Britannia Radio

Here's a breath of fresh air and commonsense economic thinkig from 
the Labour Party - Frank Field of course.  As Jonathan Isaby suggests
"most Conservatives will find it almost impossible to disagree with 
him".    Well I have no wish to.

While Mr Field was sticking his neck out Osborne makes a speech for 
the Tories to the Green Building Council  at which he outlined a 
number of supposedly 'Green' ideas, some not bad ideas in themselves 
in the context of dwindling access to fossil fuels ,  but in the 
context of our economic situation seem not to measure up to the 
crisis.  I give CH's report on this below.  Talk of 'Fiddling while 
Rome burns" - - - -

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CONSERVATIVE HOME Blog  16.4.09
1. Does the Government now have "a moral duty" to cut public 
expenditure?
by Jonathan Isaby

The hare has been set running on the above question today not by a 
Conservative politician, but by a Labour MP who is pressing for such 
cuts.
In the latest ConservativeHome survey of Tory members, no fewer than 
94% took the view that significant cuts in public expenditure would 
be necessary to restore order to the public finances.

Today that position is eloquently echoed by the man who is most 
Tories' favourite Labour pin-up, Frank Field - the former welfare 
reform minister who was told to "think the unthinkable" by Tony Blair 
and then prevented from doing just that.

In advance of the Budget next Wednesday, he has written in The 
Spectator a devastating critique of the economic problems stored up 
by the Labour Government, which is worth quoting extensively here, 
not least because most Conservatives will find it almost impossible 
to disagree with him:
"It is difficult to overdramatise the danger that is engulfing our 
country. In some ways our position is more precarious than in 1940 
when we stood alone against the Nazi tyranny. The danger can be 
stated easily enough. Far from building up reserves during the latter 
stages of the boom, the government went on a borrowing spree..."

Having effectively echoed the Tory charge that the Government "didn't 
fix the roof while the sun was shining", Mr Field writes that last 
November's Pre-Budget Report estimation of proposed borrowing of £78 
billion is now guesstimated by the Government at somewhere between 
£180 billion and £190 billion for each of the next two years (today's 
Times reckons £175 billion):
"Clearly no one, including the Government, has much idea yet of the 
true magnitude of borrowing... While we clinically talk of public 
debt we are euphemistically speaking of trying to grab part of the 
income belonging to future generations to spend on ourselves... At 
some stage the Government will wake up to the awful realisation that 
borrowing on its projected scale might just be a rather difficult 
operation. And at this point the particular weakness of the UK's 
position will become only too apparent."

"The Government appears to hope that it will gain enough cover by 
repeating ad nauseam that it is Keynesian common sense to borrow 
during the downturn and pay back when the economy is on a more even 
keel. Whether it really believes this is anyone's guess. But its 
bluff might be called, and here will be a test not only for the 
current administration, but also for the opposition, whose consistent 
poll lead suggests it may form the next government."

He cautions "any government" against thinking it can "tax itself out 
of these debt levels", suggesting that tax rises "can only play a 
modest role in closing the enormous gap in the national accounts".

So Mr Field asserts that the Government "not only has a moral duty 
now to cut public expenditure, but may be forced to do so by its 
inability to borrow on the scale necessary", and he has a variety of 
suggestions as to how it might go about what he calls the "Herculean 
task of bringing government spending nearer to what it can raise in 
taxes".

He stresses that the following proposals do not form a programme in 
itself, but rather are examples of the kinds of cuts needed to go 
just some of the way towards balancing the books:
. Scrapping Trident's replacement to save between £15 billion and 
£20 billion;
. Scrapping the ID card scheme to save £5 billion;
. Freezing the health budget in cash terms to save an annual £7.5 
billion;
. Postponing the increase in the school leaving age; and
. Scrapping the target of sending 50% of school leavers to university.

In a further nod to the expectation of a Conservative government 
before too long, he concludes by calling on "both opposition and 
government" to use the Budget to find ways of rebuilding the 
country's solvency".

Dare I suggest that Mr Field ought to be offered a role in that 
Conservative Government?
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2. George Osborne announces ten new green policy initiatives
by Jonathan Isaby

Speaking at the Green Building Council this morning, the George 
Osborne has called on the Government to adopt ten "green" policies in 
next week's budget which would make Britain's economy "greener and 
more productive".

Mr Osborne says that none of the following would add to government 
debt and the explanations with each policy are based on the 
information put out by CCHQ:

1. A £6,500 energy efficiency entitlement for every home in Britain
Fit every home with up to £6,500 of energy efficiency improvements, 
with the cost being repaid through savings in fuel bills, delivering 
immediate reductions in gas and electricity bills of around £160 per 
year for families across the country.

2. Fund at least three Carbon Capture and Storage projects
Use part of the receipts from the EU Emissions trading Scheme to fund 
the installation of Carbon Capture and Storage equipment and pipeline 
networks for at least 5GW of new coal-fired power plant.

3. Smart Meters
Bring forward the roll out of innovative new technology smart meters 
into every home to give homes and businesses more control over their 
energy consumption and help reduce bills.

4. Feed in Tariffs
Bring forward the introduction of feed in tariffs for both renewable 
electricity and heat, as already legislated for in the Energy Act, 
with the revenue stream helping people lower their energy .

5. Create a national recharging network for electric vehicles
Designate electric vehicle recharging points as regulated assets, 
thereby introducing incentives for energy companies to invest ahead 
of need and establish a new recharging network across the UK.

6. Begin work on a new high speed rail network
Start work on plans for a new high speed rail network initially 
between London, Birmingham, Manchester and Leeds - funded through a 
public-private partnership to enable construction to begin as soon as 
possible.

7. Invest in the creation of an electricity internet
Add computing intelligence to the electricity grid through the 
introduction of a smart grid, allowing demand and supply to be 
intelligently managed and paving the way for large-scale use of 
renewable energy sources.

8. Provide government loan guarantees to companies investing in green 
technologies and create the world's first environmental trading market
Make it easier for companies to borrow money to invest in green 
technologies by providing government guarantees for bank loans to 
environmental technology companies, as part of a National Loans 
Guarantee Scheme (already proposed by the Conservatives); the 
Government should also work with the London Stock Exchange to launch 
the world's first Green Environmental Market (GEM) to provide future 
British environmental companies with the investment they need to 
succeed in the global market.

9. Create a network of Marine Energy Parks
Instigate a network of large scale Marine Energy Parks around 
Britain's shoreline to help clusters of innovation grow and 
accelerate the development of new wind wave and tidal technologies.

10. Build an offshore DC cable network
Require the National Grid to construct a new network of under-sea 
Direct Current cables, which will run like bootlaces down each side 
of the British coastline, allowing offshore renewable developments to 
access the electricity grid, thereby reducing one of the primary cost 
raising risks for offshore wind and marine power.