to fight continuous middle eastern wars. The elite Universities are blamed for the failings of some state schools.

All of this has produced a ready cynicism amongst many voters. They ask why should they believe the figures, when so many seem arranged or fiddled? Why should they believe the remedy, when often they do not even agree with the establishment’s view of the problem? Why should they trust them when they say deflation is the threat, as we see inflation surging? Why should we believe them that the banks were nearly bust, when we remember that the banks were in part brought low by the publication of gloomy warnings about their solvency and liquidity by the government and regulators? Why should we think they are right now about our economic prospects, when they promised us they had abolished boom and bust? Why should we accept their view that too much private borrowing is a bad thing but more public borrowing is a good thing?

The noughties were a bad decade for the British establishment. Its credibility has been damaged by what it has said, which has so deviated from what it has done and failed to achieve.

Whilst the whole might of the UK government was being expended in failing to get a deal to stop global warming, the rest of us were struggling to do our jobs and live our lives in sub zero temperatures amidst the snow and ice. Neither the Prime Minister nor Lord Adonis the Transport Minister were around for the ever demanding 7 x 24 media they tell us about to explain the chaos they were ignoring.

On Thursday night I needed to travel back from a meeting and dinner in Birmingham to my own constituency. It was after the time for last trains. I made good progress on a crisp cold night until I reached the Chilterns on the M40. From there the motorway was down to one snow bound and slushy lane, which you could slip and slide along with difficulty. I learned that the M40 was closed shortly afterwards.

I turned off to use the A404 dual carriageway to head to the M4. The northbound A 404 was already at a standstill, with two large lorries slewed across the carriageway blocking all traffic behind. I could just manage to slither my way south as I was going downhill. I became concerned that my side of the road would soon be blocked as well, so I turned off onto smaller local roads, reckoning it would be easier to drive through less churned snow with less ice as a result. To my pleasant surprise I found as soon as I reached Wokingham District roads these had all been well salted and gritted and were clear of snow.

The question to the government is a simple one. Why didn’t they keep the main road arteries open, by sufficient gritting and using snowploughs? If a Council could manage it, why couldn’t the Highways Agency? The weather forecasters were accurate and gave them plenty of warning. Amidst all those billions of dubious and wasteful spending, why couldn’t they find the odd million to hire a fleet of lorries and do the job properly?
They tell us their concern is to be present on the 7 by 24 media. So why didn’t they appear and tell us what they were doing about this pressing problem? Why didn’t the BBC make an issue over the failure to grit and clear the roads?

Why did so many schools close? Do countries that regularly have snow falls in the winter close their schools every day it snows?

The Directors of Eurostar also have some explaining to do. The treatment of their passengers stranded in the tunnel when six different trains broke down, probably all from the same cause, was dreadful. Why didn’t they let some air into the carriages? Why didn’t they allow people to walk back along the emergency exit tunnel if they wished? Why did it take so long to send in a rescue locomotive? Why didn’t they take hot drinks and food to the stranded if they had to be left in the tunnel for so long?

It is curious how green enthusiasts always claim the train is a green solution. Electric trains can be very carbon fuel intensive when you take into account the loss of energy when the gas or coal is burnt to generate the electrictity and then the efficiency losses when the electric power drives the motors. It is even worse when the train system lets so many people down as dramatically as the cross channel service has done this winter. I would love to see a carbon audit of the consequences of this lamentable failure.

Amidst all the hype and warmist theory of Copenhagen the latest UK public borrowing figures showed more of the same – another £20 billion in debt last month. The statistics released showed that this year Income tax is down £8.5 billion, Corporation Tax by £9 billion and VAT by £10 billion.

There will be differing approaches to this “problem”.The government is minded to put rates up to get in more revenue. That might work with VAT, where the receipts have been depressed by their cut in rate, although there is some offset from bringing forward some purchases of larger and less regularly purchased items to take advantage of the lower rate. As some of the VAT is charged on items where there is no great elasticity,like energy, the higher rate may bring in a bit more money.

This government also favours higher rates for Income Tax. It is imposing a 50% rate on higher paid people, and a backdoor extra charge on everyone else through National Insurance. Lower rates may be a better way of raising the amount of tax paid, as businesses and entrepreneurs are nowfootloose between jurisdctions. The UK is moving rapidly from being tax competitive to being a relatively high tax jurisdiction. This policy will impede the economic recovery and limit the recovery in revenues that follows.

The government does seem to think lower corporation tax rates can help increase revenues, or limit the fall in troubled times. The Opposition wants to cut the headline rate by more for the same reasons.

The truth is that all rates of tax on income, whether individual or company, have an incentive or disincentive effect, depending on how high they are. As part of the UK’s recovery programme we need lower rates of tax on both company and individual income. Higher VAT is unavoidable given the size of the deficit, and it will go up shortly. Higher taxes on spending can help cut imports whilst governemnt gets to grip with the main problem, which is overspending. Mr Brown should not have spent the last few days gving more of our money away, but should have spent some of them in a cold and troubled UK working out how to rein in the wasteful and less desirable public spending before the debt overwhelms us. By spending so long in Copenhagen and then not being present at the crucial meeting which produced the “deal” he wasted his time and reduced the UK’s soft power, revealing how little influence he has. He could control UK public spending – and cut state energy bills – if he wanted to. The question is, what is stopping him? Now Copenhagen has gone and with it his opportunity to save the world, can he please return and start to save the UK from financial disaster?