Jacob Rees-Mogg's doubts about Robin Hood

Matthew Barrett

There was an exchange between Jacob Rees-Mogg and Steve Baker during a Finance (No. 3) Bill session last Tuesday that I thought I should bring to readers' attention:

Jacob Rees-Mogg (North East Somerset) (Con): The increase in the tax threshold is extremely welcome, as is the reduction in corporation tax. Being competitive on corporation tax is something that the Irish were so clever about, and may we wish them well in their fight against the European Union's attempts to make them increase it. By reducing corporation tax we attract businesses that could otherwise go anywhere in the world. We know that businesses can move and that WPP is thinking of moving back to the United Kingdom because of the right trend in taxation. In that regard, I encourage Her Majesty's Government to avoid any of this nonsense about a Robin Hood tax. Robin Hood was not as good as he was made out to be-particularly for the sheriff of Nottingham-but even if such a tax were as heroic as the late Robin Hood, it would still be a very bad tax for this country.

Steve Baker (Wycombe) (Con): I was just wondering whether my hon. Friend would agree that Robin Hood actually took from the state to give back to the people.

Jacob Rees-Mogg: I am not entirely sure that that is what he did. I think he also stole from the Church, which is why I have my doubts about him; I am not really in favour of people pinching things from holy mother Church.

Five ways of defending the Government during an Opposition Day debate

by Paul Goodman

There are many, many means.  Here are snippets of five from yesterday's proceedings -

1. Praise your constituents.

Mr Marcus Jones (Nuneaton)

"I have two fantastic post-16 colleges in my constituency, King Edward VI college and North Warwickshire and Hinckley college. I have met a number of students at North Warwickshire and Hinckley college, and had a detailed discussion with them. Their biggest concern, and the biggest impediment that they saw to young people continuing their studies, was the issue of travel to and from college. That is something that we have to address, and not just for people from rural areas; it is a problem for people from urban areas as well."

2. Use your experience.

Andrew Percy (Brigg and Goole) -

"However, I then got into the teaching profession and started to see the impact of some of the support. Over time, I started to realise that doing as I had done is not a sustainable way for many people to fund their further education from 16 to 18, and that it is not a possibility for many people-it certainly is not since the changes in employment legislation. Although those changes have advantaged part-time workers, they have in some ways made it harder for teenagers to get part-time jobs."

3. Do the sums.

David Morris (Morecambe and Lunesdale) -

"The 18 October 2010 edition of The Observer reported on a Local Government Association report published that month suggesting that 90% of those claiming did not need that benefit. That means that only £56 million gets into the pockets of the poorest in our society, whereas we want to increase discretionary payments to £78 million by 2015...Under our proposals, poorer students in my constituency of Morecambe and Lunesdale will be better off, while we will save the taxpayer money. I thank the Secretary of State, who sadly is not here, for the £250,000 he recently put towards Morecambe college."

4. Remind everyone that we're broke.

Steve Baker (Wycombe) (Con) -

"Opposition Members like to believe that some infinite pool of funds can be dipped into at will, which is certainly not the case. The measure cannot be considered in isolation. We must bear in mind that whatever we spend must be taxed or borrowed, or indeed debased. It is absolutely wrong to attempt to bribe 16 to 18-year-olds with their own money at interest, as Opposition Members have sought to do.  One hon. Gentleman suggested that we were going back to the 1880s, but I am afraid that that is facile."

5. And finally...never forget to attack the Opposition.

Paul Maynard (Blackpool North and Cleveleys) -

"Labour Members cannot keep simply backing structures rather than people. It is horrifying that, in a modern democracy, we have a Labour party that still likes to think that it can keep people under its thumb, say, "You'll get £30 a week and no more; we're going to keep you where you are," and then expect people to be grateful. I want a further and higher education system in which all people can participate without being restricted by a barrier of £30 a week and no more."

Tory MPs raise concerns about High Speed Rail 2

By Jonathan Isaby

The new MP for Wycombe, Steve Baker, secured a one-and-a-half hour adjournment debate in Westminster Hall yesterday on a topic which is of particular interest to his constituents, namely the High Speed 2 Rail link which looks set to run through Buckinghamshire, and set out his opposition to the scheme thus:

"The Chilterns AONB is a rare, precious landscape benefiting not just those who live there but the millions who visit every year from across the country, particularly, due to its proximity, from London. I have lived adjacent to the AONB for almost three years and can confirm that it is one of Britain's most beautiful and ecologically rich landscapes. The preferred route of HS 2 crosses the AONB at its widest point, in contradiction to the policy followed for HS 1. In Kent, the route of HS 1 was amended to avoid the North Downs AONB. By contrast, HS 2 appears to have been deliberately routed through the least spoilt, widest part of the Chilterns... Some 59 different protected species have been recorded within 1 km of the route of HS 2. The recommended route involves tunnelling directly through an aquifer, risking reducing the water table and exacerbating low flow in the Chess and Misbourne. It also risks possible contamination of the ground water. The environmental impact of the recommended route of HS 2 would be enormous. I am therefore calling for an official environmental impact assessment of the preferred route well in advance of the planned consultation, so that interested parties can fully digest its findings."

"There is no benefit to Buckinghamshire from accepting high-speed rail. The project would have to be bullied through against the well-grounded wishes of those affected, causing not just the environmental damage described but also infringing the property rights of large numbers of people. Doing so would thoroughly undermine the Government's commitment to increasing people's power over their own lives. From Buckinghamshire's perspective, the answer to whether HS 2 should run across the county is, of course, a resounding no. Buckinghamshire people are bound to object to a programme that would merely blight our beautiful county and trespass on local people's businesses and the quiet enjoyment of their homes. I find myself asking, "Should any area of the country be forced to accept high-speed rail?"

Continue reading "Tory MPs raise concerns about High Speed Rail 2" »

Douglas Carswell wants to stop the banks treating your money as if it were theirs...

By Paul Goodman

...And he presented a Ten Minute Rule bill yesterday to stop them doing so.  It was sandwiched between other chunks of Parliamentary business, but raises questions so compelling as to deserve a wider audience than much of what happens in the Chamber.

Carswell introduced his Financial Services (Regulation of Deposits and Lending) Bill by asking: "Who owns the money in your bank account?" -

"That small question has profound implications. According to a survey by Ipsos MORI, more than 70% of people in the UK believe that when they deposit money with the bank, it is theirs-but it is not. Money deposited in a bank account is, as established under case law going back more than 200 years, legally the property of the bank, rather than the account holder. Were any hon. Members to deposit £100 at their bank this afternoon or, rather improbably, if the Independent Parliamentary Standards Authority was to manage to do so on any Member's behalf, the bank would then be free to lend on approximately £97 of it. Even under the new capital ratio requirements, the bank could lend on more than 90% of what one deposited. Indeed, bank A could then lend on £97 of the initial £100 deposit to another bank-bank B-which could then lend on 97% of the value. The lending would go round and round until, as we saw at the height of the credit boom, for every £1 deposited banks would have piled up more than £40-worth of accumulated credit of one form or another."

He went on to explain that -

Banks enjoy a form of legal privilege extended to no other area of business that I am aware of-it is a form of legal privilege. I am sure that some hon. Members, in full compliance with IPSA rules, may have rented a flat, and they do not need me, or indeed IPSA, to explain that having done so they are, in general, not allowed to sub-let it to someone else. Anyone who tried to do that would find that their landlord would most likely eject them. So why are banks allowed to sub-let people's money many times over without their consent?

- And proceeded to set out the purpose of his bill -

My Bill would give account holders legal ownership of their deposits, unless they indicated otherwise when opening the account. In other words, there would henceforth be two categories of bank account: deposit-taking accounts for investment purposes, and deposit-taking accounts for storage purposes. Banks would remain at liberty to lend on money deposited in the investment accounts, but not on money deposited in the storage accounts. As such, the idea is not a million miles away from the idea of 100% gilt-backed storage accounts proposed by other hon. Members and the Governor of the Bank of England.

My Bill is not just a consumer-protection measure; it also aims to remove a curious legal exemption for banks that has profound implications on the whole economy. Precisely because they are able to treat one's deposit as an investment in a giant credit pyramid, banks are able to conjure up credit. In most industries, when demand rises businesses produce more in response. The legal privilege extended to banks prevents that basic market mechanism from working, with disastrous consequences.

He argued that ending the present system of fractional reserve banking would have beneficial results -

As I shall explain, if the market mechanism worked as it should, once demand for credit started to increase in an economy, banks would raise the price of credit-interest rates-in order to encourage more savings. More folk would save as a result, as rates rose. That would allow banks to extend credit in proportion to savings. Were banks like any other business, they would find that when demand for what they supply lets rip, they would be constrained in their ability to supply credit by the pricing mechanism.

Carswell acknowledged that Keynesian and monetarist economists alike will "recoil with horror" from his proposal "because their orthodoxy holds that without these legal privileges for banks, there would be insufficient credit".  However, he argued that "credit would still exist but it would be credit backed by savings...It would be, to use the cliché of our day, sustainable" and preferable in his view to the "crony capitalism" of the present financial system, which produces "great candyfloss piles" of unsustainable credit.

Carswell's got a clear-cut case on paper.  But I'd like to know more about what the effects of such change would be in practice (especially if applied in one country only): they look highly deflationary to me, to put it mildly.

The bill was unopposed - but in the absence of Government support has no prospect of finding its way on to the statute book.  Carswell was supported by my first-rate successor in Wycombe, Steve Baker, another eloquent supporter of change to the financial system.

Steve Baker MP answers ConHome's Twenty Questions for the Class of 2010

Shock! Horror! Conservative MP suggests an end to whipping

By Paul Goodman

I've just caught up with the following exchange during yesterday evening's debate on whether or not the Youth Parliament should be allowed to sit in the Commons Chamber once a year.  It took place between the excellent Steve Baker, one of ConservativeHome's CentreRight contributors and my successor as MP for Wycombe, and Philip Davies, the independent-minded MP for Shipley, and went as follows.

Baker asked Davies -

"Also, does he agree that this is possibly the most vibrant, passionate and sincere debate we have had in this Parliament, and that that is, perhaps, a case for ending the system of whipping?"

- to which Davies replied -

"I am sure my hon. Friend's comments will have been noted diligently by the Whip on duty, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill). Some of us in this House believe that all votes are free votes really, and that, at the end of the day, Members can vote entirely as they please. They might want to take heed of what the Whips are encouraging them to do, however, as I must say to my hon. Friend the Member for Wycombe (Steve Baker) that usually their advice is very sound, but occasionally it is not, and I suspect that on this issue it may not be quite as sound as it usually is.

"I am sure my hon. Friend's suggested innovation will be taken seriously by my hon. Friend the Member for Scarborough and Whitby (Robert Goodwill). Indeed, he is sitting in his position on the Front Bench and writing diligently as I speak, so I think the name of my hon. Friend the Member for Wycombe has gone in the book. I wish him well for his future career, but I fear it may be as elevated as mine."

It almost goes without saying that Baker's no less a supporter of the Government in the Commons than any of his Conservative colleagues.  But this may be the first time that a Tory MP's suggested that there's a case for whipping to be ended, and ConservativeHome should mark the occasion for posterity.

Four of the new Tory intake call for "reform or abolition" of Early Day Motions

By Jonathan Isaby

Early Day Motions are oft referred to as "parliamentary grafitti": they are effectively petitions which only MPs can sign and are often tabled with the sole intention of allowing an MP to issue a press release to their local paper beginning "Local campaigning MP Joe Bloggs has tabled a motion in Parliament demanding..." in the knowledge that few people will ever read it, let alone debate it.

And it has to be said that with each Parliamentary Session it does seem that more and more frivolous and pointless Early Day Motions are being tabled.

This has promoted four of the new Tory intake to call for them to be reformed or abolished.

Graham Evans, Nick de Bois, Steve Baker and Guy Opperman have made their point by way of an, er EDM - Number 432 in fact, which reads:

"That this House regrets the continuing decline in importance of Early Day Motions which have become a campaign tool for external organisations; notes the role of public affairs professionals in drafting Early Day Motions and encouraging members of the organisations they represent to send pro forma emails and postcards to hon. Members; further notes the huge volume of correspondence that this generates and the consequent office and postage costs incurred; believes that the organisations involved derive little benefit from Early Day Motions, which very rarely have any influence on policy; further believes that public affairs professionals are aware of the ineffectiveness of Early Day Motions, but continue to use them to attempt to justify their services; questions the value for money to the taxpayer of Early Day Motions of whatever origin; and calls for the system of Early Day Motions to be reformed or abolished."

However, Tory MP Julian Lewis has tabled the following amendment, deleteing all and inserting:

"recognises that Early Day Motions provide one of only a few methods of registering the views of large numbers of hon. Members, other than by votes in the House; believes that they enable hon. Members to generate support for worthwhile causes; consequently opposes their abolition; and accordingly advises hon. Members who do not wish to sign them simply to decline to do so."

I'm with Julian Lewis on this. The massive cross party support for the Save General Election Night campaign last year was able to be demonstrated by Tom Harris's EDM, for example, and they remain a way of enabling MPs to get their points of view about certain issues out in the public domain and I would not want to see them abolished.

That said, I accept that there is an argument for saying that MPs should have to attain a reasonable number of signatures before public money is spent printing the motion and that motions congratulating local sporting teams on victories and promotions really are a waste of said money.

In addressing the banking crisis in his maiden speech, Steve Baker calls for an examination of government’s role in the money and bank credit system

At the general election, Steve Baker inherited the Wycombe constituency from Paul Goodman, now of this parish.

Steve began his maiden speech on Tuesday with a warm tribute to Paul:

"The most consistent theme of my candidacy was, above all, the tribute to my predecessor, and I feel I can scarcely do him justice. Paul Goodman enjoyed the respect and admiration of all sections of the community, his parliamentary colleagues on both sides of the House and his party. He set out aspiring to Sir Ray Whitney's qualities of shrewdness, courtesy, unselfishness and kindness. I know that Paul surpassed his own aims and that this House will miss him."

He then quoted Disraeli, a former (unsuccessful) candidate in the constituency, to sum up his own political outlook:

“I am a Conservative to preserve all that is good in our constitution, a Radical to remove all that is bad. I seek to preserve property and to respect order, and I equally decry the appeal to the passions of the many or the prejudices of the few.”

But it was on the subject of the banking crisis that he concentrated his remarks during the debate on the Queen's Speech:

"As a trustee of a charity for economic education, I would like to give what is perhaps an alternative perspective on the cause of the banking crisis; I hope that Members will indulge me. I should like to put to them a proposition that is uncontroversial: around the world, the system of money is a product of the state. Our monetary system is characterised by private banking, with a fractional reserve controlled by a central bank, which determines monetary policy and has a monopoly on the issue of legal tender. A Monetary Policy Committee sets interest rates.

"The banks have the legal privilege of treating depositors’ money as their own. In the words of Irving Fisher, “our national circulating medium is now at the mercy of loan transactions of banks”. In the other place, in the Banking Bill debate of 5 February 2009, the Earl of Caithness explained eloquently the base of 19th-century judicial decisions—and yes, our system of money has evolved since then—that enabled that situation to take place. He called it:

“the fault which has led to every major banking and currency crisis during the past 200 years, including this one.”—[Official Report, House of Lords, 5 February 2009; Vol. 707, c. 774.]

"The Bank Charter Act 1844 ended the practice of banks over-issuing notes, but it left them virtually unmolested in their ability to issue deposit currency to be drawn by cheque. That loophole haunts us today. Unlike the situation in respect of any other commodity, in the case of money, price controls do not drive the product off the market. Artificially lowered interest rates increase the demand for credit, and decrease the supply of savings, but the legal privilege granted to banks means that they can meet demand by extending credit that is unbacked by real savings. There is a good argument to say that that causes the boom-and-bust cycle, the misdirection of resources in the capital structure of production, and over-consumption by consumers."

"Today, money is a product of the state. The Bank of England controls the price, quantity and quality of money. Perhaps if we were talking about any other commodity, there would be far less confusion over and questioning of the cause of the crisis. If money is a product of the state, we should ask ourselves, “Is this a good idea?”

"In the coalition, we have a Government ideally suited to be conservative to preserve what is good, but radical to change all that is bad. If we are to have a once-in-a-generation, fundamental review of the role of government, let us also examine government’s role in the system of money and bank credit."

Jonathan Isaby