Nowhere budget from going nowhere government

Was that it? A few crude bits of politics, a little petty cash moving around, and three wonky arguments.

I am so fed up with a Parliament which is sidelined by the government and insists on missing the main points. The government told us it was doing well with its investment in the banks, failing to mention the accumulated losses of £23 billion at RBS and Lloyds in two years or the £12 billion of potential loss on the shares revealed in the Red Book.

The government told us the deficit would carry us through the recession, failing to see how it was undermining the currency and pushing up interest rates. They press released later some large numbers for efficiency gains in major departments in future years , not wanting Parliament to have a chance to debate that. It was a budget with the spending left out!

The budget applied a £1.4 billion net stimulus to a £1400 billion economy – that’s just 0.1%. The Chancellor behaved as if he did not know that RBS and LLoyds slashed their balance sheets by £800 billion last year. He made no attempt to quantify how much negative impact that had on the UK economy, and offered no explanation of why they were doing it. He seems unaware of the lack of credit and money in the private sector, or of the way his quantitative easing is just designed to feed cheap money into the public sector to see them up to the election.

I will post my budget speech seeking to set out the magnitude of the problem and the reasons why our growth is so sluggish, once we have the transcript available.

The private sector is going to take years to pay off all the debts this government has piled up. We need a strongly pro enterprise policy to give us a better chance of surviving and flourishing. That means lower taxes on earning and working, an end to jealousy over success, and some value for the public money we do spend. Labour have started using some of the language of value for money in public services, after years of proving they do not know how to deliver it. Just using the language upsets many of their backbenchers – they were just there yesterday to cheer to the echo the latest tax increases.

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35 Comments

  1. Duyfken
    Posted March 25, 2010 at 9:06 am | Permalink

    I wonder if it would be realistic to change the nomenclature of the economic sectors to "the spending sector" (ie public) and "the productive sector" (ie private), as this might more clearly demonstrate how one must finance the other and how idiotic it is to expand the spending sector on frivolous, unnecessary, wasteful and/or unaffordable projects. Instead, the focus should always be on conserving hard-earned resources and the promotion of growth in production from genuine investment.

    • Rob
      Posted March 25, 2010 at 11:40 am | Permalink

      Labour's election slogan – tough on wealth. tough on the causes of wealth.

  2. alan jutson
    Posted March 25, 2010 at 9:35 am | Permalink

    Good morning John

    Think you summed it up in the last two lines.

    Know one knows what the Budget holds until you have seen the small print.

    Its a skill (the lie of presentation) that Labour have developed carefully over the years.

    The little Red Book which seems to grow bigger each year, seems to be the only credible bit of information worth reading.

    Good to see DC getting a bit passionate, but it would have had even more impact if he had slowed it down a bit for greater effect.
    An improvement at last, let us hope it continues.

    As for the Budget, what did you expect !!!!

    • APL
      Posted March 25, 2010 at 12:58 pm | Permalink

      Alan Jutson: "Good to see DC getting a bit passionate, "

      Yes it was.

  3. Ian Jones
    Posted March 25, 2010 at 10:06 am | Permalink

    The budget was a waste of time as expected. However, regarding the banks it is obvious they shrunk their balance sheets…. otherwise they would have had to have raised hundreds of billions more in capital.

    Agreed that QE was a Govt bailout paid for by savers. The UK needs to work out how to get asset prices back into line with general prices. At the moment asset prices are rising and so is inflation but wages are not, the worst possible combination.

  4. Stuart Fairney
    Posted March 25, 2010 at 10:12 am | Permalink

    As you suggest, a pointless exercise in smoke blowing. Most likely Labour are gone in a few weeks, and even if they are not, Darling is most certainly not going to be Chancellor, so one wonders what the point of the exercise was, even the electioneering was poor stuff.

  5. Andy
    Posted March 25, 2010 at 10:16 am | Permalink

    This might sound a little ornery, but I do not mean it to be so, it is a genuine question:

    If the Conservatives win power at the general election, will you continue to blog in such a honest way? I always find your blog refreshing because it comes from the mouth of an MP, from whom we are used to hearing nothing but BlandSpeak.

    Will I have to find a Labour MP who will become Red John Redwood after the election, or will your output become completely noncritical?

    I'll be remembering your answer, and checking back. A change in tone here if you win power will be all the evidence I need that MPs cannot be trusted. I hope you prove to me that the opposite is true.

    I ask this because this blog article recognises the problem with this government in microcosm: they think that what they say changes facts. If RBS has lost £23 billion — say so; hiding it away doesn't mean it hasn't happened. You can see this attitude in everything they do: legislating for aspirations (like that stupid poverty law we got last year). Why? They might as well pass a law that declares me to be a world class olympic swimmer. Saying it doesn't make it so.

    I want a parliament filled with MPs who tell us facts and then debate ideas on how to deal with those facts. Obfuscation helps nobody.

    Reply: Yes, I will still tell it as I see it

    • Andy
      Posted March 25, 2010 at 10:17 am | Permalink

      I didn't mean you speak "BlandSpeak" (you are one of the exceptions, I find) I meant MPs in general.

    • Geoff not Hoon.
      Posted March 25, 2010 at 5:17 pm | Permalink

      Great news you will continue with the blog. it is the only one I read every day wherever I am. Anyone who knew JR in his industry days (in my case Concentric PLC where JR was a Non Exec)will know he is a one off as almost all our chosen leaders have no industrial experience and worse, they would run a mile if asked to get it!!

      Reply: Thanks for your kind words. It was a privilege to head the Concentric team where we proved you can make it in the UK.

  6. Acorn
    Posted March 25, 2010 at 10:18 am | Permalink

    There appears to be a lot of stealth duty rises in this budget. I understand from Sky yesterday, that the staged increase in fuel duty of one pence for April; hides the fact that the one penny derogation to the fuel companies for the cost of bio fuels, has been removed. Hence there will be a two pence rise plus VAT, 2.35 pence.

    Likewise, the increase in duties to compensate for the reduction in VAT a year back; have not been removed when the VAT went back up this January. I understand the same con-trick applies to booze duties. Can you confirm?

    I expect there are many more tricks like this that will not be apparent to the voters. We will be blaming the petrol companies and the Brewers and the ZaNuLiebor will, as usual, be laughing up its sleeve for another successful con-trick; B******s.

  7. Stronghold Barricades
    Posted March 25, 2010 at 10:19 am | Permalink

    Is it true that the Labour party, if re-elected plan to put VAT on stamps?

    Will an incoming conservative administration follow through or chose not to levy the tax?

  8. Brian Tomkinson
    Posted March 25, 2010 at 10:25 am | Permalink

    JR: "He seems unaware of the lack of credit and money in the private sector, or of the way his quantitative easing is just designed to feed cheap money into the public sector to see them up to the election."

    Surely, you can't be so naive as to believe that! Of course he is aware, he organised it.
    Your party has, sadly, failed to properly hold this government to account. You seem unable to find the mechanisms to undo their obfuscation, spin and downright dishonesty. In addition, despite all the media experts within and employed by your party, you have failed to articulate a clear and unambiguous message to the electorate. That is why it looks as though you will fail to remove this most rotten, reckless and detestable government. Our country is virtually bankrupt, our Parliament and government has been corrupted and our parliamentary democracy is on the verge of destruction. You have had five years to plan for this moment – what went wrong?

  9. A.Sedgwick
    Posted March 25, 2010 at 10:49 am | Permalink

    Congratulations on your contribution to the budget debate yesterday, especially following that dinosaur Bell who you wrong footed totally following up the football analogy.

    Whilst David Cameron is an excellent speaker with a quick wit and first class memory much about him puzzles me and I believe many long standing Tory voters, not least why you are not on the front bench in a senior role. My guess is that your presence and higher profile would be worth 20+ seats reassuring people like me.

  10. Antisthenes
    Posted March 25, 2010 at 10:51 am | Permalink

    So this government has come up with a novel way of solving the UK's economic woes. It works like this:

    1. Get rid of wealth creators, tax them so heavily they head for countries with lower taxes.
    2. Put as many people as possible on the government payroll.
    3. Give every body a bank account so the extra deposits they wont get can be lent back out again.
    4. Force banks to lend money that they do not have and would be imprudent to lend in the first place.
    5. Lull the public into a false sense of security by telling them the debt is not that bad so we can dole out a couple of billion.
    6. Make a virtue out of out of a disaster, luck was on their side on this one tax receipts were up a bit and tax on bank bonuses netted more than anticipated. Don't tell them it was a mere drop in the ocean and did not change anything.
    7. Make exaggerated claims about the growth year on year of GDP which even if they had not got rid of all the wealth creators would be hard to achieve.
    8. Move the civil service around the country instead of culling them they can pull that old party trick; now you see us now you don't. In the confusion they can add a few more and add billions that they are not going to save to pay for the cost of it all.
    9. Spend more of the GDP than the private sector (to save time I suggest everybody just hands over their pay packets to the government every week).

    I bet the Conservatives are sorry they had not thought up this one first or perhaps not.

  11. Antisthenes
    Posted March 25, 2010 at 11:00 am | Permalink

    Brain Tomkinson has a very good point he is only articulating what most people are feeling in the country. Use what ever influence you have within the Conservative party to get this message across.

  12. Posted March 25, 2010 at 11:05 am | Permalink

    I would appreciate your visiting my latest post.

  13. Michael Lewis
    Posted March 25, 2010 at 11:07 am | Permalink

    "and offered no explanation of why they were doing it."

    Here I think the chancellor was correct. Presumably it is self evident that for organisations that have lent too much money not to go on expanding their balance sheets.

  14. Andy
    Posted March 25, 2010 at 11:09 am | Permalink

    John,

    Fairly typical of this tired government.

    A Prime Minister who sets the example by failing, week in, week out, to answer a question put to him but more intent on scoring cheap (and of very dubious veracity) political points.

    His ministers follow his example and refuse to allow Parliament to hold them to account.

    It is nothing short of utter contempt for our parliamentary system and the electorate as a whole.

    I look forward to seeing your analysis (not that there was obviously much to analyse from the Chancellor's speech)

  15. AJC
    Posted March 25, 2010 at 11:24 am | Permalink

    The general public appear to think that any reduction in the (fiscal) deficit is a reduction in the (national debt).

    This confusion needs to be corrected at ever opportunity. Why not call it overspend – something everyone understands.

  16. Derek Duncan
    Posted March 25, 2010 at 11:54 am | Permalink

    I enjoyed the Freudian slip at the end of your blog: "Labout" is just right – the sooner the better!

  17. brian kelly
    Posted March 25, 2010 at 11:58 am | Permalink

    The budget statement was a shoddy disgrace entirely worthy of this utterly discreditable government. Party political through and through – and the childish, juvenile yet vindictive comments regarding the Belize and Ashton statement was schoolyard politics – and how those stupid, short sighted labour MPs cheered. In the midst of the most serious and disastrous situation this country has ever faced in peacetime they come forward with a totally trivial budget. It is literally beyond belief – and how many times have we had to use that phrase in the lifetime of this NuLabour govt. And Sir! Stuart Bell – the man who worked might and main to prevent the expenses details becoming known to us first of all resisting FoI requests, then saying that total transparent details would be published by some committee or other of the HoC in order to minimise and belittle the Telegraph revelations and which, when published, were hugely redacted, who on every occasion has sought to defend the indefensible the latest of which has been his trivialising of the lobbying scandal and all the time trying to pass himself as a passionate advocate of transparency and honesty – has displayed himself to be an ignorant oaf with his intervention at PMQ's and an illiterate speech during the budget debate in which he seemed to be totally ignorant of economics.

    J. Redwood, your speech was masterful – not a word out of place or wasted. Absolutely excellent as were other interventions and speeches from the conservative benches. [As a side comment you made Bell look ridiculous by comparison. I have said before how outstanding the conservative benches look in economic debates as against the deplorable front bench of the Labour party. On the labour back benches, too, [when they are there] with some very honourable exceptions.

  18. Norman
    Posted March 25, 2010 at 12:23 pm | Permalink

    The juggernaut rolls on unabated. Whoever says there is no difference between the Parties should listen to what Labour are saying and how they plan to get us out of this mess.

    Their new plan for recovery is based on a period of unprecedented growth in the economy – the previous plan of abolishing the bust of a boom and bust cycle having fallen by the wayside this must be their Plan B.

    How is this growth going to be acheived? As far as I can make out it is by borrowing eye watering sums from other governments (China prominent amongst them) so that they can distribute this wealth via public sector jobs (doesn't matter if they are productive or not) so that those people can buy goods from other countries (China prominent amongst them). We will, of course, be paying interest on these loans and there is no end of the borrowing in sight, let alone starting to pay off the principle.

    I can't say I'm full of confidence that this plan will suceed any better than the previous 'no more boom & bust' plan.

  19. Robert K, Oxford
    Posted March 25, 2010 at 12:33 pm | Permalink

    Good. All that needs to happen is for Mr Cameron and Mr Osborne to embrace and implement these ideas. Right now, why would anyone who favours a smaller state and an enterprise economy vote Tory, other than the vain (sorry JR) hope that Mr Redwood would be made Chancellor?

  20. lola
    Posted March 25, 2010 at 1:35 pm | Permalink

    Word in your ear Mr. R. The Tory's aren't getting through to the wimmin. Just had another conversation with anoher one, who again has said not going to vote Tory or Labour. This is common among the ladies around here.

    Methinks you have a problem?

    • Robert George
      Posted March 26, 2010 at 2:46 am | Permalink

      I'm not so sure that is a problem in the longer term. Given that Labour can win a majority marginally even if the Tory party has a 5 or 6% advantage in voters, a hung Parliament is a strong possibility. This is particularly so considering how electoral distribution of seats unfairly favours Labour.

      In a hung Parliament Labour would need LIB Dem support and probably get it. Cameron should not in my view form any government with the Lib Dem's no matter how tempting; they would hobble everything which needs doing.

      The scenario post election would be a Labour party forced by the Financiers and the IMF to renege on every false promise made in the recent ridiculous non- budget. They alone would be responsible for the unemployment and economic catastrophe which would inevitably follow. If Labour remains in Government the first result will be a flight of Capital from the UK.

      Brown and the LIB Dems would fight among themselves. Brown is constitutionally incapable of sharing power within his own party let alone with any other. It would be a debacle.

      Within 12 months there would be another election, the discredited Lib dems will be wiped out and Labour will be a rump. Losing narrowly in 2010 will not be a disaster for Cameron's Tories but winning narrowly will be a disaster for whoever is marginally ahead.

      In 1950- 51 it took two elections to get rid of a massive Labour majority. I think the same is going to happen in May. Cameron as PM in 2011 with a 007 mandate is much better than Cameron in 2010 with a weak mandate.

      • brian kelly
        Posted March 26, 2010 at 10:15 am | Permalink

        I have been strongly inclined to this analysis – a good election to lose! But the very dangerous downside to this is that Brown could so manipulate the system, including the voting system, that it could become very difficult to win the subsequent election – though the fury and disgust of the electorate could well overcome any 'fiddling' with the system.

      • lola
        Posted March 26, 2010 at 1:42 pm | Permalink

        Keen analysis. In lots of ways I'd like Brown to suffer the failures wrought by him, but in lots of other ways I want it sorted, now, and he won't do that.

  21. Bazman
    Posted March 25, 2010 at 2:05 pm | Permalink

    What is the Conservative and Liberal policy on cider is the big question posed by this budget
    Tramps, bumpkins and schoolchildren across the country will be mourning the ten percent rise on the tax on cider .Strings on trousers will have to be tightened, begging and pocket money requests are set to rise.
    It needs to be pointed out that the Chancellor has abolished stamp duty on houses below two hundred and fifty grand and the duty rise on alcopops was only two percent Labour party sources have said.

    • Lindsay McDougall
      Posted March 26, 2010 at 3:30 am | Permalink

      I feel an attack of anti-social behaviour coming on. I shall take a ghetto blaster, with CD player of course, outside Number 11 Downing Street. I shall turn it up to full volume and play Adge Cutler and the Wurzels' "Drink up thy Zyder" all night long.

      Dear Adge Cutler, a west countryman, born 1931 died 1974. He died when he drove his MG into a roundabout at Chepstow after playing at a gig. Methinks this was a man who practised what he preached.

  22. Robinson
    Posted March 25, 2010 at 6:52 pm | Permalink

    All true John, so why are the Conservatives not 20% ahead in the polls? I am frankly incredulous that (a) the great British public still think Labour worth another try and (b) that the Conservative Party has been so ineffective at attacking the Government's appalling record.

    Am I missing something here?

  23. Posted March 25, 2010 at 7:47 pm | Permalink

    There is a good reason that this budget did not address the real issues, as the government does not do so. They must realise that rather than providing prudent stewardship of the Nation's finances and providing huge investment, they are bequeathing high taxes AND a spending squeeze for a generation.
    If the Chancellor's forecasts are accurate, National Debt will peak at nearly 100% of GDP in 2014, from a low of 30% in 2001.
    Most of this is down to Labour Spin. The calculation is fairly straight forward.
    – During the boom years up to 2007, Labour let the National Debt rise by 15% of GDP through the Golden Rule – of only borrowing to invest. By 2007 this structural deficit was around 4% of GDP.
    – During the recession the structural deficit was added to. In the seven years to 2014 it we essentially not be touched. This adds 28%.
    – You could add interest on that, adding 10%.
    So in 2014 over two-thirds of the increase in Debt since 2001 was due to Labour.
    This is before one adds in the billions lost from not performing any sort of due diligence before taking over the banks.

  24. Peter Turner
    Posted March 25, 2010 at 8:29 pm | Permalink

    Labour is still pushing the idea that our fragile recovery can be nurtured only if we take on even more debt and postpone all remedial action until some unspecified future occasion. We have to bring home to the general public the fiscal idiocy of this course of action. Maybe the loss of our triple A rating may bring the Government to their senses – but I doubt it.

  25. Lindsay McDougall
    Posted March 26, 2010 at 3:00 am | Permalink

    The budget? Summarise it peotically. Firstly, from Edward Lear:

    Of vast proportions and painted red
    And tied with cords to the back of his head.

    Or from the first and last lines of an old Leonard Cohen song:

    The lady in blue is thirsting for revenge
    And there are no diamonds in the mine.

  26. Posted April 16, 2010 at 6:47 am | Permalink

    I found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work Look forward to reading more from you in the future.

  27. Posted April 16, 2010 at 8:46 am | Permalink

    I really liked your blog! It helped me alot…

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    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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