Hi all –

I see the press are saying MPs have buzzed off on an 82-day holiday, so maybe
the first thing to say is that I’m here. I plan to spend a week or so visiting
family at the end of August – they’re strung along the south coast so I thought
an old-fashioned motoring holiday might be nice. Apart from that, I’m available
as usual, and surgeries continue in August. Thanks to all the offers of help in
the run-up to the General election – I’m overwhelmed by all the encouraging
messages, such as Professor David Kendall’s:

"In other constituencies I'd consider voting Liberal Democrat or Green, but in
Broxtowe the only realistic outcome is that Nick Palmer holds the seat or is
replaced by the Conservative candidate. I think that those of us who care about
progressive politics and respect his work should rally behind him. If we just
vote for party tickets and don't support good MPs when they need it, we
shouldn't complain if Parliament doesn't meet our expectations."

This email is going to focus on practical advice on swine flu and the economic
outlook, and I’d also like to consult further on public spending and taxation.

1. Swine flu

I thought it might be helpful to update you on the current position. Basically
we do have to anticipate unusually widespread infection in the coming months,
but unless the illness mutates it seems actually as or more benign than many of
the flu strains that hit Britain every winter. The job of the Government is to
ensure that patients who are vulnerable know what to do and are given calm
advice and rapid help, without over-reacting in some of the ways that have been
suggested (e.g. closing all schools).

The National Pandemic Flu Service is a new self-care service comprising a
dedicated website (www.direct.gov.uk/pandemicflu) and phoneline (0800 1 513 100
or 0800 1 513 200 (Textphone)). It will allow people to check their symptoms
and, if necessary, get a unique number which will give them access to
anti-virals at a local collection point. It is intended to free up GPs so that
they can focus their efforts on helping those in at-risk groups and patients
with other illnesses. However, people with serious underlying health
conditions, pregnant women, and parents with children under the age of one
should still contact their GP if they have swine flu symptoms. A snag here is
the limited GP cover at weekends. If you are do have an aggravating condition
and think you’ve got swine flu, and find your GP’s number is diverted to a
telephone service, don’t just wait for Monday – discuss it with the helpline,
get a friend to pick up the anti-viral medication and if you have serious
symptoms, press NHS Direct to get someone to come out, as they will if the
symptoms are sufficiently worrying.

East Midlands NHS are sending me weekly updates. In the most recent week for
which figures are available, consultations for influenza-like illness were at
the rate of 1 person in 400 across the region. Currently, local trusts are not
reporting any significant impact on services. It is important to stress that in
the vast majority of cases, the symptoms of swine flu are so mild that only
over-the-counter remedies, fluids, rest and reassurance are needed. For those
people diagnosed as needing additional medication, collection points have been
set up across the region so that a ‘Flu Friend’ can collect the medication,
without those feeling unwell having to leave their home. All of these collection
points are linked to the National Pandemic Flu Service. I’ve been asked not to
publish the locations so that patients who need the medication don’t run into
chaotic queues if the illness should spread more rapidly, but I can confirm that
there are several locations in Nottingham. I’m asking for an additional one in
Broxtowe.

Across the region, 146 admissions to hospitals during the previous week have
been recorded as possibly swine flu-related. These admissions may not have been
caused by swine flu, but by other health concerns. Ordinary seasonal flu plays a
contributing factor in a number of deaths each year. Any case where swine flu is
suspected to have played a contributing factor in the death of an individual is
investigated. In the East Midlands there are two patients suspected to have died
from swine flu so far.

The Government ordered massive stocks of the medication in good time, so there’s
going to be enough for the entire population if needed – thus don’t order via
the Internet (which might get you something dodgy) or feel you must stock up for
fear it might run out. A vaccination is in the final stages of preparation, and
a decision will be needed in September whether to start using it: the case for
doing so is that we could inoculate people who come into contact with many
vulnerable people (such as nurses); the case against is that it would really be
better to do more controlled trials for a few months to ensure it doesn’t have
side-effects, and then inoculate at the end of the year before the cold weather
aggravates things. There is always a risk of people being panicked by
sensationalist media coverage, or alternatively dismissing it all as something
that won’t happen to them; the reality is that it’s a serious issue but for most
people not dangerous, and on this occasion we do seem particularly
well-prepared.

2. Economy update

I’ve commented at earlier points in the credit crunch here, in particular in a
big January update. If you’re curious to see if I got it right you can read it
here:

http://groups.yahoo.com/group/BroxtoweInfo/message/475

A new update may be useful. The bottom in the housing market that I predicted in
January does seem to have happened: the market watch provided by

http://www.zoopla.co.uk/market/NG9/ and http://www.zoopla.co.uk/market/NG16/

show that prices in the 6 months since then have fallen just 1-2%. Locally, I’ve
been helping some medium-sized employers talk to banks and the Inland Revenue
and although it’s been a near thing in several cases, we seem to have avoided
any major collapses so far. There have, however, been substantial layoffs here
as elsewhere.

What’s the outlook? We seem to be in the classic later stage of a recession,
where firms begin to restock inventories (the big car firms that had temporary
layoffs are now mostly back at work), stock markets begin to rise, but
unemployment continues to go up as firms that were counting on a faster upturn
finally succumb. Export industries have been hard-hit by falling demand around
the world, but European purchasing levels are now levelling out and should start
to rise in the next three months. The number claiming unemployment benefit is
rising much more slowly than expected, possibly because some of the layoffs are
affecting non-British EU immigrants (who aren’t generally entitled to benefits),
but I do expect it to keep rising until the second quarter of 2010, when the
economy should be picking up speed. A large number of firms and individuals are
now getting help from the various Government schemes to see them through the
recession (though there are still problems in the interest on business loans –
see below), and if you run into difficulty let me know and I can supply an
overview of these.
While I can’t advise on individual situations, my general advice at this point
is:
• It’s now reasonable to go back into the housing market without expecting any
massive changes in current prices.

• Be wary of accepting voluntary redundancy at this point: the job market is
going to keep getting more difficult for another year before it turns.

• Don’t count on interest rates being as low as now for more than another 6-12
months. Building societies are starting to phase out the low fixed-rate deals,
and it’s unwise to take a loan or variable mortgage on the assumption that rates
will stay low for years. Conversely, if you’re dependent on savings interest,
the current drought should start to ease next year.

• If you’re running a business, plan on the basis that current overall demand is
unlikely to get significantly worse, and by next year it should start to pick up
significantly. Obviously that doesn’t mean that every individual business will
see increased sales

• If you work in the NHS, your job should be safe for the foreseeable future.
I’ve had detailed discussions with local NHS management – the budget is firmly
in the black. They are budgeting on the assumption of a real-terms freeze from
2011 and expect to be able to maintain recent improvements, avoid cutbacks, and
have a reserve for the unexpected like swine flu. Schools are also generally in
reasonable financial shape, though they are having to manage declining pupil
numbers in most areas.

• If you work for local councils, the outlook is more uncertain. The new regime
at County is ruling very little out and is talking of ‘limiting their services
to the front door’, which potentially must mean cuts in help in the home.

I hope that the advice is useful. Turning to policy issues:

3. Economic policy controversies

You’ll have seen there’s a controversy over the level of interest being charged
to businesses by the rescued banks: the Chancellor is seeing the banks about it
today.

What’s the banks’ case? They say they’re being required by the Government to
keep much large capital reserves during the crisis, which reduces their
potential loan and investment income, and also that many businesses have a
higher risk in a recession, so the banks need to charge more to cover the danger
of default.

The Government’s case is that the banks have had all the help they can
reasonably expect from the taxpayer and have given a written commitment to
maintain the level of credit to British businesses in return; that’s of limited
value if they charge up to 10% on the loans.

I expect the outcome of this to be some reduction in the loan rates, especially
in the nationalised banks, but it’s a tricky balancing act - as with mortgages
we need to be careful not to push the bank back into high-risk speculation.

The next step will be unwinding the support measures, since emergency support
for the economy has been essential (in my opinion the Conservatives were simply
wrong on this) but it can’t turn into permanent subsidy. The stamp duty waiver
on cheaper houses will come to an end, and so will the cut in VAT. The point
about that was always that it boosted firms’ and individuals total cashflow (not
that we rushed out to buy a particular item because of the 2.5% cut, but simply
that we were paying less tax so had more money to spend at the end of the
month). It’s a major reason why we’ve not seen any major retail disasters except
Woolworths. However, it’s a subsidy from taxpayers to the economy and the
current calls from industry to continue it after January are unrealistic.

Beyond that, we have the whole debate on public spending and taxation. I’ve
passed on the feedback that you gave me in the poll on the least painful
reductions in discussions with senior ministers. The current public debate is
really unhelpful – all parties including my own are saying the others would make
terrible cuts, denying that they’d do anything very painful themselves, and even
demanding that other parties commit to spending increases for diverse worthy
causes. We shouldn’t exaggerate the hole in public finances – it’s a
significantly smaller proportion of GDP than the American deficit, for instance
– but there is of course a hole and it will need to be plugged with serious
measures. What I’m recommending to colleagues, on the basis of your feedback and
thinking it through myself, is:

(a) Stop digging! There are no end of things it’d be nice to spend more on, from
more school buildings to new road surfaces to defence. I’ve decided not to
support any of them (that is, I’m politely declining *all* the requests to sign
motions demanding that the Government spend more on something, including public
sector pay rises this year) for the current six months, and probably for longer.
That doesn’t mean we can’t spend more on one thing if we spend less on something
else – see the defence discussion below.

(b) Bring forward a defence review that focuses on current essentials. We can’t
afford to be a global superpower and we should stop trying to be one on the
cheap. That means cutting back by negotiating away Trident (cost around £24
billion) in exchange for Russian missile cuts and scaling back on our ability to
intervene anywhere on the globe (which will mean reductions in naval and air
force spending – expect real controversy over that). On the other hand, it’s
reasonable that we should want to help the UN and NATO in operations to prevent
terrorists gaining control of counties, since that would threaten security both
for the UK and elsewhere, and that means that some of the money saved should go
on the very best equipment for ground forces. The current controversy over
helicopters is an example: we were well-equipped for combat in the Afghan
plains, but the coalition decision to move into the Taliban strongholds in the
mountains has left us scrambling to adjust, and we should have a reserve for all
contingencies when we get involved.

(c) Slow down investment in new infrastructure. An enormous amount has been
spent on new schools, hospitals, motorways and rail links in the last decade.
That’s good, but we need a breathing space. I wouldn’t impose a total freeze
(not least as we need to maintain skills and jobs in construction), but a
slowdown is reasonable.

(d) Increase taxation to 45p over for incomes over £50,000. This isn’t some sort
of class warfare – I’ve been in this earning bracket for the last 30 years
myself. It’s simply a recognition that we need to increase income as well as
reduce expenditure, and people in this bracket can afford it better. Also, I
hate to say it, but I think we shouldn’t treat at the standard rate as something
that only goes down – it’s been cut twice in the last few years and is now one
of the lowest in Europe. I’ve never met anyone who thought the reduction had
meant a tremendous amount to them. Would it be the end of the world if it went
back up to 21p or even 22p, at least for the higher end of the standard range?

What *wouldn’t* I do?

• I’d be against scrapping the changes that have brought child and pensioner
poverty down – I think the Winter Fuel Allowance should be protected, as should
the Pension Credit minimum income guarantee. It wasn’t a myth that pensioners
used to have to choose between adequate food and adequate heating, and we just
don’t want to go back to that.

• I wouldn’t touch the NHS (which all parties promise to protect) or community
policing (which parties are notably silent about) – we’ve laboriously built them
up to current levels, and we should let them slide back.

• Surestart and current education budgets should be defended – one of the best
things the Government has done is improve childcare in tough areas, since there
is ample evidence that poor early years lead to health and behavioural problems
later, and good early years unlock talents that otherwise never get discovered
at all – which is something that would hurt all of us, since that home-grown
talent is exactly what we need in the decades to come.

As always, feedback welcome. There’s nothing inviolable about my opinions and
I’ll listen to any suggestions. But we badly need an honest debate, and if the
national parties won’t have one, let’s at least have it locally.

4. Local events

August 8-9: the Nottingham and Notts Fuchsia Society are holding their annual
show at Attenborough Village Hall. The colourful show with many unusual
varieties is open to the public, after judging, from 1.30 - 5.00pm on Saturday
and 9.00am to 4.00pm on Sunday. Admittance is £1.00. Tombolas, plant sales, cake
stall and refreshments are available.

Saturday August 22: The National Children’s Orchestra of Great Britain's is
giving its first-ever Nottingham concert at the Royal Concert Hall in the city,
with a West Side Story emphasis. The orchestra is nationally-acclaimed and has
an interesting social background. It runs five age-graded orchestras drawn from
children across Great Britain without regard to financial means, offering
bursaries and even providing high-quality instruments to those in need. It also
runs outreach courses giving children from non-musical backgrounds opportunities
to experience playing music for the first time. Admission starts at £10
(children £5). Details are here:
http://www.royalcentre-nottingham.co.uk/default.asp?id=363

Best wishes

Nick