Mid January Column

Written by Malcolm Bruce MP on Sat 12th Jan 2008

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Let's not talk ourselves into depression

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The economic downturn is clearly not going to pass the North East completely by so I used the fact that the House was not sitting last week to talk to a range of local businesses to find out exactly how they are faring.

My conclusion would be that we must not talk ourselves into a depression as many sectors remain confident that they can continue to do business.

I spoke to businesses in agriculture, food production, retail, hotels, catering, construction and oil and gas services and, while not complacent, all reported continued activity, no redundancies and a positive outlook.

Businesses I spoke to also had a good relationship with their bankers and believed the future should still be positive.

If there are companies in the constituency for whom this is not the case I would like to hear from them.

The next few months will be crucial to see where the oil price settles, as this is a key driver of our economy, and also the extent to which the more traditional sectors can maintain profitable activity with minimal job losses.

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Top retailer backs income tax cuts against VAT

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I was pleased to hear Simon Wolfson, the Chief Executive of Next confirm my view and that of the Liberal Democrats that cutting VAT by 2.5 per cent is unlikely to be as effective as cutting income tax would be.

Closing tax loopholes on the super rich and applying the revenue from green taxes could allow for a cut in income tax of 4p. This would help families and savers alike by enabling them to make their own decisions on what to do with the money.

It is also right as Governments are forced to change their priorities to tackle the crisis that they should look to cut back spending in less essential areas such as IT and data projects which cost a fortune and often fail to deliver.

So Scottish Liberal Democrats are right to call for Government to look for savings in what is currently an expanding public sector to enable us to pass these on in cuts in income tax.

The Scottish budget has been consistently under-spent in the past few years and it should be possible to find savings while protecting key areas such as health, education and the key services provided by local government.

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Rail fares confused and dearer than air

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I have been campaigning consistently not only for investment in the railways but a fair, transparent and competitive fares structure to encourage people out of their cars and other more polluting forms of transport where possible and appropriate.

The new fares structure introduced last year was supposed to do just that but research by my office has shown it to be complicated, cumbersome and often uncompetitive. It is consistently more expensive to book a ticket for travel in three months time than it is for travel in 2-4 weeks time.

Compare this to airfares and it is a wonder that we still have a long-distance rail system. For travel booking three months ahead my office found the cheapest return rail ticket from Aberdeen to London is £124 compared with return air tickets with one checked bag ranging from £73.98 with Easyjet, £76.40 with BMI and £111.40 with BA.

Rail companies need to be more competitive if they are to improve their reputation and provide passengers with more confidence in the system.

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Russian gas crisis strengthens need to back UK investment

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The Russia - Ukraine - EU gas row is becoming a farce that nevertheless underlines the unreliability of Russia as an energy supplier and this could have implications for gas prices and future investment that could affect the UK in spite of the fact that we do not import gas from Russia.

In recent years the Russian economy has been floating on inflated oil prices. However the Kremlin's aggression not only towards Yukos but also Shell and BP deters future investment in what is a crumbling oil and gas infrastructure.

The proceeds of oil and gas revenues have also been invested in western stock markets or companies heavily engaged in the global economy and this has now collapsed. So Russia lacks the money and the technical capacity to invest in its industry and has deterred foreign investors.

That suggests that gas prices in the EU could rise and there will be strenuous efforts to reduce dependence on Russian gas by diversifying sources of supply and other fuel options.

The UK Government should certainly be considering how it can stimulate investment in maximising gas (and oil) supplies from the UK's own resources.

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Israel's bombardment of Gaza helps extremists

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The tragedy of Gaza has been the horrendous backdrop to the Christmas break and I think it was wholly right for Liberal Democrat leader, Nick Clegg, to make a strong statement of condemnation for the carnage and call for decisive action by the UK and EU.

It is perfectly possible to be a strong supporter of the state of Israel and opposed to what they are doing in Gaza as born out by demonstrations in the UK last weekend.

Nick was therefore right to urge the Prime Minister to condemn Israel's tactics as he has the Hamas rocket attacks. He should also urge the EU to use its economic and diplomatic leverage to broker peace.

This could involve suspending the proposed new co-operation agreement with Israel and banning arms exports.

The International Development Committee which I chair has produced two reports on the Occupied Palestinian Territories - one just a few months ago.

We have been horrified at the blockade and restrictions faced by the Palestinian people, which is intolerable. However, the blockade of Gaza in recent months followed by the most recent bombardment and reports of actions which come close to war crimes has been an unprecedented escalation.

It is difficult to believe that the offensive which has produced so many civilian casualties, many of them children, can lead to either a reduction in support for Hamas or any basis for peace.

If this bombardment and harassment of ordinary Palestinians continues many of them may start to wonder if they will ever get their own state while Israel exists. That cannot be what anyone who aspires to a two state solution can entertain.

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Election this year? Next year? I'm ready

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There is a certain amount of febrile speculation about an election being called in the next few weeks. The argument appears to be that because things are going to get much worse in the coming months the Government will want to chance an election before that happens.

That seems to be an opposition argument. But what would be the Government case for calling an election? The Prime Minister says it's the last thing on his mind. He appears to be enjoying himself coming up with initiatives and gimmicks all over the place in contrast to what he describes as the 'do nothing' Tories.

If he is, as he would have it, "leading the world out of recession" (even if he helped to lead us into it in the first place) then calling an election would be

a major distraction that seems to brook no adequate explanation. My instincts are that Mr Brown is too cautious to risk it when he is still behind in the polls.

Either way, I have been selected to be the Liberal Democrat candidate for Gordon and whether the election is next month or next year I will be ready for it!

ENDS