The plastic bag budget

The Chancellor shuffled a few hundred million here and a few hundred million there, as if he were running an economy one tenth the size of the UK’s. The overall increase in spending is dwarfed by the huge supplementary estimates that went through with precious little explanation on Monday. The big tax hike on alcohol will pay for very little of those big spending increases, so we now know most of that money is going to be borrowed.

The budget speech contained endless references to “stability” as if repeating the word would deliver the desired result. If the Chancellor really wants stability, he needs to take the kind of action the US is taking to prevent the sharp slowdown getting out control – tax cuts and more assistance in money markets. The reason he cannot do this, is he has allowed careless spending in his inefficient public sector, taking public borrowing and spending to record levels just before the downturn in growth hits the figures.

What we needed today was a serious analysis of the turmoil in credit and banking markets; an explanation of how quickly the vast sums lent to Northern Rock will be repaid; and a drive to raise the productivity of the public sector to curb its inflationary costs. Instead we were treated to little homilies on plastic bags, drinking and driving, as if they were the most important things on the Chancellor’s mind. He should be spending his every working hour trying to get to grips with the credit crunch and the Rock mistake. That is serious money. This was a budget of penny packets that will have no overall economic impact, though it will annoy those in the drink trades.

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20 Comments

  1. Brian Tomkinson
    Posted March 12, 2008 at 4:59 pm | Permalink

    David Cameron was right, this was a dire performance. How can someone speak for so long but say so little? Maybe the devil will be in the detail as on each occasion when Brown presented the Budget. There are very scary threats to this and the world economy which were either ignored or used as an excuse by Darling whilst he concerned himself with plastic bags which may or may not become the subject to future legislation. Talk about Nero fiddling whilst Rome burned!
    However, John, given that you have given an explanation as to why Darling wasn't able to take what you regard as the necessary measures what actions would you be able to take if you were Chancellor today?

    Reply:PLEASE SEE TODAYS BLOG – start taking cost out of the public sector, to curb borrowing and create some leeway.

  2. Glyn H
    Posted March 12, 2008 at 5:01 pm | Permalink

    The story in the Times last Saturday blew wide open the plastic bag falshood (it was fishing net, not bags) which Gordon Brown has recently taken up (we will legislate…..) and the Manhatten Declaration on 4th March vindicated your stance on Climate Change (your R/Rover analogy being the neatest summing up to date). Both of these excuses for government interferance were paraded today. Why is it that socialists always pick up on things to damage Britains interests?

  3. gordon-bennett
    Posted March 12, 2008 at 6:19 pm | Permalink

    Here's an interesting article about plastic bags.
    http://www.timesonline.co.uk/tol/news/environment

  4. Man in a Shed
    Posted March 12, 2008 at 6:39 pm | Permalink

    Isn't the point of New Labour that they think their words make reality ? This is I assume why Brown was going on about the fiction of having reformed public services.

    I'm personally fed up of hearing spending termed investment.

    Nobody should be allowed to use the term investment unless they can show verifiable returns on it. Surely by now we have rumbled that fire hosing other peoples money around doesn't qualify as investment.

  5. mikestallard
    Posted March 12, 2008 at 7:33 pm | Permalink

    What can we say?
    You are totally right.
    Meanwhile, storms ahead: apparently there are some huge banks in the USA which are facing Northern Rock sort of situations. I read it in the Telegraph today.
    The Chancellorship of Brown is now revealing itself in all its bankruptcy. And this man has certainly not got either the character or the nous to face up to the problems which you adumbrate.

  6. Matthew Reynolds
    Posted March 12, 2008 at 8:02 pm | Permalink

    13 billion plastic bags a year while we run out of landfill space is serious . It costs business a bomb , harms the environment and we really do not need them . That is just madness that not even Marty Feltman could have written . Consumers & business have had long enough to do the green thing & have not done so . Therefore sadly the state must act . Looking at our defaced countryside & thinking of the animals who will die & the co2 produced due to the UK’s insane love affair with the plastic bag one cannot fail to agree with Boris Johnson that these things need to be banned . Getting rid of carriers will not solve all our environmental problems but things will get better as in Eire , France , Germany and Holland . Eire have taxed plastic bags out of existence & they are a very wealthy low tax & small government economy – so green growth is possible . Learning from abroad is no bad thing as is caring for the environment !

  7. Matthew Reynolds
    Posted March 12, 2008 at 8:02 pm | Permalink

    13 billion plastic bags a year while we run out of landfill space is serious . It costs business a bomb , harms the environment and we really do not need them . That is just madness that not even Marty Feltman could have written . Consumers & business have had long enough to do the green thing & have not done so . Therefore sadly the state must act . Looking at our defaced countryside & thinking of the animals who will die & the co2 produced due to the UK's insane love affair with the plastic bag one cannot fail to agree with Boris Johnson that these things need to be banned . Getting rid of carriers will not solve all our environmental problems but things will get better as in Eire , France , Germany and Holland . Eire have taxed plastic bags out of existence & they are a very wealthy low tax & small government economy – so green growth is possible . Learning from abroad is no bad thing as is caring for the environment !

  8. newmania
    Posted March 12, 2008 at 11:20 pm | Permalink

    Watching Yvette Cooper, her best line , which left me a bit dumbfounded , was the at borrowing now was at nothing like the level it had been during the irresponsible days of the last Conservative administration . Someone needs to come up with an answer this because it does have an impact. The whole thrust of the Conservative attack is not that what is being done now is wrong but that we now have no choice precisely because the of the level of borrowing . The Labour hoards will be repeating this gleefully tomorrow and I would like something to say please Mr. R
    Incidentally I dearly wished that it had been your good self discussing the matter with Yvette , I was not impressed with the spokesman who only repeated a line like a broken action man .

    Reply: I WOULD SAY WE NEED TO CUT OUT WASTEFUL AND UNDESIRABLE SPENDING, WHICH THIS GOVERNMENT GOES IN FOR ON A GARGANTUAN SCALE.

  9. Chuck Unsworth
    Posted March 12, 2008 at 11:50 pm | Permalink

    "as if repeating the word would deliver the desired result". Exactly s0 – and has that not been the case for the last decade? I thought Cameron's response was clear and direct. It's available here: http://news.bbc.co.uk/player/nol/newsid_7290000/n

    Brown's grimacing and twitching did nothing to reinforce his Chancellor's position – quite the reverse. It's clear that we are in serious difficulties now and the route out is going to be lengthy and painful. As you rightly emphasise, there's no strategy and no plan except for a little local tinkering. We are on a liferaft in a hurricane. Would anyone believe that Darling or Brown can see us safely through this self-inflicted calamity?

  10. Steven_L
    Posted March 13, 2008 at 3:26 am | Permalink

    I can't help thinking there are similarities between the Feds actions and the Northern Rock nationalisation. The report I read reckoned that the Fed have taken private mortgage debt on as collateral for the loans they made this week. In both cases the tax payer is obliged to take on the risk of the loans going sour. I guess they've decided that this is the lesser evil as opposed a deflation of asset prices clobbering Average Joe Taxpayer's pension fund yet, and his employer not being able to obtain finance from their distressed bank.

    In terms of Northern Rock, the shareholders that didn't bail out are out of pocket in either case, there's no reports that management had been dipping into the pension fund and it seemed to me to be more of a case of not being able to get any customers than to borrow money (which the government were lending it). There were a few thousand jobs at risk, probably a similar amount at risk from the smoking ban.

    In fact perhaps that would be an ideal way to 'offset' the effects of the tax hikes on the drinks industry, make for some sort of compromise on smoking. With all this doom and gloom in the news these days surely we can be forgiven the odd fag?

  11. Adrian Windisch
    Posted March 13, 2008 at 3:56 am | Permalink

    I thought after all the hype he would put a big increase on alcopops and cheap cans of beer. And his speech repeatedly went on attacking the tories for what they did over 10 years ago, you would think weve all had enough of that by now. I understand some MPs fell asleep, it was so boring.

    And after all the expectations on plastic bags, we still get no action, just some recomendations for supermarkets. And despite all the talk on leading the world on climate cange, and all major london mayorall hopefulls opposing heathrow expansion, he voiced support for expansion at Heathrow and Stansted.

  12. Bazman
    Posted March 13, 2008 at 11:08 am | Permalink

    What most people need from a budget is one that creates the right economic conditions to create well paying jobs. With that money the mortgages can be met. No job and everything is expensive. The money markets caused a lot of these problems and are now looking to governments for a way out. To be then free to do the same thing all again? Bonuses and trebles all round.
    The three quid pint and the six quid packet of fags are nearly here. Supermarket sales of beer will soar and cigarettes and tobacco are cheaper than ever. The country being awash with illegal East European imports. I stopped smoking ten years ago and have some grim satisfaction in this. I never thought any government would get a smoking ban into the law though. Says a lot.
    It will be interesting to see how pubs change in the next ten years. Maybe the smoking ban and high prices will make them more civilised, turning them into semi restaurants? Whatever happens people will not drink less.
    (COMMENT SHORTENED)

  13. judy from the north
    Posted March 13, 2008 at 11:36 am | Permalink

    I do not profess to be an economist but I am mistified why Northern Rock was never mentioned.It is the most important issue for most of us but no it was airbrushed out.Did anyone else like me feel sick at all the boasting about how wonderful the economy is when it feels so different in reality.It was a purely political budjet no approach to how to put things right in troubled times.We need your clear thinking John keep up the good work we can dream for a conservative chancellor soon I hope

  14. Neil Craig
    Posted March 13, 2008 at 1:02 pm | Permalink

    I had previously said here that I support increasing excise as a way of discouraging bingeing, but I made clear that it should be revenue neutral. Darling has not used the money to reduce other taxes, particularly corporation tax which would really help the economy.

    I have rather more approvalm of regional governments than you since I think it would, if properly run, allow different regions to practice different microeconomic policies & am confident those areas which went free market & low tax would provide a beneficial example. On the other hand people currently don't want it & it should not be forced on them.

    The bag tax sounds OK in principle but the statement that the money will go to "environmental charities" means that the government will control where it goes. Just as we see the lottery fund being grabbed to shore up the Olympics. We already know that Friends of the arth, Europe is a largely government funded subsiduary of the EU, used to lobby for ever greater regulation. A "charitable" fund under government control would be likely to increrse the unholy alliance between the eco-fascists who want to regulate everything & the bureaucrats who want to empire build with ever more regulators.

    Since nuclear power is virtually CO2 free I would argue that non-profit organisations like SONE committed to lobbying for nuclear do far more for the real environment than the FoEs & Porrits but somehow I do not see them being on the governments list for funding, while I am sure the Luddites would be.

  15. Confused from Oxford
    Posted March 13, 2008 at 2:27 pm | Permalink

    Could someone explain the bit about assisting the money markets. If this means making it easier for banks with poor business models and lax lending regimes to do more of the same then are we not exacerbating the problem. I thought this was the cause of the credit crunch so how will it also be its remedy.

    Should we not be raising interest rates if anything, to force these institutions to tighten up their regimes and stop lending to poor bets?

    Could someone please explain.

    Reply: THE LATEST US INTERVENTION IS TO BUY HIGH QUALITY PAPER WHICH THE MARKET IS CURRENTLY SHUNNING,WHILST BALANCING THAT WITH SELLING MORE GOVERNMENT GRADE PAPER. THE $200 billion IS NOT A NET MONETARY EASING. THE US AUTHORITIES ARE TRYING TO RESTORE SOME SENSE TO A MARKET THAT IS RELUCTANT TO BUY ANY NON GOVERNMENT PAPER OF CERTAIN TYPES.

  16. David H
    Posted March 13, 2008 at 7:53 pm | Permalink

    13 billion plastic bags a year and Gordon Brown wants to ban them. Ye Gods!! Where is the creativity and joined up thinking from this Govt?

    With fags and drink so expensive the population will be leaping into its cars and white vans and heading across the channel to top up as often as possible. Don't set off empty, fill as many plastic bags with rubbish as you can and dump them in Calais. Landfill problem solved.

  17. Bazman
    Posted March 14, 2008 at 10:07 am | Permalink

    Privatising profits and nationalising losses is a term I heard a politician say yesterday. Very good.

  18. Bazman
    Posted March 14, 2008 at 10:32 am | Permalink

    Far be it for Bazman to attack the unemployed and the poor, but I was reading in the Mirror yesterday an article about the winners and losers in the budget.
    What struck me was the unemployed family. The man on the sick with a personality disorder (huh?) and the woman a trainee teacher with three children.
    They have an income from the state of £600 a week. Rent and council tax paid, and £35 a week towards fuel for the car, so they can take the kids to school.
    My Father was self-employed and sometimes employed guys like him for cash. He often said that in real terms he earned less than these men.
    Now I'm not comparing like with like here, as one of the men he employed would buy two copies of the Sun. One for his wife to read when he got home, but remind me.
    Why do I go to work?

  19. track rat
    Posted March 14, 2008 at 12:56 pm | Permalink

    Since when did the 'incovnenient truth' to quote Saint Al Gore (who has lately replaced St Bob Geldof and St Bono in the cannon of those who worship at St Celebrity of the Environment, Islington) about plastic bag polllution, global warming or any other global 'disaster' get in the way of the greens and their allies in Nu Labour from trotting out the story and imposing some more rules and taxes on us.

  20. Marry
    Posted June 21, 2009 at 2:04 pm | Permalink

    Useful info, nice blog, thanks.

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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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