The UK’s problem – too few producers

In the 1970s at the end of a wildly socialist period of Labour government we had a similar problem to today – too few producers. Then it was recognised and led to an important change of government to start to sort things out.

All the economic numbers about the UK are currently at misery levels. Inflation is too high. Real incomes are too low and falling. Unemployment is too high. The balance of payments deficit is too large. Public borrowing is too big. The interest bill on the public debt is enormous.

The answer is obvious – we need to produce more of our own goods and services, and we need to sell more abroad to afford the imports we crave.

Mr Brown – and Mr Clegg – seem to think sustaining high and rising levels of public spending is the way to tackle the problem. They fail to see that high taxes – present and prospective – put people off working harder, risking investment, creating jobs, making things. They fail to see that some public spending, far from creating home goods and services we need and want, is wasteful, just adding to the debts around our necks for no good purpose.

The MPs have been forced to get it. Borrowing more public money to buy a Lib Dem MP a better armchair or a trouser press does not add to the national well being enough to justify the extra debt. If the items are imported it is a double blow to our economy. Now it has to be the turn of the rest of the public sector to get it.

There is hope on the dorsteps. Yesterday I had two surprising exchanges. The first was with a lady who was very disillusioned with politics in general. She told me she worked for the NHS which she said was “crap”. Instead of protesting about how good much of the care is from our nurses and doctors, I asked her why she thought that. She told me it was so because they employed far too many managers and box tickers who got in the way of their provision of care, and took too much of the money which was needed to spend on patient service.

The second was someone who enthusiastically said he would support me and then went on to explain he was a civil servant. He said he knew the cuts were coming, and he thought they were needed, even if it was not in his own interest. It was good to hear a public servant speak up for the general interest and to see the dangers of borrowing too much so clearly.

Mr Brown has tried to create such a large public sector, hoping then they wll unite “to fight the cuts”. Some in the public sector fully understand you need a productive and successful private sector to pay the taxes to pay the public sector bills, and fully understand the need to do more for less to make their contribution to economic recovery. There is a growing sense of unfairness in London and the south about how much of the national bill we have to pay, and growing fears amongst the Labour, Nationalist and Lib Dem political classes far away from London about what happens when the public sector money tree no longer produces such a good crop. The way to unite the nation is to unite it around the twin propositions that we need a much stronger private sector recovery, which requires lower tax rates, and we all need to do more for less in the public sector, as the private sector has had to do for years to compete.

Promoted by Christine Hill on behalf of John Redwood, both of 30 Rose Street Wokingham RG40 1XU

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41 Comments

  1. Norman
    Posted April 17, 2010 at 9:12 am | Permalink

    I imagine the vast majority of the public knows that the government is wasting untold millions in every department, that money is being wasted is about the only thing you can rely on a government to consistently do. The NHS is surely no exception.

    The vast majority also knows that spending is completely out of control.

    The interesting point is that we need to produce more. I scratch my head and wonder what it is we will produce. If it involves energy (and I'm scratching my head again at anything that is produced without the use of energy) then the UK, with the most stringent CO2 reduction ambitions of any country in the world, will find it difficult to attract companies from outside the UK to choose here over anywhere else in the world.

    Our own entrepreneurs may start off producing here but find they need to start completing carbon footprint reports and paying large sums for the honour of being a member of such schemes.

    A computer on every desk was a visionary idea that transformed the world, I think a windmill in every garden or a solar panel on every roof won't be quite as successful but we'll wait and see.

  2. Mark Wadsworth
    Posted April 17, 2010 at 9:40 am | Permalink

    Probably three reasons why our output is so far below trend, and I think you only mention two: there is far too much regulation (in extremis, things like the owners of Corus being paid a billion or two to shut it down) and taxes far too high/employment in public sector far too high, that's all well and good, but you miss off the third reason:

    … it is because all the money was being funnelled into the house price bubble, people with a bit of initiative found it easier and more profitable to go into buy-to-let or property development than start a proper business that actually creates wealth.

    So I suppose my question is, would a Tory government allow the house price bubble to deflate, or would it continue Labour's policy of trying to desperately keep house prices up by, for example, freezing council tax, lifting stamp duty threshold, restricting new development, offering subsidies for mortgage payers in arrears etc?

    • Kevin Peat
      Posted April 17, 2010 at 10:48 am | Permalink

      Hear hear !

      Mr Redwood has a vision of the UK as a property owning democracy (from a previous post) but hasn't that already been achieved ? Aren't we already obsessed with property like no othr nation ? For the past decade haven't our TV channels been packed with property shows ? Haven't house prices been driven to insane levels by the stampede for property ?

      Not only have our most talented been diverted from true wealth creation into this bogus 'industry' but a lot of capital has left the country based on the notional value of our housing stock – this has taken the form of equity release and emigration. A national economic disaster AKA the Credit Crunch.

      The housing market simply has to be deflated for us to realise our true economic level and for us to accept the drastic drop in living standards we need in order for us to become competitive again.

  3. oldrightie
    Posted April 17, 2010 at 9:52 am | Permalink

    Too few producers emphasised by Labours' client state.

  4. waramess
    Posted April 17, 2010 at 10:14 am | Permalink

    Waste is not really the issue but spending is. Government is too big and that is the problem. It was the problem under Mrs T and it is more so under GB yet no politician seems capable of stopping it.

    So long as the Libs and the Labs and sometimes the Cons are wedded to this strange concept that consumption leads to investment we are stuck with a government that will get bigger and bigger in it's mistaken quest to feed consumption

    A smaller government with sound money policies would be our panacea but I would not propose a breath holding exercise whilst waiting.

  5. Matt
    Posted April 17, 2010 at 10:39 am | Permalink

    In the north east, home to some of the greatest minds of the industrial revolution I think about 70% of the populace is either employed by the public sector or is on benefits.
    That represents every bit as much of a challenge, as the incoming Thatcher government were presented with when public funds were used to prop up nationalised steel works and coal mines.

    Mr Brown, by designing the expansion of the state, taking on hundreds of thousands of additional workers has made it hard for the Conservatives to provide a clear message to the British people, not every public worker will have the outlook of the civil servant that you met.

    Then, if the Conservatives get in, and cuts are made and taxes rise, maybe vat, there will be an outcry that the public have been deceived … and there will be something in that.

    I don’t know what the answer is, but I do think Mr Cameron should work a little less on presentation and talk more about the hard choices ahead, about how the present position is not sustainable and if the government of the day don’t tackle it then the markets will sort it out, a far worse fate.

    • Jmaes Clover
      Posted April 17, 2010 at 7:37 pm | Permalink

      It's a difficult one: be honest and describe the misery on the way and lose the election, or be vague and optimistic and have a good chance of winning.
      Which would you choose?
      No doubt you will reply that the people are tired of being lied to and want the truth above all. I cannot agree.

  6. Simon D
    Posted April 17, 2010 at 10:42 am | Permalink

    Interesting figures from my own London borough. It was old Labour for many years but fell to the Conservatives three years ago.

    The Chief Executive has just retired on a final salary of £164,000. If he has the right number of years service this will mean a pension of over £100,000. The head of legal is on £141,000. Six other employees earn more than £100,000 and you can imagine how many at the Civic Centre will therefore be earning between £50,000 to £100,000 per year.

    Anecdotal accounts from Conservative councillors say the Labour waste was incredible and there were plenty of low hanging branches to lop. The Conservatives have held the Council Tax at the same level since they were elected with no detriment to services.

    However, we must also have regard to employment law. The BA strike has taught us that once you employee people on silly salaries and even sillier terms and conditions it is virtually impossible to reduce remuneration – especially if a powerful union is there to protect the workforce.

    This is becoming a very strange election. The political class and the media parasitic upon it do not want to talk about the belt-tightening needed to sort out our monumental problems. Instead we discuss Nick Clegg's hairstyle and whether or not Michael Gove should or should not wear a tie on a TV programme. You, Mr. Redwood, are an honourable exception to this. My own feeling is that something exceedingly unpleasant is going to happen to UK PLC in the next twelve months and the unintended consequences of our failure to curb our profligate behaviour will be much worse than we currently expect.

  7. Jim
    Posted April 17, 2010 at 10:46 am | Permalink

    Absolutely spot on – we import too much stuff. More should be made here, to replace imports, and to be exported. But as others have said, you try doing it. Try starting a manufacturing business, and experience the skip loads of paperwork and clipboard wielding bureaucrats, that will descend upon your head, most of whom seem to want you to stop doing anything at all. Is it any wonder people give it up as a bad job?

    We in this country are trying to have it both ways. We want cheap stuff, but we ignore the consequences of that cheap stuff. We ignore the slave labour wages, the environmental damage, the social costs to the nations who produce said cheap stuff. As long as it's not on our doorstep, we close our minds to it. Its happening in some God forsaken hole in China, or India, not Macclesfield, or Nottingham. So it doesn't matter.

    One of two things must happen – either we prevent cheap tat coming in from abroad, and accept that we must buy (at a much increased cost) the goods manufactured here under our own stringent labour and environmental rules, or we allow factories here to produce under the same conditions as abroad, and accept the costs to the environment and social welfare.

    To continue trying to have it both ways will result in us eventually becoming even poorer as we become dependent on foreign manufactures, which will get more and more expensive as the pound slides inexorably downwards.

    • David B
      Posted April 17, 2010 at 9:12 pm | Permalink

      Simply advertising country of origin would be a start. I have discovered by chance in recent years that I can buy Honeywell switches made in Scotland at the same price or less than Telemecanique ones made in France. I can buy Bailey and Mackey pressure switches which are as good as any other make but are made in Birmingham, not Germany or Italy. Vickers valves are made in England, Rotary Power in Newcastle and Kawasaki in Poole both make pumps here too.

      There is still a manufacturing base left, but we casually go to RS or BSL or any of the merchants and buy things without realising we can get British ones for the same or less that are just as good. If we try we can often find British goods to replace imports, but we need to know they exist.

      • alan jutson
        Posted April 18, 2010 at 10:42 am | Permalink

        David B

        I what you say my be true, why are the sales teams of the companies you mention not promoting their goods better.

        If you have a better or equal quality product to someone else, at the same or less costly price, then it is down to the sales and management team to promote it to gain market share and increase sales.

        For many (not all) products it is simply too expensive (in almost every way) to manufacture in the UK.
        High wages
        High rents or property prices
        High business rates
        High taxes
        High health and Safety requirements
        Etc Etc.

        • David Price
          Posted April 18, 2010 at 2:02 pm | Permalink

          The cost profile depends on what sector of industry you are in, it simply is not universally true that everything made in the UK is more expensive than elsewhere, even China.

          A high degree of automation neutralises comparative wage costs while consistently high quality neutralises wastage costs.

          The simple truth is that people in this country never really cared where things were made and refused to take account of the long term consequences of their actions – buy a foreign ship and eventually you will lose your job building cars because the people who used to build the ships can't afford your cars.

          More to the point, offshore (ie give away) strategic industries, services and skillsets and eventually you cannot compete – full stop.

          People need to take more account of where products and material are produced and realise the consequences of buying imports.

  8. JimF
    Posted April 17, 2010 at 10:48 am | Permalink

    Both the indigenous UK manufacturing Companies I worked for in the 80s eventually sold their land portfolio, one to a supermarket, the other to be covered by housing.

    The first and smaller Company, which was only marginally profitable in its metal manufacturing activities in Outer London, actually used the revaluation of their properties year on year to borrow against, in order to pay business rates, south east wages, and many other overheads which wouldn't have been there in a cheaper location. It was like a coiling spring which could only end with either a bust or by selling the property and moving out, which they eventually did.
    They actually spun off a semiconductor arm which was housed in your constituency, in a modern high tech unit, approx 10000 square feet. It was the type of unit that you might have seen 5 years later in Singapore. It was ahead of its time, in the wrong place, but definitely uncompetitive in terms of property and wage costs, totally unsupported in its long-term aims by local authorities, and it soon went east.

    I suppose if one good thing comes out of the current situation, it is that the skewed attitude towards investment in the UK is changed. From the aspiring 20-something buying a bijoux penthouse flat in Trafford to SrAlan building up his Hotels/Shops/Offices portfolio, property has been seen since the late 70s as a one-way bet. Until this boom goes bust there will be no reason for people to change the habits of the past 30 or so years, and invest in production and their employment more significantly than property.

    It WILL be quicker and ultimately easier to do this by way of keeping a strong currency, and allowing a property bust than by an inflationary boom outside the property sector covering the sins within it. It just isn't politically convenient to admit this, amongst all parties. There are too many SrAlans and mini SrAlans around, and insufficient producer-investors waiting in the wings.

  9. Acorn
    Posted April 17, 2010 at 11:08 am | Permalink

    A few posts back JR, you were questioning the vaporisation of £700 billion from our nationalised banks' balance sheets. Could the following be one of the answers?

    Interest rate swaps. A city in France has recently defaulted on a bank interest payment. The city took a bet, offered by a bank, to swap some of its fixed interest rate debt for variable interest rates, which were low at the time of the swap contract. Unfortunately, the city did not allow for the interest rate going back to its original fixed value when the swap expired.

    Apparently there are a train loads of interest rate swaps waiting to explode in Europe. UK local government has never been allowed to use derivatives of any kind, as far as I am aware; you may no better.

    Now, what are the chances that our nationalised banks are holding some of these swaps?

    • Acorn
      Posted April 17, 2010 at 11:57 am | Permalink

      Now how does that song go?
      The ankle bone connected to the leg bone
      The leg bone connected to the knee bone
      The knee bone connected to the thigh bone
      Now hear the word of the New Jersey Carpenters' Lawyers V RBS.

    • Mark
      Posted April 17, 2010 at 7:30 pm | Permalink

      The U.K. decision in Hazell v. Hammersmith & Fulham L.B.C., 2 W.L.R. 372 (1991), ruled that swaps transactions entered into by local government authorities were ultra vires (beyond their legal competence to execute – much as e.g. a minor agreeing marriage), and therefore legally unenforceable contracts. This ruling cost banks approximately $1 billion in defaulted swap payments. The need for legal clarity is highlighted by the fact that legal counsel in Hazell had made continuous assurances that the swaps contracts were legal and enforceable.

      However, banks have become much more canny about these things, and you will find embedded derivatives in all manner of contracts that government entities enter into. These aren't strictly swaps that might not be enforceable – they're PFI payments and other contracts for goods and services with formula payments.

      • Acorn
        Posted April 18, 2010 at 9:35 am | Permalink

        Thanks Mark, good info. I never considered PFI contracts as disguised swaps.

  10. Max Van Horn
    Posted April 17, 2010 at 12:36 pm | Permalink

    John..what hope is there for the productive side of the economy, when on the platform the other night we had the choice of two socialists or a communist. People are angry and frustrated,which is being wrongly interpreted as apathy.We desperately need men/women of your calibre.We need strong vibrant leadership.We need politicians to really listen, not just pay lip-service.Out of the EU, before it implodes and costs us even more money,immigration, and as you were saying; why keep rushing and ramming through ridiculous and ill thought out legislation.And finally the Mammoth in the room..how is the huge government debt going to be tackled or are they hoping to keep passing the parcel untill the music stops and the unlucky incumbent opens it to find a bankruptcy petition.

    • Jmaes Clover
      Posted April 17, 2010 at 7:39 pm | Permalink

      The odd thing is, the chaps actually seem to want to grab that parcel and hold it. Rather them than me.

  11. Simon D
    Posted April 17, 2010 at 12:49 pm | Permalink

    Following my post earlier today I thought I would report on the Conservative's local election leaflet – just received this morning. The highlights are:

    1. Council tax frozen for FOUR YEARS since they took power from Labour.
    2. Radical changes to the delivery of our services: greater efficiency with no loss to the front line consumer.
    3. 34% of waste recycled (double that under Labour)
    4. Investment in parks, libraries and leisure centres after years of Labour neglect.
    5. 1,000 new trees planted.

    It goes to show that you can cut waste, freeze taxes and provide better services. This is the opposite of what new Labour and the Liberal Democrats have been telling us. 'Labour investment versus Tory cuts'. Not in our borough Mr. Brown and Mr. Mandelson – why don't you both get a life, preferably on the opposition benches.

  12. no one
    Posted April 17, 2010 at 2:11 pm | Permalink

    and we need to use more EC nationals as workers in this country instead on non EC nationals who often pay no tax here and send much of the money they earn undercutting Brits to their home country

    we need to stop diluting our skillbase by allowing floods of folk into this country on such wheezes as "intra company transfer" visas

    and we need to stop printing indefinite leave to remain visas like confetti

    we need to protect our hard won intellectual property and stop the 3rd world outsourcers taking our leading techniques over to India

    we need to play to our strengths and stop trying to compete with the 3rd world on their terms

  13. Alex
    Posted April 17, 2010 at 2:55 pm | Permalink

    2 actions to reverse the lack of capital investment:

    1. Repeal the the various measure reducing the rate of capital allowances on plant and machinery – including the Conservative provision in 1996 that reduced the rate of WDA on long-life (25+ years) to 6%. The decline in industrial investment started then. I know; I have been involved in industrial investment since the 1980's

    2. Repeal the legislation since 1997 limiting the tax benefits of finance leasing, which has made the UK a very unattractive place for inbound investment. The Toyota and Nissan factories, the Kymmene paper plants at Shotton, most of the gas fired power stations and much more investment in the 1990's were funded with foreign equity and UK banks providing finance leasing. If you want to create any more investment, that is the way to do it, but I fear it may be too late.

  14. Neil Craig
    Posted April 17, 2010 at 3:06 pm | Permalink

    The problem is worse than that. The state sector is indeed now about 53% of the economy & unlike in the era of nationalised industries completely non-productive. The worse bit is that the state is heavily negatively productive. Regulation for windmillery & against nuclear means ethe average household spends £1243 on electricity rather than £311 & the same applies to the 70% non-domestic power. "Planning" makes housing 4 times the cost it should be. H&S regulation negates the work of 4 million workers. EU regualation, according the the EU "Enterprise" Commissioner, cost 5.5% of GNP – it is unlikely he is overestimating. All in all it looks like governemnt controls halve the size of our economy as well as eating half of what is left.

    The good news is that all of this could be ended with a few Acts of Parliament. If we are almost not in recession with all this burden think how good life would be in Britain without it. The bad news is that with the Conservatives under Cameron, no major party is offering anything but more endless parasitism.

  15. Lindsay McDougall
    Posted April 17, 2010 at 3:22 pm | Permalink

    Excellent. Please print it and stick it under Mr Cameron's nose.

    To get the better of Mr Clegg and Mr Brown in debate, he should major on the policies where Labour and LibDem are similar and we the Conservatives are clearly different:

    – Elimination of the fiscal deficit in one parliament, not two
    – Consequential bearing down on debt and debt interest
    – A small state and what is necessary to attain it
    – Taxation & monetary policy aimed at growth
    – European policy

    It is important to tar Labour and LibDems with the same brush.

    And please don't bang on about Trident. If we are going to have to contain defence expenditure, and simultaneously buy Trident, the implications for conventional defence are not good. What is the last possible date at which we can order Trident?

    Reply: There is no last date. There is no need to spend serious money before 2015

    • backofanenvelope
      Posted April 17, 2010 at 6:10 pm | Permalink

      "Elimination of the fiscal deficit in one parliament, not two"

      Good idea – but how?

      • Lindsay McDougall
        Posted April 18, 2010 at 10:56 am | Permalink

        First, the macro-economic numbers for the 6 financial years 2009/10 to 2014/15 (£bn in constant 2010/11 prices):

        Debt interest 31 42 50 53 54 54
        All other public expenditure 655 627 593 577 563 550
        Total public expenditure 686 669 643 630 617 604
        Total tax receipts 516 529 568 580 592 604
        PS borrowing 169 140 75 50 25 0

        That is the top down planning – and anybody who is numerate can do it in a spreadsheet after getting the base year figures from the budget report.

        The reduction in total public expenditure relative to 2009/10 levels would be 12%. Once you exclude debt interest, which will grow until we stop borrowing more, the reduction in all other public expenditure would be 16%. This is the painful bit and it is why debt should be viewed as a malignant tumour.

        John Redwood has said that 10% can be taken out of public expenditure with limited pain. So we are OK up to and including FYR 2011/12; it gets more difficult after that. In my figures, the biggest reduction in borrowing will come in 2011/12, so the 2011 budget is the crucial event.

        A Conservative government would make deep cuts in social protection and change the way it worked. There would be cuts in all areas except the NHS and foreign aid. I would not make those exceptions. In the NHS:
        (1) There are layers of bureaucracy to strip out, starting with the Strategic Health Authorities.
        (2) Doctors are paid about 10% too much.
        (3) Too much money is spent on geriatric medicine.
        Foreign aid is totally useless to both donor and recipient.

        And I would demand economies in expensive international institutions – UN, EU, IMF (scrap this last).

        Taxation is simple – keep our manifesto promises and be prepared to use VAT as a regulator. Target 38.5% of GDP.

        In terms of projected GDP, realisic growth rates for planning purposes are 1% in 2010/11 and 2.1 % pa afterwards (the long term average). Under this scenario, public expenditure and taxation would converge to 38.5% by FYR 2014/15. If growth turns out to be higher, the pain would be less.

  16. Simon
    Posted April 17, 2010 at 5:50 pm | Permalink

    Although I am generating hundreds of thousands of pounds of exports for database design services they are providing many millions of pounds of competitive advantage to overseas companies .

    There aren't enough proper British owned and headquartered large companies for a small supplier like myself to service .

    Two other problems facing smaller players :-
    – regulation , promoted by lobbyists to protect the status quo
    – in my area a malfunctioning marketplace which is unable to discern quality

  17. S Whitfield
    Posted April 17, 2010 at 7:04 pm | Permalink

    None of the three leaders have even a basic understanding of economics. On thursday Gordon Brown repeatedly claimed that reducing state spending "takes money out of the economy".

    Sadly David Cameron failed to point out that money kept out of the wasteful hands of the state is then available to spend in the real wealth creating sector of the economy.
    Mrs Thatcher wasn't always right but she was wise enough to know that individuals can spend money more wisely than the state.

    The well being of the nation and the hopes of all conservative minded people are crying out for a return to this philosophy. Unfortunately we have the limp David Cameron who is more of a liberal/tony blair clone than a true Conservative

    He is so weak, even congratulating Labour for soaking the public services in spending when most of it was wasted.But he agreed with Labour spending plans so he's painted himself into a corner.
    He needs to get tough, quickly and attack his opponents. Ignore the image consultants, stop the talk about letting sunshine win the day etc. and be a proper politician with convictions.

  18. Lindsay McDougall
    Posted April 17, 2010 at 7:20 pm | Permalink

    THERE IS NO RECOVERY, GORDON

    Over a period of 18 months (2008 Q2 to 2009 Q3) GDP fell by a total of 6%.

    There was 0.4% GDP growth in 2009 Q4, half of which was achieved by revising 2009 Q3 GDP downwards.

    The OECD has pencilled in 0.4% GDP growth for 2010 Q1.

    During 2010, the following stimuli have come or will come to an end:
    – Quantitative easing
    – Ultra low base rate
    – Car scrappage scheme
    – VAT rate of 15% (now back up to 17.5%)
    – Holiday from Stamp Duty

    That little lot won't have a positive impact on economic growth. And the private sector is still starved of capital. So there isn't going to be a recovery, is there?

    Mr Redwood, where are the Conservative attack dogs? It's all very well Mr Cameron being constructive and having a nice personality, but there are nearly 200 Conservative MPs. Is nobody allowed to stick the boot in? We should be rubbishing Labour and Lib Dem policies (because they are rubbish) every single day.

  19. Mike Stallard
    Posted April 17, 2010 at 7:23 pm | Permalink

    Let's be really positive.
    The birth rate is falling and has been falling now for a number of years. Since the discovery of contraception that worked and also the freedom to abort on demand, there have been less and less of us white English.
    Add in all the emigration, and we are rapidly declining.
    That reflects, of course, our diminished status in the world.
    This ought to mean that the population falls commensurately and we become like, say, Australia where there is freedom to move about and where everyone has enough space to live in harmony.
    Say 30,000,000 people in ten years' time?

  20. Jmaes Clover
    Posted April 17, 2010 at 7:32 pm | Permalink

    Just a moment, John. If London and the South are aggrieved that "remoter" areas are living off them, could not the North and Midlands especially reply that whatever industry and production we have left is centred there, whereas the financial/hotel/office/service world centres on..London and the SE.
    I am by no means a supporter of a huge public sector, but I do get the impression that too many bloggers assume the whole thing is a burden on the go-ahead, thrusting private sector.
    Well, unless you can afford independent school fees and private health care, you are going to use the public sector, and unless you have a private army, you are going to need the police force.
    The balance is wrong, but there is no excuse for a vicious and snarling delight at the propect of thousands of people losing their jobs.
    By the way, I am not and never have been a public sector worker.

    • Lola
      Posted April 18, 2010 at 9:30 am | Permalink

      Hmmm, not so sure. In Suffolk I can think of quite a few high tech manufacturers – good for a 'rural' county.

      • Jmaes Clover
        Posted April 19, 2010 at 7:26 pm | Permalink

        I'm sure there are- up and down the land there are small, high tech firms, but the really big industries, the kind that will employ hundreds of people, tend in to be in the North and Midlands. The reason that these areas have huge pockets of unemployed, both willing and unwilling, is that these industries have died or are in a weak condition.
        My main point, though, is that too often there is an assumption that the public sector is some huge burden, a quite useless monolith that employs millions to do nothing. I think it's only fair to recognise that a modern civilised Welfare State needs a public sector. This is not to say that our version has not been swollen by Brown's policies into something that attracts the derision and often loathing of many who are not involved in it.

        • Lola
          Posted April 22, 2010 at 12:35 am | Permalink

          I reckon about 80% of 'public services' supplied by government could be better done by private business. One would think that the more modern an economy the less it would need 'public services as its citizens would be wealthier and better educated and better able to look after themselves. It is one of the grand deceits of socialism that they try it on with the opposite of that.

          In any event large public employers distort the jobs market and crowd out private business. They cause rents to rise and shortages of cpaital. Furthermore carrying a 50+% overhead cost of excessive 'public sector' – i.e. taxes – has priced us out of world markets in many areas of wealth creating private business. In regards to mass employers, the world of business has moved on, very few businesses are now mass employers in the sense you mean. Many are virtual companies, as shoud become the case as we advance technically and learn how to do even more with less. The areas of which you speak are now in effect over-populated. In past times the population would have moved on and taken their skills, or their cognitive ability and opposable thumb to where the owrk now was. Socialism as trapped them in new ghettos on benefits whilst trying to take work to them at the expense of other profitable businesses in areas where work is. These transfer payments nullify any comparative advantage enjoyed by those other profitable businesses and we go into a cycle of decline. People have to move to where work is – basic location of industry theory teaches us that. I've done, so why the Hell should I be taxed to support those that won't?

  21. Kevin Peat
    Posted April 17, 2010 at 8:00 pm | Permalink

    I am very concerned at the loss of major industry. A 70m population cannot be sustained by small businesses.

    • Paul A
      Posted April 18, 2010 at 2:21 pm | Permalink

      Rubbish assertion. There are currently 4.3 million SME's trading in this country with a working population of 28 million. That's less than 7 employees per business. If we then also rationalised the tax and NI schemes, removed the red tape and bureaucracy, scrapped IR35 and incentivised businesses to hire and half of SME's employed ONE more person each we wouldn't have any unemployment at all.

      So I'm afraid you are wrong Kevin a 70 million population can quite easily be sustained by small business

  22. Lola
    Posted April 18, 2010 at 9:38 am | Permalink

    Let's put it very simply. UK plc is carrying too much overhead. One sure way to bankruptcy is to love your overhead. If that overhead is also paid more than the shop floor you price yourself out of work. And that's what we have done. We have priced ourselves out of world markets.

    Your trouble, Mr R, is that your MD and Finance Director do not seem to have a clue as how to present this, and its cure, to the shareholders and stakeholder (yuk) in a way that secures them election to the board. Someone needs to get after DC to train him how to present these facts in a way that the voter understands and can buy into.

  23. Paul A
    Posted April 18, 2010 at 2:16 pm | Permalink

    Totally agree with you John, it's a shame that no one seems to have told Dave and George about this either. Cameron's woeful misunderstanding of why NI cuts actually leave money in the economy rather than Brown's ludicrous take on it as evidenced in the "leaders" debate was soul destroying for someone like me running an SME.

    For what it's worth I also think it's a travesty that someone of your talents doesn't have a front bench role while a bunch of light weights do. It's why I can't vote Tory I'm afraid

  24. Lindsay McDougall
    Posted April 18, 2010 at 6:25 pm | Permalink

    For David Price

    My target tax receipts are based on getting to 38.5% of GDP in real terms.
    (1) I assume only 1% real GDP growth in 2010/11 and 2.1% pa thereafter, not the cock eyed optimism of the budget report.
    (2) I use constant 2010/11 prices, not nominal or current (funny money) prices. In other words, I correct for inflation using the GDP deflator (see budget report).

    My figures are compatible with Conservative policy of deficit elimination being 80% public expenditure cuts, 20% tax rises.

    The budget report shows total tax receipts rising by 4.1% pa in real teams for 5 straight years. We won't be doing that.

  25. Anthony
    Posted April 25, 2010 at 4:24 pm | Permalink

    Simply advertising country of origin would be a start. I have discovered by chance in recent years that I can buy Honeywell switches made in Scotland at the same price or less than Telemecanique ones made in France. I can buy Bailey and Mackey pressure switches which are as good as any other make but are made in Birmingham, not Germany or Italy. Vickers valves are made in England, Rotary Power in Newcastle and Kawasaki in Poole both make pumps here too.

    There is still a manufacturing base left, but we casually go to RS or BSL or any of the merchants and buy things without realising we can get British ones for the same or less that are just as good. If we try we can often find British goods to replace imports, but we need to know they exist.

  • About John Redwood


    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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