The Bank gets gloomy but doesn’t apologise

The Bank of England yesterday bowed to the inevitable and warned us that we will become worse off this year. Many people already feel worse off, after the huge increases in food and energy costs that we have experienced in recent months. There was no apology for leaving credit too loose a couple of years ago, and no public recognition that the Bank had kept conditions too tight last summer and autumn as the bakdrop to the Northern Rock crisis. There was no revision to the absurd line just before the Northern Rock crisis struck that banks had been foolish in their lending and there would be no bail outs!

The Bank is right that they are boxed in – boxed in by government spending that is too high, by a public sector whose productivity is too low, by past credit excess and rising prices, and by the more recent Credit crunch which is having a big impact on property. The Bank is partly boxed in by governemnt mistakes – the government should have reined back more on wasteful spending earlier, and cut public borrowing – and partly by its own erratic performance on money growth.

We now have a boom and bust approach to credit creation – boom in 2003-6, bust in 2007. We have had boom and boom in public spending. Now we see the government fighting to get to grips with the problem of over spending.

I am glad the Conservative leadership has responded to those of us who have asked that we should not match all of Labour’s spending plans in the future. We should keep all the teachers, nurses, doctors, police and armed services personnel, for they only cost under one quarter of publilc spending. We should not keep all the quangos, regional governments, ID cards, computerisation schemes, advertising budgets and management consultancy contracts. They do not represent value for money and they are squeezing the public needlessly.

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8 Comments

  1. Matthew Reynolds
    Posted February 14, 2008 at 10:49 am | Permalink

    You are dead right John ! QUANGO's need cutting down to size so that taxes can be cut to energise the economy .

  2. Richard
    Posted February 14, 2008 at 3:26 pm | Permalink

    The economic mess we are in now has surely been created by Gordon Brown's economic policies? Conditions seem reminiscent of the 1970's Labour policies under Harold Wilson where sharply higher oil prices led to a massive increase in inflation.
    This time around I suggest that the number of employees in the public sector is proportionately higher, hence the drain on the Exchequor and therefore limited room for manoeuvre to get public finances under control.
    Gordon Brown, aka Mr. Bean is utterly at a loss for solutions. He and Blair are responsible for where we are today although Blair had the good political sense to get out just before things started to go horribly pear-shaped.

  3. Chuck Unsworth
    Posted February 14, 2008 at 9:47 pm | Permalink

    Yes but all these Quangos are sinecures for the pals of Brown and his cohorts. Whilst that continues there'll be no change. Appointments in all cases are politically based and biased. And that applies to a plethora of public organisations – such as NHS trusts etc.

    Add to that the exponential growth of these empires and you can see that there are a large number of people who would regard it as in their best interests to continue this rip-off of tax- and rate-payers. It never ceases to amaze me when I pick up the local rag and run my eye over the appointments section. Page after page of jobs for various Quangos, and local and regional authorities. What productive work are all these people doing? How much wealth are they actually generating? They are all a net loss and most are a dead loss.

  4. Simon
    Posted February 15, 2008 at 2:19 am | Permalink

    Have you noticed the amount of government advertising on the radio? They must be keeping half the commercial radio stations in the country afloat. I have found recently that it has increased to such a level as to become irritating and I find myself turning the radio off ever more frequently. We seem to be bombarded with orders to get our tax returns in, don't use mobile phones, eat 5 portions of vegetables, get low energy lightbulbs, emissions zone warnings, benefits hotlines, tax our cars. It is unpleasant, opressive and intrusive. No doubt the various departments involved are spending a small fortune on producing these ghastly adverts. The sooner they are stopped the better.

    Reply: I agree – they are always threatening us through these ghastly ads if we don't comply.

  5. Stuart Fairney
    Posted February 15, 2008 at 12:54 pm | Permalink

    Is it just me, or does anyone else find the adverts for the "people's post office" really North Korean?

    Reply: What bugs me is we are having to pay good taxes to subsidise this punk socialism

  6. Cliff
    Posted February 15, 2008 at 4:26 pm | Permalink

    Simon,
    I thought it was just me….I was watching TV the other night and on channel five I think it was, during every ad break there was a government or one of government's quangos or agencies giving me a message….most came down to the same thing namely, "We are watching you and if you don't do as we say we'll have you." I was threatened with a fine, imprisonment, loss of car and having it crushed, a court appearance, being responsible for depriving my children of clean air and a list of other things.
    What made it worse is that in effect, these messages from Nanny are piped into my home….it is very 1984.

    I have also noticed that the psychologists are getting involved in the contents of the aforementioned ads….We are having childrens voices telling us to be eco friendly…I am of the generation where kids do not dictate to adults, kids do as adults tell them, so if anything, these adverts are even less likely to make me do what Nanny wants. I do not want to sit in my home and be threatened by Nanny neither do I wish to be emotionally blackmailed by her.

    John, do you know how much government and it's quangos spend each year on TV and radio advertising to threaten the people that pay their salaries?

    Replyt: No, but too much. That's another spending cut that will be popular.

  7. mikestallard
    Posted February 15, 2008 at 5:17 pm | Permalink

    We all know that the Chancellor is a lawyer who is totally, utterly out of his depth in the City. We all know that the PM is completely hopeless at dealing with people and that his media face is appalling. We all know, too, that Labour is full of unreconstructed TU people and jobsworths in natty Italian suits/dresses. (The Frank Fields type went under ages ago.)
    The

  8. Simon
    Posted February 16, 2008 at 7:12 am | Permalink

    Cliff,

    I asked the DVLA how much they spent on the robotic voice advert that threatened to crush your car and ended with the charming catchphrase "We know where you live". It was

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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