No-one is saying take £6 billion out of the economy

If anyone ever thought Mr Brown was good at economics his latest statements that the Conservatives want to take £6 billion out of the economy and that would wreck the recovery ought to change their mind.

Reducing the public sector deficit by £6 billion does not take money out. Public spending is either financed by taking money out of the private sector through taxes, or out of the private sector by borrowing it from them. Borrowing less from the UK private sector leaves that sector with more money to spend on what it chooses.

£6 billion is a small sum in a £1.4 trillion economy: less than 0.5%. Mr Brown instead should be asked to explain why RBS, the bank he bought for taxpayers, has slashed its balance sheet by £700 billion over 2009 and plans to slash it by another £300 billion in 2010. That is significant money, even allowing for the global reach of the business. That does have an impact on the UK. Mr Brown’s banking policy is the main reason the UK economy is scarcely growing. His large public sector deficit remains a threat to stability and a cause of a damaged private sector.

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

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30 Comments

  1. Matt
    Posted April 25, 2010 at 11:01 am | Permalink

    Thank you for pointing that out John. lots of people I know have been shouting something on those lines at the telly during the first 2 debates. Could you encourage Cameron to make the same point point on Thursday?

    • Selena
      Posted April 29, 2010 at 2:46 pm | Permalink

      Totally agreed.

      Brown also uses it to warn against the Tory policy of not raising national insurance contributions as this takes money out of the economy. Obviously leaving it in people's own hands rather than the government's is not taking money out of the economy.

      Please make encourage Cameron not to let Brown get away with this comment as he did in the last debate.

  2. Irene
    Posted April 25, 2010 at 11:31 am | Permalink

    No, of course it doesn't take money OUT of the economy, but I have yet to see ANYONE from the Conservative party explain that properly, just like the IHT – it is left to fester grrrrrrrrrr.

  3. Brian Tomkinson
    Posted April 25, 2010 at 11:42 am | Permalink

    The economy is no more than tax collecting, borrowing and public spending to Brown. Sadly, your colleagues have failed to put across clearly this message and that without the private sector there can be neither future prosperity nor "front line" public services.

  4. JimF
    Posted April 25, 2010 at 12:21 pm | Permalink

    Hopefully placed in front of Cameron in time for this week's debate. Why doesn't he say this? Does he not understand economics either?

  5. John Moss
    Posted April 25, 2010 at 12:35 pm | Permalink

    As I was saying…..

    It is telling that Labour accuse the Conservatives of wanting to take £6 billion, "out of the economy". This suggests they believe that the state is the economy, rather than the total of both the state and private sector.

    The answer to this has to be a simple retort.

    "No, Gordon. You want to take £6 billion out of the pay packets of the lowest paid and out of business bank accounts and waste it. We want to leave that money with the people, so they can spend it, save it or invest it and we trust them to do a damn sight better job with it than you will!"

    • THE ESSEX GIRLS
      Posted April 26, 2010 at 2:02 am | Permalink

      EXCELLENT REPLY. LET'S HOPE HE USES IT!

  6. alan jutson
    Posted April 25, 2010 at 1:26 pm | Permalink

    John

    You, and many others have posted on your site (including myself in the past few days) about this SO CALLED missing £6 Billion, which is "taken out of the economy" according to Browns calculations.

    Why is not David Cameron not nailing this lie, and at the same time he could say, if your calculations are that bad, and your understanding of economics that poor, no wonder we have ended up with the biggest debt in the Country's history.

    By saying nothing, DC looks as though he is accepting that Browns statement is true.

  7. olly garchy
    Posted April 25, 2010 at 2:34 pm | Permalink

    Brown has repeatedly stated this nonsense. He said it at PMQ's – April 7, he said it during the debates, and he keeps saying it.

    Perhaps he views 'the economy' as only what The State has to spend.

    Why aren't the Tories vigorously rebutting this garbage?

  8. Antisthenes
    Posted April 25, 2010 at 2:55 pm | Permalink

    The argument over the NI increase points to a much deeper problem with Labour's tax strategy in that it is aimed at maintaining the public sector and the welfare system by high taxation which will of course put pressure on the private sector. That pressure will have two effects one is in the flight of businesses to more economically friendly climates and a return to the days of when the black economy was a large proportion of GDP. That will of course exacerbate the current economic woes so much that Britain may sink into recession and decline that Britain will never ever be able to fully recover.

    As it stand the likelihood of another recession is highly likely almost inevitable as reigning in the deficit has been left too late. A total reshaping of the public sector and welfare system has to be undertaken that reduces it's costs to a level that can be sustained by taxation that re-balances in favour of wealth creation. That will mean lowering taxes in the right areas and savage cuts.

    If Labour policies are continued then that will be the eventual outcome anyway but the damage done will be irreparable.

  9. Pauper
    Posted April 25, 2010 at 5:13 pm | Permalink

    This is true, evident and actual wisdom, but you'd score a gramme of coke off the Pope before you'd get a straight answer about finance from Mr Brown.

    How on earth did that muddle-headed and slow-footed man get his reputation as an intellectual powerhouse?

  10. Ken Adams
    Posted April 25, 2010 at 5:37 pm | Permalink

    Unfortunately this message is not getting across to the public Labour as usual seem to be getting away with continually repeating the same message about the Conservatives taking 6 bil out of the economy without being challenged, not even Mr Hague made this point on Question Time.

  11. Ian Pennell
    Posted April 25, 2010 at 6:02 pm | Permalink

    FROM: Ian Pennell

    Dear John Redwood

    What now matters is that Sir David Cameron performs well in the forthcoming (and final) debate on the BBC on the subject of the economy. It is Gordon Brown's supposed "great strength", he has the experience and "gravitas" to produce the numbers and make sound economic arguments and it is David Cameron's role to tear Gordon Brown's economic credibility to shreds whilst successfully defending the Conservative arguments for reduced borrowing and lower taxes sooner. To be sure of winning a majority for the Conservatives, David Cameron has got to perform best, but I fear he may do badly.

    If Gordon Brown manages to wipe the floor with David Cameron it will all be over for us. We will have to see how bad our fourth successice Election Defeat will be, whether the ensuing Socialist regime will be Labour or a Lib-Lab coalition. We can then look forward to more debt, with higher taxes rather than reduced spending resulting in more economic decline and, worst of all, the prospect that Britain may end up joining the euro. There is also a big danger that when the EU President demands it, that the Government will cede all control of our Police and Armed Forces to the European Union. So we will lose control of our currency and we will completely lose the power and strength to protect ourselves as an independent country. And Britain will indeed be toast! This just does not bear thinking about.

    So, to win the forthcoming General Election and to save our country Sir David Cameron must be exhorted in the strongest possible terms- to WIN! Failure is not an option, because by failing he will not only let all Conservatives down big-style, but he will also let down this country by living it vulnerable to a bunch of Socialists who would sell Britain out to Brussels totally, in order to appease their Socialist EU Masters!

    David Cameron must be revising the TPAs "How To Cut Public Spending. And Win An Election" which I sent him, he should USE the £50 billion savings illustrated to show Gordon Brown (and the audience) how he will cut spending to pay down debts and fund existing Conservative policies. If he is not reading that book, and "The Bumper Book Of Government Waste", which details how £100 billion could be cut without hurting public services someone should tie him down to a chair by Tuesday night, make him read these books, identify the savings to make damned sure that the Conservative proposals are seen to be watertight!

    David Cameron also needs to learn his Laffer Curve, so that he can rebuff claims by the Left that cutting taxes is tantamount to closing schools and hospitals. And all this material could then be used in the forthcoming TV Debate to rebuff Gordon Brown's vicious allegations that the Conservatives would slash vital services in the strongest terms possible!

    Are you, Sir up to ensuring our Leader does his homework ahead of the forthcoming, so very important debate. We cannot, MUST NOT let him fail, our entire country depends on Sir David Cameron winning!

    • THE ESSEX GIRLS
      Posted April 26, 2010 at 2:21 am | Permalink

      We entirely agree Ian. This debate is crucial and we hope to contribute to this site each day with constructive proposals to help achieve a winning performance.

      Experience shows that contacting Cameron's office – and most Tory MPs for that matter – is futile. Messrs Redwood and Carswell are exceptions in listening and responding.

      We believe and certainly hope Tory HQ keep a close eye on this site and might even follow some of the host's, and even your and our advice!
      They have missed so many open goals to date that our main striker MUST find his goalscoring ability by Thursday to lift the cup.

      Yes..Essex Girls love their football too!

      • THE ESSEX GIRLS
        Posted April 26, 2010 at 2:26 am | Permalink

        ps – REGARDING HAVING THE FACTS AT HIS FINGERTIPS THIS IS A QUOTE FROM OUR BLOG TOMORROW…

        "You’re only as good and interesting as your material – quote firm facts and precise figures to illustrate your point. Most listeners will take them in if presented simply and clearly".

    • Mike Stallard
      Posted April 26, 2010 at 8:39 am | Permalink

      Have you noticed how Nick Clegg, who was brought up in the EU as a lobbyist and MEP is determined to strengthen the regional government? The idea of this, of course, is to fight nationalism which Clegg also sees as a bad thing. It causes wars, you see.
      Immigration should be handled regionally, he says.
      Britain doesn't just face losing its control over the army and police, and therefore, as is already rapidly happening, the Common Law. It faces, actually, regionalism which means being broken up like Spain or Germany into separate regions with no centre. And these regions are going to be allied to other countries like Northern France, Ireland and Scandinavia.
      That way the Eurocats can do anything they like with no opposition at all.
      A vote for LibDems is, in fact, a vote to stop England existing at all.

  12. Mike Stallard
    Posted April 25, 2010 at 6:52 pm | Permalink

    ….and the sooner he goes, the better.
    What a fraud!

  13. gac
    Posted April 25, 2010 at 6:58 pm | Permalink

    Mr Brown with his Balls economics also believes that not given people a pay rise next year is an efficiency saving equivalent to cuts in expenditure.

    How does that work?

    My own finances would welcome being able to spend the same next year as this year but yet end up having spent less!

  14. Norman
    Posted April 25, 2010 at 9:05 pm | Permalink

    Why doesn't Mr Brown increase NI by 5% for a £30bn injection into the economy?

    Think how much good could be done with that windfall.

  15. Lindsay McDougall
    Posted April 26, 2010 at 12:25 am | Permalink

    Productivity in the private sector has grown by 20+% since Labour took office. Productivity in the public sector has declined by 3+% since Labour took office. Which sector would you want to invest £6 billion in?

  16. forex robot
    Posted April 26, 2010 at 7:31 am | Permalink

    nice post. thanks.

  17. Ian
    Posted April 26, 2010 at 2:12 pm | Permalink

    Have you noticed how Nick Clegg, who was brought up in the EU as a lobbyist and MEP is determined to strengthen the regional government? The idea of this, of course, is to fight nationalism which Clegg also sees as a bad thing. It causes wars, you see.
    Immigration should be handled regionally, he says.
    Britain doesn't just face losing its control over the army and police, and therefore, as is already rapidly happening, the Common Law. It faces, actually, regionalism which means being broken up like Spain or Germany into separate regions with no centre. And these regions are going to be allied to other countries like Northern France, Ireland and Scandinavia.
    That way the Eurocats can do anything they like with no opposition at all.
    A vote for LibDems is, in fact, a vote to stop England existing at all.

  18. greg
    Posted April 26, 2010 at 7:59 pm | Permalink

    AT LAST. PUT IT IN CAPITALS AND GIVE IT TO D CAMERON

  19. Dave
    Posted April 27, 2010 at 12:39 am | Permalink

    No, of course it doesn't take money OUT of the economy, but I have yet to see ANYONE from the Conservative party explain that properly, just like the IHT – it is left to fester grrrrrrrrrr.

  20. Sean
    Posted April 27, 2010 at 3:09 am | Permalink

    Have you noticed how Nick Clegg, who was brought up in the EU as a lobbyist and MEP is determined to strengthen the regional government? The idea of this, of course, is to fight nationalism which Clegg also sees as a bad thing. It causes wars, you see.
    Immigration should be handled regionally, he says.
    Britain doesn't just face losing its control over the army and police, and therefore, as is already rapidly happening, the Common Law. It faces, actually, regionalism which means being broken up like Spain or Germany into separate regions with no centre. And these regions are going to be allied to other countries like Northern France, Ireland and Scandinavia.
    That way the Eurocats can do anything they like with no opposition at all.
    A vote for LibDems is, in fact, a vote to stop England existing at all.

  21. Rob
    Posted April 27, 2010 at 10:17 pm | Permalink

    ….and the sooner he goes, the better.
    What a fraud!

  22. Bill
    Posted April 28, 2010 at 5:45 am | Permalink

    FROM: Ian Pennell

    Dear John Redwood

    What now matters is that Sir David Cameron performs well in the forthcoming (and final) debate on the BBC on the subject of the economy. It is Gordon Brown's supposed "great strength", he has the experience and "gravitas" to produce the numbers and make sound economic arguments and it is David Cameron's role to tear Gordon Brown's economic credibility to shreds whilst successfully defending the Conservative arguments for reduced borrowing and lower taxes sooner. To be sure of winning a majority for the Conservatives, David Cameron has got to perform best, but I fear he may do badly.

    If Gordon Brown manages to wipe the floor with David Cameron it will all be over for us. We will have to see how bad our fourth successice Election Defeat will be, whether the ensuing Socialist regime will be Labour or a Lib-Lab coalition. We can then look forward to more debt, with higher taxes rather than reduced spending resulting in more economic decline and, worst of all, the prospect that Britain may end up joining the euro. There is also a big danger that when the EU President demands it, that the Government will cede all control of our Police and Armed Forces to the European Union. So we will lose control of our currency and we will completely lose the power and strength to protect ourselves as an independent country. And Britain will indeed be toast! This just does not bear thinking about.

    So, to win the forthcoming General Election and to save our country Sir David Cameron must be exhorted in the strongest possible terms- to WIN! Failure is not an option, because by failing he will not only let all Conservatives down big-style, but he will also let down this country by living it vulnerable to a bunch of Socialists who would sell Britain out to Brussels totally, in order to appease their Socialist EU Masters!

    David Cameron must be revising the TPAs "How To Cut Public Spending. And Win An Election" which I sent him, he should USE the £50 billion savings illustrated to show Gordon Brown (and the audience) how he will cut spending to pay down debts and fund existing Conservative policies. If he is not reading that book, and "The Bumper Book Of Government Waste", which details how £100 billion could be cut without hurting public services someone should tie him down to a chair by Tuesday night, make him read these books, identify the savings to make damned sure that the Conservative proposals are seen to be watertight!

    David Cameron also needs to learn his Laffer Curve, so that he can rebuff claims by the Left that cutting taxes is tantamount to closing schools and hospitals. And all this material could then be used in the forthcoming TV Debate to rebuff Gordon Brown's vicious allegations that the Conservatives would slash vital services in the strongest terms possible!

    Are you, Sir up to ensuring our Leader does his homework ahead of the forthcoming, so very important debate. We cannot, MUST NOT let him fail, our entire country depends on Sir David Cameron winning!

  23. Jack Carter
    Posted April 28, 2010 at 3:25 pm | Permalink

    Our home business was really affected by the Economic recession, we have to cut jobs just to cover up our losses. fortunately, we have already recovered. –

  24. Chris
    Posted April 28, 2010 at 5:11 pm | Permalink

    More re cutting government waste and dubious quangos: http://uk.news.yahoo.com/elections/dont-panic-pos

    I have not yet checked this out properly, but I believe this individual has turned up some significant well researched material in the past.

  25. Andrew Gately
    Posted April 28, 2010 at 11:57 pm | Permalink

    Thank goodness someone else noticed the ridiculous comment about taking 6 billion out of the economy. I was shouting at my telly.

  • 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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