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Mark Field MP: Why Conservatives should support flexibility on economic migration

Mark Field is MP for Cities of London and Westminster.

The wisdom of the Coalition’s strict monthly cap on skilled immigration is the hottest topic for many of my commercial constituents. For multinational businesses, a liberal immigration policy is the litmus test for the proposition that the UK is ‘open for business’. Surely, my associates suggest, a cap is at odds with the government’s passionate commitment to economic growth.

The apparent softening of the government’s stance on the cap this week to reflect this widely-held sentiment has been subject to press criticism. Many on this website feel betrayed at the ease with which this apparently immovable pillar of May’s Coalition Agreement is being dismantled. However, I believe the Prime Minister should not feel overly hamstrung by his earlier pledge. We must think very carefully before we impose a permanent, artificial limit on those who seek to study or work here.

Nor, of course, should we ever accept blindly the undercutting of the indigenous workforce with cheap migrant labour. Few would support employers choosing an international worker over a similarly skilled Briton or welcoming with open arms each and every person who decides they would like to start a new life in the UK. However, flexibility in a country’s immigration system is now part and parcel of being a signed up member of the global economy. International businesses and business people, not to mention academics, expect to be able to move with relative ease between open, dynamic and flexible global cities, just as many mobile Britons would anticipate being able to work in Hong Kong, New York, Shanghai or Mumbai for a spell. Those countries which restrict this movement risk economic isolation in the age of globalisation.

The problem with the immigration debate is that it is stifled by a lack of candour. In truth, the movement of international business people and students is not the nub of the issue for most Britons. Instead, worries about immigration broadly stem from a sense of rapid change to our communities which no longer seems under control and for which there has never been an explicit mandate.

Mark Field MP: The impact of the CSR will only start to become apparent next year

Mark Field is MP for Cities of London and Westminster.

There has been furious activity in recent days amongst the ConHome community with claim and counterclaim about the extent of the cuts. So just how severe can we expect today’s Comprehensive Spending Review to be?

For sure, the unrelenting austerity message risks undermining business confidence, which urgently needs to be boosted by a growth strategy and a consistent recovery plan. Moreover, the fall-out of the likely future spending cuts, especially in terms of public sector employment, cannot readily be dismissed as minor fiscal tinkering.

Nevertheless, it is also the case that the differences between the Coalition and Opposition over the extent of the Spending Review are considerably narrower than most frontline politicians would have the British public believe.

The truth is that domestic economic policy will continue to be defined largely by Gordon Brown’s framework (the future costs of repayment of debt and PFI, for example, stand as a tribute of sorts to the lack of room for manoeuvre which Labour imposed on any incoming government). Indeed our commitment to cutting public spending is still exclusively sold on the grounds of necessity rather than promoting Conservative instincts for a smaller, more efficient state. Never mind the change of government – the ‘fairness’ and ‘social equality’ agenda of the last decade continues unabated.

Three years of breathlessly grim economic news since the collapse of Northern Rock have been superseded by five months of austerity talk. The great British public can be forgiven for believing – as many folk do – that the worst is behind us.

Yet the reckoning will not even come with today’s sombre review. Faced by a blizzard of statistics about percentage cuts and billions of pounds of departmental economies over a four year programme, most of the public will be utterly bemused.

I suspect the real impact will only start to become apparent nearer to and beyond the new tax year next April. Only then will the voters see which local school reception classes are earmarked for closure, which road programmes will be shelved and meals-on-wheels services discontinued, and above all whose jobs are not safe.

Eliminating this deficit rapidly is essential (on moral as well as economic grounds) and so too is a clear programme for future economic growth. It is to this task that the Coalition must now urgently turn.

Mark Field MP: Welfare reform never comes cheap

No one can accuse the government of paucity of ambition as it seeks to overhaul the paralysingly complicated array of welfare benefits. Wisely it also recognises that such wholesale reform cannot be rushed. It will – electorate willing – prove a two-term task.

The holy grail of ending the welfare trap for those in the workplace, who otherwise stand to be better off claiming benefits, has been tantalisingly elusive to generations of politicians. Yet one of the key stumbling blocks in the immediate future is that there may well not be jobs available for many who find themselves transferred from Incapacity Benefit to Jobseekers’ Allowance. These changes all promise to take time.

They will also cost money. Probably far more money than we might think.

In a fix?

The latest staging post on the coalition government’s whistle-stop journey of constitutional reform comes today as we debate the Fixed Term Parliament Bill. Much of the press coverage over this legislation concerns the technicalities around votes of confidence, which would trigger a general election before the end of the set fixed term.

The proposal that power should be vested in the Speaker of the day to issue a certificate declaring that parliament had no confidence in the government places the Speakership in a potentially damaging position of partisanship at a critical political juncture. Worse still such certificates would – in the opinion of some constitutional experts – be challengeable in the High Court. In short, at a time of the most acute and sensitive political crisis, the time-critical decision to call an election might be open to legal challenge.

Rather curiously, however, less has been made of the fact that the coalition has chosen five years as the fixed term for a parliament’s duration. It is almost exactly a century since the maximum term was reduced from seven years to five, with the Prime Minister of the day, Asquith, expressly recognising that elections were likely to be called within this time frame.

Indeed generally in UK politics a fixed term tends to be set at four years (think local elections, Mayoral contests, Scottish Parliament and Welsh Assembly terms). If we look at the average time between general elections since World War Two, there have been seventeen elections since the 1945 contest in sixty-five years, so the average tenure of each parliament in this period has been three years and ten months.

Strangely enough even Labour opposition to the longer term has been muted. One need not be too cynical to observe that it is only candidates who really like elections – sitting MPs have potentially too much to lose. For them, perhaps no fixed term is too long!

Mark Field MP: The looming threat of protectionism and just what it tells us about the path ahead

Mark Field is MP for Cities of London and Westminster.

With the furore over the hostile takeover of Cadbury by American giant, Kraft, the attacks by the Obama administration on British Petroleum, and worry over the number of companies being sold to buyers from the Middle East, China, Russia and India, the ownership of business has become increasingly politicised. Against a backdrop of rising unemployment and deep seated economic unease at home, any perceived failure by a government to stand up for the ‘national interest’ against ruthless foreign invaders risks domestic uproar.

Unfortunately, however, I fear these awkward collisions between the worlds of business and politics are merely the outward manifestations of an underlying trend towards protectionism that is beginning to infect the global economy. But why the urge to batten down the hatches and what does it augur for the future?

I would contend that growing protectionism is in reality only a symptom of a far deeper, more fundamental anxiety – that of the colossal trade imbalances that the financial crisis has so painfully exposed (and which were in truth one of its main causes). How these might be overcome and what the world will look like once they have been unravelled may eventually tell the story of the global economy in this century.

So what happens in May 2015?

Parliament may be winding down towards its summer recess but political eyes now turn firmly towards a busy September schedule.

The next two full parliamentary weeks will commence the process towards a referendum on the Alternative Vote electoral system, fixed term parliaments and a radical redrawing of constituency boundaries.

Whether or not the Coalition gets its legislative way over AV, I suspect that leading party strategists are already working through likely scenarios for the run-up to the next election. Both David Cameron and Nick Clegg realise that their political fates are inextricably tied to the success of the coalition, so its full term survival is probable.

Whilst prospects of a fully-fledged merger between our Party and a large part (if not all) of the Liberal Democrats are not as fanciful as many might think, I reckon this is highly unlikely to have happened by 2015. Instead I believe the Conservatives and Liberal Democrats will almost certainly fight the next election as separate entities, but each standing on the basis of coalition achievements in government. Even if AV is on the statute book I reckon that defending a record in government will necessitate Conservatives giving most Liberal Democrat incumbents a free run in their seats. By way of reciprocation in the dozen or so Conservative-held seats most vulnerable to the Liberal Democrats, candidates from the latter party would also stand down. Conservatives might also enable Liberal Democrats in marginal battles with Labour (in Scotland, the North and parts of London) a potentially easier fight by withdrawing from the fray. Who is to say that dozens of candidates will not take the hustings as ‘Lib Dems with Conservative coalition support’?

Yet here is the paradox. Such a formal pact in selected seats clearly aids vulnerable Lib Dem incumbents, reinforces the coalition but also critically makes any post-election coalition between the Liberal Democrats and Labour more difficult to sustain. However, any electoral strategy short of equidistance risks destroying the Liberal Democrats’ broad appeal and threatens its status as an independent political force.

Naturally any of this would require changes in Conservative Party rules.

However, importantly, the impending boundary reviews may assist in formulating such an electoral pact as no one can be sure of the precise constituency make-up until 2013 at the earliest.

In short even in the most marginal seats of the sort that might be subject to a pact, there is unlikely to be any opportunity to have selected a Conservative candidate for at least three years.

And as we know 156 weeks is a long time in politics…

George Osborne's frenetic start

George Osborne’s month of frenetic activity at the Treasury has provided welcome reassurance to many in the City of London.

The creation of the Office of Budget Responsibility is the sort of thing that gets promised in Opposition and conveniently forgotten once an election is behind us! So full credit to the Chancellor for seeing it through. However, such has been the sorry state of economic forecasting over the past couple of years – from independent as well as Treasury sources – there can be no guarantee that the OBR will fare much better. The true test of the OBR’s much vaunted independence will come when it is no longer possible to blame a previous administration for current economic woes.

Wednesday’s Mansion House speech signalled the recasting of the UK model of financial services regulation. In truth, not all the blame for the international financial crisis should sensibly be laid at the door of the tripartite system. Global imbalances and the unsustainable level of public and private debt (helped on its way by the former government’s misguided inflation targeting and the Bank of England’s keeping to excessively low interest rates) were primary causes here. The main danger associated with the effective abolition of the FSA now is that this much maligned organisation has over recent times developed momentum and stability in its consumer protection and market activities. As sovereign default in the Eurozone reaches crisis point over the next year the inevitable lack of focus as reorganisation of the UK regulatory regime gathers pace may prove costly.

Clearly the big winner of this reorganisation is the Bank of England. The Chancellor rightly identified that in the run-up to the September 2008 crisis no one appeared to be in charge. The buck now assuredly stops firmly at the door of the Old Lady of Threadneedle Street.

I reckon there is one small missed opportunity. While I can see the attraction of an over-arching Economic Crime Agency, working closely with the City of London Police’s Economic Crime Directorate, I should have preferred that this was now overseen by BIS rather than the Treasury. As I have written before, robust competition policy should lie at the heart of future economic strategy for both the financial and general corporate sector. The activities of the erstwhile Serious Fraud Office should ideally be more integrated into the OFT and Competition Commission in implementing a radically improved system of investigation and prosecution of economic crime.

Our broken infrastructure

On the morrow of her 1987 election triumph, Margaret Thatcher pledged that the Conservatives would devote themselves to transforming Britain’s inner cities. The urgent regeneration task for an incoming Conservative administration this year will involve transforming our increasingly shabby suburbs at a time of dire constraints on the public finances.

The regeneration of the centres of cities like Glasgow, Manchester, Liverpool and Manchester – to name but a few – has been one of the triumphs of the past twenty-five years. These areas have become attractive places to work and live. Even in my own central London seat I never cease to be amazed at the number of people in their fifties and sixties who choose to downsize from the Home Counties and move into a city centre apartment where they can benefit from an excellent retail, health, transport and entertainment offering. Alongside a more diverse and mobile younger population, they help provide a social glue that ensures many inner city areas now thrive.

Uneasy calm settles over the financial markets

Over recent months, global financial markets have been enveloped by an eerie stillness. The fear remains that this calm is unlikely to last – our fundamental economic imbalances have not been solved, merely parked. The recent indication from the Chinese government that it is to put a firm break on bank lending to ameliorate the effect of speculation is just one sign that points towards the likely return of market turbulence. The most negative effects of the crisis may well be most painfully felt in the stagnant aftermath of statistical recession.

As things stand, the global economic patient lies in an induced coma. Over the past eighteen months we have had near zero interest rates and governments worldwide have gone on an unprecedented spending spree – whether through quantitative easing, car scrappage schemes or bank bailouts - that has filled the gap left by the ailing private sector. The absence of an immediate market reaction to this, and the lag from credit ratings agencies in adjusting their assessments, has given rise (with the exception of Iceland, Greece and Ireland) to unwarranted complacency. But past economic experience reminds us that the State is not infallible to debt crises of its own. Sovereign default may not be the outlandish prospect we believe and the notion that huge deficits can be racked up without any medium term implications as to the cost and availability of credit may prove desperately naïve.

Mark Field MP: An instructive visit to Bangladesh

Mark Field is MP for Cities of London and Westminster and Vice-Chairman of the All-Party Parliamentary Group on Bangladesh. Here he reports back on a trip to Bangladesh last week with a group of UK Conservatives of Bengali origin.

In the near four decades since the civil war that created Bangladesh and resulted in a first huge wave of migration from that country to this, Bangladeshi Britons have been a highly reliable bloc of support for the Labour Party.

This is changing… and fast.

Last week I led a delegation of British Conservatives to Dhaka and Sylhet. Our team consisted of Tim Archer (the PPC in Poplar & Limehouse, a “must win” marginal with a current 4,000 Labour majority), Cllr Mehfuz Ahmed from Westminster North (who won his seat in a sensational by-election victory in 2008), Cllr Ahmed Hussain (Tower Hamlets) and two other Tory council candidates for May in Tower Hamlets, Zakir Khan (from the Canary Wharf Group, the sponsors of the trip) and Sabrina Hussain. Our team of thirty-somethings (present correspondent excepted!) reflected an upsurge in interest from British Bengalis in London and other cities keen to make their way in our Party.

No longer is this a bloc vote that Labour can take for granted, especially as a new young – and not so young - generation of British Bengalis becomes more self-reliant, affluent and consumerist in its political allegiances.

The highlight of the first leg of our trip in the Capital, Dhaka, was a meeting with Prime Minister Sheikh Hasina. Frankly I was astonished that our motley delegation was able to get such high level access. Indeed, the PM asked me pertinent questions about likely UK election timing and results and seemed fully briefed as to its likely outcome, so we were not entirely surprised that our billed “courtesy call” turned into a lively 25-minute long meeting which was extensively featured in the Bangladeshi media the next day.

Our discussions focused on the thawing of Bangladeshi/India relations, especially important as the latter rapidly develops world economic power status. Prime Minister Sheikh Hasina also spoke warmly of her initiatives to make life easier for those Bengali Britons wishing to invest and develop businesses in the country.

The battle of the bonuses

I appreciate the bewilderment of the general public at the rapid return to huge bonuses in those parts of the City (including the 70% state-owned RBS) which seemed so close to collapse only a year ago.

However, amidst the anger and dismay we need to realise that this in a highly mobile, global business. The only way to introduce an effective cap on banking bonuses would be by a binding, international agreement to cover London, New York, Hong Kong, Singapore, Tokyo et al. This is NOT going to happen.

Conservatives rightly support calls for restraint throughout the financial sector and in order to open up lines of credit to small businesses it was our suggestion last month that this year’s bonuses should ideally be paid in shares, which would only vest in future years.

The future landscape of global finance

Such colossal sums of global taxpayers’ money have been spent and immense government guarantees continue to underpin the financial system that it is remarkable how little agreement exists to what constitutes the point at which the banking industry can be said to be fixed. Less still is there any emerging consensus as to the ideal future landscape of the financial services world.

This is no mere academic issue. The imperative to start repaying borrowing at the earliest opportunity cannot be overstated. Yet commercial lending is unlikely to return to anything like normal until the second half of 2011 as toxic assets are gradually removed from bank balance streets. The credit crunch will be with small and medium sized businesses for some time to come.

Another dismal day for parliament

Listening to some of the early responses to the Kelly Report fills me only with a mixture of disbelief and deep foreboding. The campaign from certain quarters of the House of Commons to dilute its headline proposals betrays a continued failure to appreciate the scale of public anger at the perception that the parliamentary allowances system has been subverted to maximise MPs’ personal enrichment.

Whilst I accept that the Kelly proposals throw up anomalies and inconsistencies bordering on injustice for some MPs, I believe that they should be accepted swiftly and in their entirety.

Effective Enforcement - Changing the City's Culture

Despite grandstanding galore from the government, there is a growing unease at the paucity of substantial change in the aftermath of the financial crisis. Nowhere does this resonate more than in the field of enforcement, where talks of US-style powers to prosecute alleged wrongdoers in financial services appear to have been dashed.

The general public are not fools. Weak and superficial exercises in chastisement are no replacement for considered and mature discussions between government and the City about the best ways to lead the economy out of the dire mess in which it finds itself. In this way, we must start to look at solid proposals that will make a lasting change to the workings and culture of our financial system. Only then will the banking fraternity earn the public trust so crucial to any economic resurgence.

Two areas at which I suggest we look urgently are the remit of the Serious Fraud Office (SFO) and the related idea of deterrence.

Alternative Investment Directive - the impact on hedge funds

The rise and power of hedge funds represents one of the biggest changes to the global economy over the past half century.

Predominantly limited liability partnerships, most hedge funds are exempted from much of the regulation that applies to investment banks and mutual funds, and as pools of highly mobile capital they have fast developed the reputation of being able to move financial market mountains by anticipating future expectations. Hedge funds thrive on volatility so the crux of the controversy surrounding them is the degree to which they either cause or affect fundamental shifts in financial markets.

This unpoliced, unsupervised and until recent years low profile sector of the financial services world is now firmly in the sights of the European Commission. However, its proposed Directive to regulate hedge funds and the private equity sphere betrays a lack of understanding of the workings of the business. Critics of these proposals regard the onerous reporting and disclosure regime as predominantly politically motivated.

Failing our youngsters - a very English disease now threatens the national game

Mark Field MP is a member of the All-Party Group on Football and represented the Conservatives on its reports into the game’s governance (2003-04) and finances (2008-09).

 

In the warm glow of England’s convincing qualification for next year’s World Cup Finals and promising prospects of a successful bid to host the competition in 2018, there is one sphere of the national game, club-run youth academies, where the garden is rather less rosy.

 

The 18 month transfer embargo imposed on Chelsea by FIFA earlier this month has overshadowed the start of the new Premiership season and confirmed a trend that many of us football fans have long feared. Namely, that some of our top clubs have been involved in signing young foreign teenagers in a manner that is, if not always technically illegal, at least unethical. Indeed, since the news broke several other leading clubs have also been accused of similar breaches highlighting just how widespread the problem appears to be in the highest echelons of the professional game.

Boris' new broom helps clean up the Met

On listening to a televised discussion about the News of the World phone tapping scandal recently, I was struck by the general acceptance of the Metropolitan Police as an almost mendacious organisation whose word cannot be trusted. Amidst talk of whether or not the case represented a watershed for privacy law, not one of the guests (drawn from a range of political backgrounds) had any confidence in the thoroughness of the Met’s original investigation. Of particular note was the suspicion that ascertaining whether a crime had been committed was secondary to the importance of the Met maintaining good relations with the media.

Whether the guests’ analysis was fair or not, it is clear that even (perhaps especially) amongst the metropolitan middle classes, trust and confidence in the Met is still very fragile in wake of the gunning down of the Brazilian, Jean Charles de Menezes, and the subsequent catalogue of attempts to cover up what happened on that fateful day four years ago this week.

The televised discussion came just days after the Evening Standard revealed that Metropolitan police officers are currently facing 255 complaints of racism. Of these, 238 were submitted by the public and 17 are internal allegations of misconduct. The Chairman of the Black Police Association was quoted as saying that whilst he thought half the cases would amount to nothing (in general, only 3 in every 200 of all complaints against officers are ever upheld), it was still a significant amount ‘in a police force that is no longer supposed to be institutionally racist’.

Here lies the heart of the problem. In so loudly trumpeting its politically correct credentials in recent years, the Met has left itself wide open to accusations of discrimination. It is almost axiomatic that any public body making a song and dance of its commitment to equality finds itself similarly engulfed in controversy.

This issue relates directly to the deficit of trust in the capital’s police force. After the Macpherson report that followed the unsolved murder of Stephen Lawrence, the UK’s largest police force (31,000 officers strong) was sent into a cycle of soul searching that saw it set aside the pursuit of effective policing methods to concentrate on its external image and public relations. In troublesome inner city areas, the Met lacked the confidence aggressively and visibly to protect the innocent, with stop and search and patrols cast aside to concentrate instead on listening to residents and chasing diversity targets.

Farewell to a wasted decade

Too few of my parliamentary colleagues have woken up to the enormity of the debt crisis that follows hot on the heels from the economic downturn. Yet the seriousness of what will follow cannot be long denied.

For sure, technically the worst of the economic recession may now be behind us although it would be premature to conclude that a ‘double-dip’ recession is not on the cards as the effect of the stimulus dies off in the New Year. Amidst some of the glib green-shoots commentary, we should also understand that the banking crisis represented nothing unusual. Indeed it signalled the end of another in a long line of boom/bust cycles (positively commonplace in the second half of the last century) caused by speculative euphoria and an excess of credit.

It is the Labour government’s narrow interest to present this as being an entirely unprecedented type of downturn caused by modern financial alchemy gone wrong, failure by regulators or rank unforeseeable misfortune. This is not so. It is true that the global nature of the economic crisis has made things worse. But there are also clear lessons we can learn from the past. One of the grand old names of British banking, Barings, collapsed owing £780 million only fourteen years ago; today RBS survives courtesy of a £26 billion bailout. But it is only the extent of the economic downturn, not its cause that is so very different.

Home education - the government casts aside another liberty

Home educators’ fears came true yesterday when the government accepted the findings of the Badman report which recommended that they register annually and demonstrate to local authorities that they are providing a suitable education.

For anyone unfamiliar with home education, these are superficially reasonable demands. But home educators I have spoken to believe that current anxiety over child welfare failings is being manipulated by a government obsessed with monitoring and targets to interfere in a sphere over which they currently have little influence. Frustrated by review after review, the majority of home educators feel that the government is simply incapable of trusting parents to do the best for their children.

Home educators will now have to conform to the state’s ideas of what constitutes a ‘suitable’ education and jump through hoops to reassure local authorities that they have their children’s best interests at heart. Understandably, home educators are reeling at the prospect of justifying themselves to a state that so often fails both in education and welfare.

Why these European elections matter

Few Conservatives would count themselves as unreserved supporters of the European Parliament.

In truth, I suspect many of us privately – and perhaps not quite so privately – doubt whether such an institution is capable of functioning effectively as a pan-European legislature. This makes it all the more difficult to raise much enthusiasm in campaigning in advance for June. But this set of European elections matters more than most.

Let’s put to one side the importance of these elections as a stepping stone towards the next General Election. As the world around us changes rapidly with the unravelling of the global financial system, where the UK goes from here and which path we take to recovery will be influenced in large part by the European Union. Legislation being put forward right now is more than ever shaping how the British economy will look in the years ahead. It is crucial that we make that legislation work for us amidst the competing interests of Member states.

Tax and tactics

It comes as little surprise that early opinion polls suggest an overwhelming majority support the government's plans to impose a new higher tax band on those earning over £150,000.  Our Party Leadership has correctly identified that this blatantly political gauntlet has been thrown down purely to embarrass us  - after all it stands to raise negligible additional income.  Accordingly we are entirely justified in declining to play to this discredited government's tune. The most urgent priority of any incoming Conservative government will be to stabilise the public finances.
 
As I have frequently observed there is an increasing sense of insecurity amongst an ever larger proportion of the UK workforce that the spoils of globalisation are being spread inequitably. This will grow especially amongst middle-class professionals outside the once gilded corridors of financial and associated services.  However, the predictable truth of this imposition is that the super-rich will pay not a penny more of tax at all.  They are either non-domiciled or in the privileged position of being able to characterise much of their income as capital gains (subject to an unchanged 18% tax rate).  Additional revenue will come only from modestly successful entrepreneurs (who will have even less incentive or collateral to expand their enterprises) and salaried workers unable to avoid this increase and frequently earning sums not wildly in excess of the threshold, whose instincts to do the right thing on savings and pensions will be blunted as their disposable income falls.
    
Conservatives understand the critical importance to our national economic health of promoting small, start-up business. Competitive tax rates are essential to encourage entrepreneurs especially as we make our way out of this deepest of recessions.  Conservatives appreciate that raising tax now even on the wealthiest in our communities risks prolonging the UK's economic downturn.
 
A decade or so ago the decision of the then Labour opposition to "stick to Tory tax and spending plans" was an explicit recognition that our economic strategy was right for this nation.  This is in stark contrast to the situation today. Even in these turbulent times the public should not be taken for fools. No-one out there believes that the Labour government's recklessness with the public finances is worthy of emulation.   

Mark Field: The pressing issues we now face in the wake of yesterday's Budget

By Mark Field MP

If there are any crumbs of comfort to be gained for the Chancellor in yesterday's Budget – and I suspect there are very few – no-one can accuse him of putting an overly bright face on our nation’s bleak economic prospects.

It lacked any credible narrative of a pathway for economic recovery. Yet still the seriousness of the situation is only slowly dawning on the political class, let alone the general public.

Last year’s budget predicted £40 billion public borrowing for 2009-10; by autumn the figures were £78 billion for last year, £118 billion this. Now we know that over the next two years aggregate borrowing will be around £350 billion. In short, over the near term – whoever is in government – for every £4 that government spends, it will raise only £3 in tax. This overspend cannot possibly be described as ‘investment’ - it is purely spending to consume today what will need to be financed by a future generation. Remember too this is only if the Government’s figures - persistently over-optimistic - prove accurate.

There has been a precipitous collapse in tax receipts, especially from business. But this also applies to the Government’s slice of bonuses earned by the wealthiest in more clement economic times. No bonuses means no tax, which means, as ever, that it is predominately middle-income salary earners who will foot much of the future bill for the Government’s over-expenditure.

The Government has flunked the really tough decisions on public spending that needed to be made.  Instead, action on this has been delayed until a General Election is behind us.

Attention is understandably moving away from financial institutions as the ‘real’ recession takes hold, but as the City of London’s MP I'd like to highlight here the pressing issues which I believe will emerge in the months ahead.

2.33 or not 2.33?

So the Senior Salary Review Board (SSRB) in its independent-minded wisdom has declared that MPs’ salaries should rise by 2.33% for the year commencing tomorrow.

Predictably the Prime Minister in typical grandstanding form announces that he and his ministers will not take the increase. Politically – not least in these recessionary times – David Cameron has no choice but to follow suit.

But I must confess I am left a little uneasy by all this.

For at the very heart of the problem over allowances and expenses is the fact that repeatedly parliament has failed to bite the bullet and increase MPs’ salaries. Thereby a green light has been given to the culture of racking up the expenses and allowances system as a way of playing catch up, for salary foregone.

I would rather that the Prime Minister had expended less energy in trying to make populist gestures at this time and more in dealing urgently with a pathetically inadequate allowances regime which threatens to engulf the public reputation of parliament.

After all the whole idea of the SSRB is for parliament to receive – and act upon – a genuinely independent view on parliamentary pay and conditions. There is little point in MPs and the general public paying lip-service to the notion that parliament should have no say in setting its own remuneration when we promptly ignore the recommendations of the body set up to do precisely that.

If it had recommended that MPs take a one per cent pay cut, I should have been a little disappointed, but would have accepted the decision. Similarly an independent recommendation to pay an additional 2.33% especially at such time when we desperately need to wean MPs off their allowances addiction, should be accepted without question.

In short parliament – and the general public - should accept the recommendation of the SSRB in rain or shine.

Telling voters the truth may improve our prospects at the General Election (and it will certainly give us a mandate)

'Anyone in management not planning to spend considerably less in the next year is living in cloud cuckoo land.’

This was the bleak, yet candid, commercial assessment of a high profile businessman in my constituency.

Most people in the political world accept that the same strictures must apply to government. At some point, some unpalatable and politically difficult decisions will have to be made on public spending. But in the final year of this parliament, how open and honest should the political class be with the electorate about the scale of the troubles that lie ahead? Should we Conservatives be the first to tell some home truths about our nation’s economic future?

I have long argued that we should tell it as it is to the electorate and believe we must continue to do so for one compelling reason: In the event that we are elected, it is crucial that we have a strong and clear mandate to do what is necessary to put the public finances back on track. After the next election it will not be enough simply to freeze or trim public expenditure. Instead much more radical solutions will be necessary. Policymakers will need to re-evaluate where the State’s empire should properly start and end.

I accept that this message is not an easy one to deliver. Indeed there are some sound political reasons to avoid even starting down such a path.

For a start, the extreme economic volatility of recent months is likely to continue well beyond the forthcoming election year. There can be few certainties about the state of the economy to be inherited by any incoming administration. Specific policy commitments are arguably unwise.

It is also worth reflecting that for many, this recession is still ‘happening to someone else’, with the real pain and anger being felt by only a minority. For those in (relatively) secure employment – including most in the public sector – the cost of living has fallen dramatically over the past year. Many with tracker mortgages are paying less than half the cost servicing housing debt than they were a year ago. Similarly a visit to the supermarket or filling station has become noticeably cheaper in recent months.

Printing money now could lead this nation to fiscal and monetary ruin

In such turbulent and volatile times it is tempting to suggest that Conservatives should concern themselves more with political positioning than making a cool assessment from economic first principles.

There is little doubt that for a few months around the turn of the year the ‘do nothing Party’ tag resonated with the public at large. No longer – it is fast dawning on a bewildered British public that frenetic government-by-daily-initiative is no substitute for sound judgement and longer-term thinking.

Whilst superficially the spirit of the age leans towards ever more government intervention and expenditure, so David Cameron’s vision of a smaller state and promoting thrift (which all Conservatives should wholeheartedly support) carries short-term risks. In the medium and long-term it will be vindicated. Moreover, it is a clear sign that we are serious about the challenges ahead of government.

The next big question on the domestic economic agenda is quantitative easing – the printing of money by the Bank of England, necessary (or so we are told) to reflate the economy. An attractively easy option, but the wrong solution to our economic woes.

Because every other government initiative over the past five months has failed to get the economy moving does not mean we should resort to printing money without a crystal clear analysis of its dangers.