Abandon the deficit reduction plan?


              There have been rumours that the Chancellor may this autumn announce that he is not going to press on with the elimination of the “structural” deficit as planned. The Autumn Statement is in the diary for the rather late date of December 5th. Some think the Chancellor should offer an early Christmas present of a further “fiscal stimulus”, or more spending.

             The media, to understand this briefing, need to understand the story so far. The present Plan for cutting the deficit and curbing new borrowing is very different from the Plan announced in the summer of 2010 when the Coalition took over. Each time the Office of Budget Responsibility has revisited its forecasts it has had to downgrade growth for the ensuing period. This in turn has cut tax revenue forecasts and raised spending.

             In the first plan in 2010 the government aimed to borrow an additional £451 billion over the five years of this Parliament.  The following year they increased this to £485 billion, and this year to £556 billion, or more than £100 billion up in two years. If there is a further increase forecast in the Autumn Statement that would not be a change of trend or a unique event.

                   Some of this drift can be attributed to the “cycle”.  The first Plan assumed faster growth with better and earlier recovery. This meant an expectation of more revenue and less cyclical spending. Each subsequent revision is in part down to a slippage in the speed and direction of travel of  output.

                     Some of this drift can be put down to an overoptimistic forecast of tax revenues. Higher rates have been more damaging, actually cutting revenues  for Income Tax and Capital Gains Tax, where the OBR assumed rises.

                    There is little evidence that the fiscal stimulus applied liberally in recent years through large rises in cash current spending coupled with slow growth of revenues has produced a spurt to growth. It is difficult to see that a small extra fiscal stimulus on top of the large current budgetary deficit would of itself  change the speed and direction of travel of the economy.

                       There is a lot to be said for a policy which drives public sector productivity much higher, and  which cuts out questionable programmes or  nice to haves which we cannot afford. Eliminating the structural deficit was and remains the best policy. The test is how to do it without damaging the things that matter, and without taxing the country into recession.


  1. Martin Cole
    September 13, 2012

    “The test is how to do it without damaging the things that matter, and without taxing the country into recession.”

    The two areas so far decreed as untouchables seem the most obvious candidates, namely health and foreign aid.

    Electorally unpopular once off draconian cuts or revenue raising shock taxation remain weapons in the armoury for an incoming, one party, majority government, but where is a leader who might create such a miracle, and skillfully manage the results to gain re-election some years later? Thatcher managed it!

    1. outsider
      September 13, 2012

      As you say Martin, either ministers do get rid of all but about £40 billion of the annual deficit by 2015 or they fail. A while ago, Mr Redwood invited readers to list “what the coalition has done for you” and had few positive replies. The Coalition was formed to tackle the deficit. That is its sole raison d’etre. If it cannot do so, it is pointless and should end, followed preferably by a General Election in which all parties would have to say what their strategy was and what they would actually do.

      1. Bob
        September 14, 2012


        say“what they would actually do.”?

        What we said : “we will cut the deficit”

        What we did: “we changed the definition of marriage”

        You can trust Dave to deliver!
        (but not necessarily what you ordered).

  2. lifelogic
    September 13, 2012

    “Higher rates have been more damaging, actually cutting revenues for Income Tax and Capital Gains Tax, where the OBR assumed rises.”

    Of course they have been damaging and cut revenues as anyone sensible would have expected them to.

    “There is a lot to be said for a policy which drives public sector productivity much higher, and which cuts out questionable programmes or nice to haves which we cannot afford.”

    Much of what this government is doing is not just questionable it is pointless or actually damaging. Nearly all the green agenda for example.

    Tax, borrow and waste the country into a further recession seem to be the plan.

    I am however very pleased that Cameron has apologises for appalling behaviour of parts of the state sector over the dreadful Hillsborough tragedy. Things take a very long time in the state sector it seems.

    1. JimF
      September 13, 2012

      Yes one does wonder what the historians will make of this period. My guess is that over the next 23 years inflation will have wiped out the deficit, but also confidence in our currency along with several others. Governments will blame their predecessors for stoking this up, of course, and Camerosborne will be long gone, probably in the Major mould of watching cricket or polo, on the Board of some large non-enterprising conglomerate, and pretending nothing could have been done any differently under their watch.
      Perhaps that is where this site will claim its place in history – we knew it could be different and said so at the time.

    2. lifelogic
      September 13, 2012

      £65M odd wasted on HS2, so far too I read. Tax borrow and waste, waste and waste again.

    3. Disaffected
      September 13, 2012

      Lifelogic, your last paragraph says it all. Borrow, tax, spend and waste. Where are the 80% cuts Osborne claimed he was going to make?????
      JR’s previous blog about how the EU was going to spend billions between 2014-2020 also highlights where easy cuts could be made. Perhaps the build up of the EU peace army is actually about keeping us, the populations of the Europe, from uprising against an anti democratic state with unelected dictators such as Borroso.

      Borroso was clear about the EU federation needs speeding up and banking union yesterday- what is Cameron’s position exactly? Ah, stay in the EU no matter what. Hardly the view of a Eurosceptic as he previous claimed.

      Could we be grateful that he and his chancellor are not on a jolly to the US for a spin his plane come the autumn review. There must be something more important than the economic mess they preside over and have done nothing about for two and half years.

    4. Bazman
      September 13, 2012

      I thought the top rate had been cut and this had raised revenues and created jobs?

      Reply The top rate remains at 50% this year, with falling revenues.

      1. uanime5
        September 13, 2012

        It’s almost as if people in the 50% tax rate are deferring being paid a large proportion of their income this year so they can be taxes at a lower rate next year.

        I also predict that next year’s income tax revenues, which will include the deferred income, will be compared to this years income tax and some minister will claim that the difference is a gain resulting from the lower rate of income tax (rather than a loss because it wasn’t taxed at the higher level). The same minister will also claim that the lower income tax revenues in 2014, due to the lack of deferred income, requires that the rich be give an even greater tax cut.

      2. lifelogic
        September 13, 2012

        Tax cut are always announced in advance and often do not even ever take effect, increases on the other hand usually take effect immediately or are even backdated.

        So we still have the absurd 50% +NI

        1. Bazman
          September 14, 2012

          Not so absurd if like millions you are non NMW. Is this group supposed to support this?

    5. uanime5
      September 13, 2012

      So it’s not higher unemployment, more people in part time work, wages falling in real terms, declines in most industries, or salary reductions that are causing CGT and income tax revenues to fall but it’s solely due to the taxes that you hate.

      1. Bazman
        September 14, 2012

        Has he also noticed how London property prices are in free fall due to high taxation and all the rich leaving?

  3. Pete the Bike
    September 13, 2012

    This is the Deficit Reduction Plan that has seen spending go up consistently? The one where no real public spending cuts are made and taxation is increased to stifle any possible economic growth? Where the unbelievably huge EU payments grow and counterproductive foreign aid is continued?
    Well I have two questions. One- Has George got Plan B or C or whatever plan is next? Two- how long before the markets notice and turn on sterling?

  4. James Reade
    September 13, 2012

    Another piece wonderfully devoid of any evidence whatsoever for your assertions.

    As I repeatedly point out, you never ever acknowledge that there is an announcements effect of fiscal contraction, regardless of how tight it is (or isn’t, as you continue to assert). People make decisions based on announcements – stop spending because they are concerned about the future because of announcements. Governments influence the behaviour of individuals. Now of course you can tell me that I haven’t got evidence to support that assertion – but the point is that you believe expectations are powerful – that’s your whole argument about why the pound remains weak. So I’m really just using your own unsubstantiated assertions in suggesting this.

    And your continued assertion of there having been a fiscal stimulus since 2010 remains laughable. A stimulus package is not defined by the movement in the fiscal balance for the other reason you do at least acknowledge these days – the business cycle.

    And the fact we remain in the depths of that cycle is not some unfortunate chance event, nor is it something we can solely blame on one-off factors or the eurozone, as Tory politicians love to do. It’s at least in part caused by this attempt to eradicate the structural deficit in the midst of what was a slowly recovering economy.

    Of course, the most contentious unproven assertion you make is that it’s high tax rates that are cutting into tax receipts. This is the usual right wing assertion, made without any evidence, that we’ve gone past the peak of the Laffer Curve. I’m await your response, and that of your supporters on here, and I suspect it will likely be something along the lines of “it’s self evident”. Is it really? If it is to you, and not so to many others, that suggests it might well be something that’s ideologically driven, rather than anything with a solid basis in objective reality.

    Reply: I have always acknowledged the impact of the business cycle and the role of the automatic stabilisers. You seem oblivious to the structural deficit which is what the government said it wished to tackle. I have produced the Treasury figures before to show the impact of higher rates on Income Tax receipts (down) and lower rates of Corporation tax (receipts up) As well as the copious historic evidence. The main reason the private sector is subdued is the combination of tax and inflation on low wage increases.

    1. Lord Blagger
      September 13, 2012

      So what about the pensions debts?

      Not included.

      No assets

      Going up with inflation plus new liabilities.

      6,000 bn present value on top of the borrowing.

      That can’t be afforded, so what’s the government going to do?

    2. oldtimer
      September 13, 2012

      You say “People make decisions based on announcements…”

      That, I believe, is true for many people. But they do so in expectation of the impact on their future income based on those announcements. What I find surprising is the contradiction of your contention in your second paragraph “Governments influence the behaviour of individuals” with your denial in the last… “the most contentious unproven assertion you make is that it’s high tax rates that are cutting into tax receipts”.

      I believe that the tax regime does influence behaviour. It certainly has and continues to influence mine. I know many, many people who arrange their affairs to minimise the impact of taxation. Your denial that high tax rates have influenced tax receipts flies in the face of my own experience and observation – and, I imagine, of many others.

    3. Lindsay McDougall
      September 13, 2012

      And what is the length of this business cycle?
      7 years as in Victorian times?
      4 years post WW2 as in the Bretton Woods era?
      10 years as between the 1981 and 1991 recessions?
      18 years as between the 1991 and 2009 recessions?
      3 years as between the 2009 and 2012 recessions?

      1. Steven_L
        September 13, 2012

        The UK credit and land price boom and bust cycle is approx 18 years – google “Fred Harrison”.

    4. Bob
      September 13, 2012

      Since tax revenue is finite, can we talk about how the money is spent and are we getting value for money?

      Is it right to borrow to cover current expenditure, or should the Chancellor tailor current expenditure to current income?

      Should the chancellor take optimism out of his revenue forecasts and replace it with pessimism?

      Should the Chancellor’s aim be to get the budget into surplus?

    5. Mark
      September 13, 2012

      Rational expectations of the market are to observe the real forecasts of people with a greater track record for accuracy, and give them rather greater weight than those of governments and central bankers who are trying to spin the truth. Thus an announcement of cuts is ineffective unless it is made by a credible government, and backed up by rapid action – not promises of action at some future point, all ready to be reneged at the slightest whiff of gunpowder.

      Economic surgery is inevitably painful, but to retreat at the sight of the anaesthetist’s needle and surgeon’s scalpel isn’t going to get the surgery done, and the patient will become progressively more ill, however many placebos are tossed down its mouth. The later the surgery, the more invasive and comprehensive it will need to be.

    6. outsider
      September 13, 2012

      Dear Mr Reade,
      I do not know why you habitually start and frame your comments with insults to Mr Redwood who, whether you agree with his opinions or not, is a paragon of evidence-based blogging. Perhaps you wish to evoke hostility. Otherwise, why not just stick to the arguments?
      As it happens, I agree with you that no sensible budget can be drawn up on the assumption that tax cuts will raise revenue. It may well happen but cannot be relied on, any more than projected GDP growth can be relied on to pay for future spending plans or to cut the deficit. There are reasonable alternative explanations for Mr Redwood’s supporting figures on self-assessed income tax revenue.

      You are also right that projecting austerity without achieving it quickly harms expectations. Mr Redwood does not deny this. His own 2010 deficit reduction plan aimed at maximum gain for minimum pain, instead of the reverse.

      But I challenge your assertion that “we remain in the depth of (the business) cycle”.
      The employment rate of 16-64s is now 71.2 per cent, the highest for four years. The highest in the past 15 years was 73.1 per cent. We only reached 73 per cent in 11 months out of 163, so it was not sustainable. Even if we assume 73 per cent is the norm, only 1.8 percentage points of unemployment is accounted for by cyclical factors and 6.4 per cent by structural and frictional (job-to-job) unemployment. So that is the big problem.
      Total June employment In both private and public sectors is the highest quarterly figure recorded. When the employment rate fell to 71.2 per cent in 2009, about 730,000 fewer people were in work. If you set rising labour input against static output , it seems clear that the UK, along with several other European countries, has suffered a permanent negative productivity shock. You may argue that the employment figures may underplay the switch to part-timework, but part-time work tends to be in lower productivity occupations. And to the extent that the switch from public to private sector employment may boost recorded tradable output, the fall in productivity is even more stark. That is the main problem, not demand, or even credit.

      And what evidence have you that there is a lot of spare capacity outside the labour market? The “output gap” is a notional figure. As time goes on, much of that spare capacity wastes away, either physically or because businesses are shut or permanently scaled down. So what evidence is there that a further state boost to demand would raise output proportionately, let alone by more than the stimulus? Would most of it not leak away into imports and inflation?

    7. Bazman
      September 13, 2012

      If you ain’t got a job or involved in some absurd and pointless part time job as an increasingly large part of the population are, becoming more ‘flexible’ and claiming tax credits, then you will inescapably paying not much tax.

      1. Richard
        September 13, 2012

        I know many friends of mine who do part time work, it suits them and they enjoy it.
        They find it neither absurd nor pointless as you claim.
        Not everyone want to work 40 hours per week 9am to 5pm Monday to Friday.

  5. Brian Tomkinson
    September 13, 2012

    Here we go again. Two and a half wasted years – not because cuts have been too deep and too fast but just the opposite. Cabinet ministers still don’t seem to know the difference between debt and deficit as shown by Pickles on “The World at One” yesterday. Politicians just can’t bring themselves to stop spending. We have a sham argument between the coalition and the opposition. The three main political parties are failing the country. The party system itself is detrimental. You and some of your colleagues know what needs to be done but your tribal loyalty to your party stops you from acting, rather than merely speaking.

    Reply What action could make the situation better? There is a strong majority in Parliament for spending at least as much as the current budgets lay down.

    1. Brian Tomkinson
      September 13, 2012

      Thank you for confirming that there is no choice for the voters if they vote for any of the three main parties. Backbench MPs are mere lobby fodder. We didn’t vote Conservative to have a continuation of Labour, which is what we have.

    2. Jose
      September 13, 2012

      This ‘spending at least as much as the current budgets’ is contrary to the way most businesses operate where the emphasis is not to spend the full budget but to reduce on the budget figures.

      It’s extremely easy for politicians to spend other peoples’ money, those sitting in Westminster are no different from those sitting in the EU parliament…”why not spend more, it’s not our money and they can afford it” seems to be essence of politicians’ arguments.

    3. Leslie Singleton
      September 13, 2012

      Dear John, A little point maybe but you may remember I once asked you and anyone else wanting certainty and clarity of delivery to start calling the “Deficit” the “Annual Deficit” instead. Apart from the helpful hand given to people not well up on these things, there is always the confusion with the term “Retained Deficit” used by accountants.

      Reply: Thanks for the good advice

    4. Christopher Ekstrom
      September 13, 2012

      Sending Cast Iron to Hell!!!

      Mr. Redwood your ship is sinking & the Captain is worse than a fool. Either leave & join UKIP or lead a mutiny. Loyalty to a traitor is insane.

  6. Lord Blagger
    September 13, 2012

    he media, to understand this briefing, need to understand the story so far


    The story so far is that there is accounting fraud. The debts have been hidden off the books.

    The treasuries plan is to change the law to deprive people of what they are legally entitled to, their pensions.

    That means that the current pensions are a legal right. If they weren’t you wouldn’t have to change the law.

    So governments with the approval of MPs, are committing fraud. Taking money from people in the full knowledge they are not going to supply what people have paid for.

    So when MPs planned to change the retirement age for the state pension, that was the start of the fraud.

    Reply: There is n o fraud. State basic pensions and state benefits have always been pay as you go. They are reviewed – usually upwards – annually and always depend on affordability and the will of Parliament.

    1. zorro
      September 13, 2012

      It is difficult to establish this as a fraud. It is more likely an ongoing deception dressed up as a PONZI scheme. Soon, the PONZI will fail in that the government will no longer pay the universal pension but will rather means test it or increase tax on the wealthier pensioners…..


      1. Conrad Jones (Cheam)
        September 13, 2012

        In actual fact, there is good evidence to suggest that the Government is poorly advised – by Lobbyists; who provide very plausible explanations on the best way to cope with debt. They accurately advise that the Government should continue with low Interest Policies, QE and Treasury Bond Issues as this does seem to cause short term stability.

        Huge increases in Asset Prices – for example; would cause massive hardship with State Benefits.Houseing Benefit it is thought, addresses the balance of an over priced market. People become reliant on Housing Benefit to obtain a roof over their heads. First Time Home Buy Schemes and Shared Equity are assumed to give that little lift into the Housing Market. Labour tried it, then the Conservatives – both did produce minor positive affects and those who apply and recieve this help feel that the Government has helped them – which they have.

        My big concern over these is that there appears to be a fog of confusion about how these problems of huge deficits amd Government debt came about. It is assumed that the reason for high House Prices is because of simple Supply and Demand. Many MPs believe this view. their views are often shaped by researchers – fresh faced graduates just out of Economics School who eagerly refer to their familiar Economics Text Books obtained from University. This is where I am most concerned as their is growing evidence that the theories taught about Economics may in fact be incorrect or misread.

        House prices did not increase by over 360% because the population suddenly exploded or high levels of immigration, the population only increased by 5% from 1997 to 2005 and Housing Stock rose by 10%, so House prices should have fallen. What happened was an increase in Mortgage Lending by 630%.
        That’s what caused House Prices to increase. The availability and expansion of Credit by Private Banking Institutions.

        This increase in House Prices casued the Government to do what is Natural for a Government, to Help ease the burden by providing Housing Benefits. If Gordon Brown had kept an eye on the Housing Market instead of the CPI and GDP figures, we would not have to provide all these State Benefits and Inflation would be stable. Since 1971, we have had a FIAT Currency. Government’s still have not come to terms with the additional regulations required to control a FIAT currency. BoE Interest Rates do not work. Allowing Banks to create 97% of our money does not work. In this system we have to keep borrowing or the money supply shrinks. The Government could change the system and issue currency directly – that would solve many of the problems we now have. But they won’t do that until it’s too late due to an overwhelming ignorance of how Banks work.

        Taking one MP as an Example – can we imagine someone like Geoff Hoon saying (if he hadn’t been caught on camera trying to pitch for a Job with a Lobbyist), it’s time to fix the Banking System so that Government’s no longer have to borrow Money but create it and then lend it to Banks instead of the other way around. He probably did not understand what money is, so how can he possibly be able to find a solution to the debt problem.

  7. Chris
    September 13, 2012

    Benedict Brogan’s newsletter refers to the Mail article this morning which indicates that Plan A is not going to be abandoned and that sources close to the PM have indicated that “mischievous briefing by the Lib Dems” was to blame.

  8. Lord Blagger
    September 13, 2012

    And your continued assertion of there having been a fiscal stimulus since 2010 remains laughable.

    I disagree and agree with John on this.

    There has been a massive increase in total government spending. That’s a stimulus. It hasn’t worked. You need to work out why the government spending more results in lower growth.

    It’s down to expectations People know they are going to be shafted, with interest for this.

    So 150 bn a year of deficit spending is 150 bn a year of stimulus. Another 2-3 billion won’t make one iota of a difference.

    Remember too, this mess is caused by too much borrow and spend. Mostly by governments. Why should the cure be more borrow and spend? That’s voodoo.

  9. oldtimer
    September 13, 2012

    They should not abandon the deficit reduction programme, as you ask in your headline. It has been obvious for some time that the coalition would fail to meet its timetable. No doubt some of this failure is attributable to external developments, but much of it is down to its own misguided policies – listed and discussed at length by many commentators here. The coalition needs a root and branch examination of all its spending programmes and the peverse impact that some of its policies (including tax policies) have on economic recovery. If it went through this process, it might preserve some shred of credibility in rescheduling its programme to bring the deficit back under some semblance of control. If it is just more of the same, more slippage, more excuses then we can conclude that they really have lost the plot.

  10. Acorn
    September 13, 2012

    “MOSLER’S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.” {that is fiscal policy not monetary policy}

    For those that have studied what has happened over the last five years, it is that when the private sector stops spending, the public sector has to increase spending. That is, if you want to keep national output at anywhere near its full throttle capacity with a resultant increase in employment and productive hours. You have to live with the budget deficit; and, if you issue your own fiat currency, you have no insolvency problems using that currency.

    The Treasury must have known that this was a private sector balance sheet problem, over leverage as they say, too much cheaply acquired debt in the private sector, particularly households. Monetary policy, QE, was good for the Banks to cover its toxic CDOs etc but no good for the non-financial private sector that did not have the political obligates the big banks had. This was and still is a demand side (households and firms as consumers of goods and services) problem, only fiscal policy, less tax and more spending, can support the nation while you can find something to grow from seed or prune dead wood for better growth in future.

    We complain about wasted government expenditure. That has to be repaired and preferably returned to the harsh discipline of the private sector to get the bigger bang for a buck. But, remember that this is still fiscal stimulus spending for the moment. One persons spending is still another persons wages and wages need spending and not saving at this time. Investment now, in response to consumer demand, will provide the savings later.

    Now you know why Osbo’ is borrowing is a £100 billion up in two years. I think he knows he can’t do anything else. He just doesn’t have the (Ed) balls to tell you the truth in front of the his right wing that still thinks our monetary system still uses commodity money (Gold) and not fiat money.

  11. backofanenvelope
    September 13, 2012

    I assume your headline is intended to be ironic? I understood the deficit reduction plan to consist of two parellel policies. Increasing taxation and reducing public expenditure. When was the policy ever put into effect?

    I would also point out to Mr Reade that the numbers employed are rising. Why is this? Is it because people generally have decided to ignore what the politicians say? Perhaps we are not “conditioned” by government announcements. Or those of the opposition.

  12. Lindsay McDougall
    September 13, 2012

    Continuing to reduce the deficit by delivering significant real public expenditure cuts in FYR 2013/14 is the only credible game in town. I’ve given the figures in an earlier blog. If GDP growth in 2012/13 and 2013/14 as is forecast in the 2012 budget, the cut in total public expenditure needed will be ‘only’ 1.4% relative to 2011/12. If there is no GDP growth, that rises to 5%. It’s all down to the probable level of tax receipts. These numbers are in terms of constant prices, so are real cuts.

    The Autumn statement is being delayed until early December so that the Chancellor can report two quarters of successive GDP growth. The figure for July-September will be more or less final and ought to be good. The figure for October-December will be ONS’s initial estimate based on 2 months data. The better the numbers look, the better the markets will perceive the Chancellor’s progress.

    The Chancellor will be wise to ensure that their are no traitors in the ONS.

    1. uanime5
      September 13, 2012

      Given the negative growth in the previous quarters and the constant downgrading of growth this year I doubt the remaining quarters will be good. Especially since in the past few years the last quarter has had negative growth.

      1. Lindsay McDougall
        September 14, 2012

        We shall see. The Chancellor may be in luck; October and November are usually reasonably mild.

  13. sm
    September 13, 2012

    So why doesn’t the government cut the wasteful spending on items like.
    1) Euro membership.
    2) Subsidies to banking sector.
    3) Tax relief for debt interest funds(unstable) versus equity (stable).
    4) Overseas aid for the likes of India.
    5) Large overpaying of functionaries over and above average wages.
    6) Stop goverment departments paying staff off payroll. How is that not caught by existing rules in the private sector?
    7) Allowing public contracts to be awarded to companies who use offshore tax structures to avoid tax on the contracts paid for by taxed public funds.

    Why aren’t the banks broken up? With their capital ratios much increased in tandem with inevitable deficit spending (hopefully needed infrastructure and flatter taxes and minimal to no means testing). We could hopefully then remove the private banks ability to create money.

    Which if you end up cancelling the debt is equivalent to creating debt free money- is it not?

    Money belongs to society and brings with it productivity related benefits. These benefits should not be appropriated by private interests creating unstable debt money ponzi’s. Indeed the same should be true of individual governments they should remain some constitutional limits on money creation. Or maybe we turn it over to computers and use ideas like bitcoin?

  14. oldtimer
    September 13, 2012

    An OT post:
    In due course, will you be commenting on Mr Barosso`s speech to the European Parliament, in which he calls for a federal Europe? The link is here:

    Towards the end he says:
    “We must use the 2014 election to mobilise all pro-European forces. We must not allow
    the populists and the nationalists to set a negative agenda.”

    The implications of his comments, for the UK, are profound.

  15. Alan Wheatley
    September 13, 2012

    As for “a policy which drives public sector productivity much higher, and which cuts out questionable programmes or nice to haves which we cannot afford” you need look no further than the current DoT Public Consultation on Setting Local Speed Limits. The Department is withdrawing the the existing circular, published in 2006, and replacing it with a new circular, containing revisions to their guidance to local authorities.

    You do not have to wade through this badly written document too far to realise this is more to do with the latest step in an agenda to reduce speed limits rather than to ensure speed limits are set at the most appropriate levels. The Introduction starts by listing Key Points, and the very first sentence shows that the DoT have no concept of a “safe” speed, and no understanding of the factors that determine what that speed is.

    Further, they are asking if it is agreed that the new “The Speed Limit Appraisal Tool” should replace the existing technical assessment tool for rural speed limit reviews, and doing so without providing any information on the new tool. In fact it is another COMPUTER project still in development, so goodness knows what and when will be the outcome.

    So, as to the financial implications, the DoT is incurring the costs of developing new guidance, including new software, and of conducting a public consultation. It is also forcing additional costs onto local authorities, who are duty bound to spend money assessing the draft guidance they will subsequently be given and on compiling a response.

    I do not believe there have been any revelations in road safety since 2006. This consultation is simply a waste of resources, and by people who can not be relied on to do a proper job in any event.

    Costs to be saved here.

    1. Alan Wheatley
      September 13, 2012

      Is the DoT top of the league of shortest time in post for the Secretary of State, and is there a message here for those who wish to see it?

  16. Matthew
    September 13, 2012

    The government started with the most modest of objectives.
    Too modest many would say, with debt at about £1 trillion and set to grow to £1.4 trillion they now think the solution may be to spend a bit more.

    Maybe more QE and inflation on the horizon.

    This follows the idea of having a government backed (taxpayer backed) bank to lend to business – haven’t we already got taxpayer backed banks? This presumably would involve setting up a new infrastructure.

    The government is giving a good impression of – it doesn’t know what to do.

  17. Iain Gill
    September 13, 2012

    Listening to a radio talk show recently I was quite surprised. They were discussing this country and describing it as a “one party state”. It didn’t make sense at first. But then when you look at their analysis of similar types of people, similar backgrounds, with very similar policies, it did start to make sense. A one party state where folk in the party just wear different coloured ties and take turns in power.
    Having given it a lot of thought now myself I pretty much agree with that analysis.

  18. Neil Craig
    September 13, 2012

    If we were achieving the world average level of growth of 6% over the last 2 1/2 years the econopmy would have grown 16%. With Treasury takings up 16% (actually probably a little more because tax rates are progressive) the deficit would be nearly £100 million lower – to low to worry about.

    Every competent MP (& state bnroadcaster “journalist”) knows that we could get out of recession and reach world average growth simply by following the economic policies of UKIP

    1. uanime5
      September 13, 2012

      Is every country growing at 6% following UKIP’s policies? If not then why would they result in the UK growing at 6%?

  19. Richard
    September 13, 2012

    Its going to carry on like this until the next election :-

    No growth, increasing national debt, reducing standards of living, high taxation, low returns on savings, a stagent housing market, inflation eating away at people’s spending power, high levels of unemployment and high levels of uncontrolled immigration.
    Add a depressed EU economy and many emerging nations providing great trade competition to the UK and its not looking too good.
    There doesnt seem to be any radical policies or actions by the Government to deal with the problems we are facing. They seem to have gone into a sort of quiet management/survival mode, unable or unwilling to decide what to do next.

  20. David Jarman
    September 13, 2012

    EVERYBODY is going to default. US fast approaching another debt limit increase. With them already having $80 TRILLION in unfunded liabilities, plus the $16 TRILLION “Official” debt the Republicans are unlikely to aagree to another increase after it almost didnt get passed alst time. This means about 150M Americans over night will go without getting a pay cheque, from social security to government workers to military and while many think they wont let things get that bad they have already made the preparations both logistically and “leagally”. When this former power house collapses it will cause a further slowing down of the BRICS which the Eurozone also relies on so heavily for their economies, eventually bringing the globe to a financially grinding halt. The “recession” people think we are in at the moment is hardly a taster of that which is to come. It does not matter how well we look after our economy because there will be no markets for us. The real problem is these Chancellors who think they are going to bail everything out breaking their own countries and still not saving the Eurozone. And why is that? There is no accountability. If George Osborne agreed to go to jail for the rest of his life if our debts were not repaid, would he be so eager to lend it out? He says its not our money he’s lending but the buck always stops with the people. We know how corrupt they all are, bailing the banks out proved that! There was no logical reason for that other than they are completely corrupt. Email me in 5 years and tell me I was wrong!

    1. Lindsay McDougall
      September 14, 2012

      You are exactly right about US debt. Federal debt is nearing 100% of GDP and on top of that State and local debt totals 30% of GDP. The bigger they come the harder they fall.

      President Obama has governed in the way that Labour would have governed had they remained in office – more monetaty and fiscal stimulus (and more debt) just to keep the economy growing at a mediocre 1.5%.

      1. Lindsay McDougall
        September 17, 2012

        It is now over 100%.

  21. Michael Cawood
    September 13, 2012

    The economy of the UK is being stifled by high taxes, particularly high motor fuel taxes (highest in Europe), high Air Passenger Duty (again highest in Europe) and the unreasonably high rate of VAT at 20%.

    1. David John Wilson
      September 13, 2012

      If you ignore a couple of small countries like Cyprus the VAT rates in the EU vary from 19% to 28%. The UK is hardly at the top of that league.

      1. Michael Cawood
        September 14, 2012

        It just goes to show that VAT is an absolute rip-off tax.

        1. Richard
          September 14, 2012

          VAT when it was introduced to replace the complex and discredited purchase tax was promised to be a simple tax that would always be a single figure rate.
          Look at it now.

        2. Bazman
          September 15, 2012

          A rip off for those on the lowest incomes.

  22. David Langley
    September 13, 2012

    Lets face it John, this coalition government has no real plan or ideas to get going. The big ones have already been abandoned because as M Thatcher would say “They are Frit”. We need a government that can do the big thing and the right thing. Build the new airport in the the Thames estuary, build a temporary new runway to soak up current traffic at Heathrow. Get 24/7 building going on with a tight target delivery date. Lets have some nuclear power stations of our own you know we need it. Get the Olympic guy to drive the Airport plans. Get a team going on the new airport. Reward them with dough from the Foreign Aid budget and the EU contribution. Get a standard 20% tax for everybody in the country, lets all get rich. Lets chuck out the EU regs and in fact the EU period. Whats wrong with you lot, this is our country not anybody elses. I live here and now, not in some utopia in the future. I may know little about banking con tricks but I know what makes people happy, its called a Britain for British people. By ther way Prime Ministers Question time is an insulting farce to the British people, it makes you all look silly. Stooges parroting prepared questions for staged answers. no answers to good questions just a charade. The sight of 600 MPs crowding in to watch this comic opera is a bigger joke than the thing itself. We do need some grown up behaviour and adult responses to proper questions and of course they are designed to hurt, but if you are honest and truthful we might all learn something real not spin.

    1. wab
      September 13, 2012

      “Build the new airport in the the Thames estuary.” Just because Boris is for it does not make it a good idea. Just because some rich Tories (like Zac Goldsmith) who live near Heathrow happen to be against an extra runway there does not mean it is a bad idea. (And I bet Goldsmith and his fellow Heathrow haters use Heathrow far more than your average citizen. But it’s ok for rich people to fly, just not ordinary people.)

      The most sensible option is to let Heathrow expand (there is a huge investment in that area which would be a sunk cost if the UK hub moved).

      The second most sensible option is to expand Stansted (far fewer people are affected there than at Heathrow, but there are also some rich Tories, and other rich people like Jamie Oliver, who live near there and so are against, although again they almost certainly use airports far more than the average citizen).

      Putting an airport in the middle of a major bird zone is not bright, and is just about the worst option (even worse than expanding Gatwick or Luton).

      Shouldn’t the Tories let the market decide?

  23. Mike Stallard
    September 13, 2012

    The whole point of this coalition, as I understood it, was to reduce the debt and to eliminate the deficit.
    Well, silly me.

    The whole point of Michael Gove was to introduce Free Schools and to allow local initiatives, even for profit, just like the private schools at the moment.
    Well, silly me.

    I was really looking forward to Welfare Reform. Now I read that IDS’ Welfare Reform is in the hands of the Treasury because that is where the all important IT arrangements are being made and, because Mr Osborne and IDS are in the middle of a slanging match with occasional shouting, the IT is simply not being done and the Companies involved are not even bothering to register.
    Well, silly me.

    However, the EU is now definitely going to turn into one enormous Fourth Reich (although, let us hope ) it will be more like the second Reich than the third one
    So that is one thing which I really did expect.

  24. David Langley
    September 13, 2012

    By the way John, do you have a list of the 3,000 regulations that the government say are going to be dumped? Do you know where we can find them or is that just a lot of hokum by a government that is trying to look good? I bet none of them are EU regs because you cant!

    Reply: I will be writing about this soon when I have some more information to illuminate your interesting queries.

  25. Bernard Juby
    September 13, 2012

    I’ve said this before but it’s worth repeating. Stop removing the spare purchasing power of the “grey voters”. Appallingly low rates of return on savings coupled with inflation (the true meaning of “quantitive easing”) has effectively taken away availably capital from the very people whose spending businesses rely on.

    1. wab
      September 13, 2012

      The “grey voters” have accumulated vast wealth because of their property ownership, and so through no effort on their part except to restrict house building in desirable areas, all at the expense of younger people. The first house I bought cost 7 times what the previous owner paid for it sixteen years before. Two decades later it is now worth over 3 times that. This is insane. Old people also have over generous pensions, and young people are paying the price for that as well. Older people should be one of the biggest targets in any government spending reduction (e.g. free bus passes for all, etc.). Of course they will not be, because they are a big voting bloc.

      Most adverts are aimed at young people, not old people, which shows you what market most businesses rely on (of course there are exceptions).

      1. Richard
        September 14, 2012

        Absolute rubbish, most either started their own businesses and worked very long hours to develop them or worked hard for others in companies where they gained promotions, studied at night school to gain qualifications, took second jobs to supplement their income and so improved their standard of living.
        They spent carefully , saved for their retirement and improved themselves.
        Property prices are just a small way this generation prospered.
        The main reason was hard work
        Its politicans like the great Gordon who have ruined your pension.

  26. nicol sinclair
    September 13, 2012

    “There is a strong majority in Parliament for spending at least as much as the current budgets lay down.”

    Why, prey do your colleagues in that House not understand (as Mrs Thatcher and Mr Micawber? did) that to earn less than one spends leads ultimately to disaster and penury. The latter, I fear, is where we are currently heading. Ask ANY housewife – they will provide the obvious answer.

    September 13, 2012

    If the people that make up this Governement all understood the plan, worked 2gether to make the plan work the plan would work, but everyone has their own little idealisms, couple with autonomy-freedom to do as they please which then gives everyone their own cheque book to dip into public funds for whatever purpose. If you want to budget to live within your means and gradually proper, you ensure everyone in the household knows this and that ONLY ONE PERSON holds the funds…. as I see it you cannot stop up these holes in the bucket so no matter what plan you devise it cannot possibly succeed, all you see is people taking salary for BUGGERALL!

  28. Barbara Stevens
    September 13, 2012

    There are some things this government could do, for example, stop this silly legislation on foreign aid becoming law, which you have no mandate to do. It should, in the countries circumstances stop altogether. Stop the foolish ‘green policies’ the country again cannot afford it, let alone the people who have to meet the energy bills. The first suggestion, which I believe is political posturing, will back fire on Mr Cameron, and already seen has foolish while he cuts from his own citizens and borrows to give to foreigners.
    Indeed, the green policies are crippling people’s household budgets and many fear a hard winter coming, we simply cannot afford to do it. While other countries have not embarked upon such stupid policies, why should we? Some things will make the Conservatives unelectable at the next election, they are handing No 10 on a plate to Miliband, and I question Mr C’s caperbility altogether. They should also look to VAT. and petrol taxes, which could give a stimulas to the domestic market. These simple suggestions could in effect create more jobs, and more money into the domestic system.

  29. Alister McFarquhar
    September 13, 2012

    No doubt some will anticipate policy changes-but to what degree ?

    Some evidence on cuts and recovery in most recent ASI Blog

    “The results are in: Spending cuts, not tax hikes, are the road to recovery”

  30. Patrick Loaring
    September 13, 2012

    The announcement that BAe is likely to be taken over by EDS means that our sole defence equipment contractor will be controlled by the French & Germans with the head office in Paris.

    If BAe had bid for EDS it would not have been allowed by the German & French goverments. Just about all our important companies are now foreign owned.

    We have about as much chance of leaving the EU as Luxembourg has of winning the World Soccer cup. We will be controlled from mainland Europe and we will eventually have to join the Euro! I despair.

    1. Bazman
      September 15, 2012

      The French building our nuclear submarines and one of the largest primary defence contractors closed? The market will know best what is in the interests of Britain defence will it not?

  31. Steve Cox
    September 13, 2012

    It’s clear now that the first OBR forecast was made in Cloud-Cuckoo Land. They were probably being advised the Bank of England’s inflation forecasting team. I know that forecasting is a very difficult art and is subject to error bands, and sometimes quite wide ones, but for the OBR and Bank to haver made so many forecasts over the last 2-3 years that have turned out to be such utter rubbish is unforgivable. I also worked at forecasting oil and gas production from very large complicated fields subject to many unpredictable factors. Nonetheless, if I and my colleagues had been as consistently wrong in our forecasts as the Bank and the OBR have been we would have been shown the door a long time ago. Commercial entities simply cannot afford this level of error, so why can and why should UK PLC? We pay them good money for them to make these forecasts, so somebody should be carrying the can for this fiasco.

    The other point I should like to make is that, in spite of the forecast inaccuracies (and both the OBR growth forecasts and the Bank’s inflation forecasts have a dramatic effect on the deficit reduction plan), another unforgivable error has been Osborne’s decision to abandon from Day 1 the 75% reduction in deficit via spending cuts and only 24% via tax rises and immediately opt for Plan A*, 100% deficit reduction via tax rises. So our misguided and poorly advised Chancellor has believed all along that the government knows how to spend our money better than we individuals do. Combined with overpriced elite fripperies like HS2 and the latest idea of selecting specific industries to champion, we have a Liberal/Conservative coalition that is trying to run the economy in a manner that would make Leonid Brezhnev smile in approval.

    Smaller government, less public spending, lower taxes, less regulation. Those are that we need for economic recovery and growth.

    1. uanime5
      September 13, 2012

      Well the OBR was created by Osborne, may this is why they only forecast thing that are favourable for the Government but are later proven wrong.

      1. outsider
        September 14, 2012

        Dear Uanime5,
        Your conspiracy theory is understandable but I fear it is just because they are all still using the same macroeconomic model, which assumes we are just suffering a rather large business cycle. The model has nothing useful to predict when we are undergoing a basic change in the world economy.

        1. uanime5
          September 14, 2012

          It’s not a conspiracy theory, the OBR was created after the 2010 election by George Osborne. The OBR has also been criticised for not being independent by the Financial Times.


      2. Lindsay McDougall
        September 15, 2012

        Why do you think I have been publishing the size of the real reduction in total public expenditure (5%) that will be needed in FYR 2013/14 if there is zero GDP growth?

        There’s red ink eveywhere, certainly throughout government (and don’t forget the off balance sheet items such as PFI payments and Network Rail’s debt) and for private households. Some banks and businesses are also none too healthy.

        You – and everybody else – had better hope that the figures published in the 2012 budget are correct. The reduction required is 1.4% rather than 5% precisely because of the forecast economic growth.

    2. Bazman
      September 15, 2012

      Smaller government, less public spending, lower taxes, less regulation. Those are that we need for economic recovery and growth?
      Your religious belief in this might think so, but many of these could and are slowing growth or are not making any difference except to make the working conditions worse for the majority of the population and have Britain run for the benefit of corporations and an elite instead of the people. Ram it.

  32. Bert Young
    September 13, 2012

    Stop the EU contribution – it’s wasteful and undemocratic ; the leeway in doing this allows for a number of various alternatives including tax reduction and investment in training . The atmosphere of “despair” and “uncertainty” in the community is a huge disincentive to growth . People of my generation who have the benefit of hindsight and the experience of change , feel “forgotten and disregarded” . Our views should be valued and respected ; youth at the top is a recipe for disaster . Take more note of the Tebbits of this country .

  33. Alte Fritz
    September 13, 2012

    So far as domestic consumption is concerned, it is commonly acknowledged that we consumed too much on borrowed money. Does Mr Reade want to return there? Lower domestic consumption may well be a case of people cutting their cloth etc. Apocryphal, but certainly true in my own case. It seems far fetched to expect growth in the domestic market in those circumstances alone, quite apart from inflation and the business cycle. So we need to look to export of manufactured goods and services which is where a heavily deregulated economy and liberal tax policy comes in.

    1. Bazman
      September 15, 2012

      The great wages grab. Sounds about right as I am on less than I was in 1996.


  34. Max Dunbar
    September 13, 2012

    Of course we are going to go further and further into the red. Its quite obvious that the government is not prepared to take robust action. Its too hard. It is much easier to fleece businesses and scapegoat bankers. Always the path of least resistance.
    Cameron and Osborne could do worse than go off fishing toghether and leave the tough decisions and their implementation to someone else.
    This also shows that withdrawal from the EU will not solve the underlying problems in the UK although it could be a good place to start.

  35. BobE
    September 13, 2012

    Reply What action could make the situation better? There is a strong majority in Parliament for spending at least as much as the current budgets lay down.

    1. Cap public pay to £75k
    2. Cap public sector pensions to £50k
    3. All public sector pensions to be contributary
    4. Scrap HS2
    5. Scrap Trident
    6. Cancel overseas aid
    7. All budgets to be reduced by 10% per annum until the books balance.
    But you won’t do any of thos things will you? ant the leadership will all dissapear to be EU commisoners when you loose the next election in 2.5 years time.

    1. Conrad Jones (Cheam)
      September 17, 2012

      “and the leadership will all dissapear to be EU commisoners when you loose the next election in 2.5 years time”

      …or get Jobs with J P Morgan or HSBC like Tony Blair and Ruth Kelly.

      “Bob’s Barclays bonanza of (large amount-ed)… and, despite this, he’s battling for a further (large sum-ed)” – from the Daily Mail.

      How can a Private Business – that doesn’t produce anything; afford to pay it’s old CEO,(such a huge sum-ed)during a five year period after a major Financial Crisis? Bob Diamond could have funded David Cameron’s of Gordon Brown’s; election campaign single handedly. We should value our Prime Minister more than a Bank Manager, but pay close attention at why the Bank Manager is paid so much.

  36. BobE
    September 13, 2012

    Sorry, please delete the second copy. My mistake

  37. Conrad Jones (Cheam)
    September 13, 2012

    I agree with you – borrowing money is bad for the Economy in the long run.
    The plan to let the Private Sector increase their borrowing obviously isn’t working so the Government is taking over and saving the Money Supply. What choice has it got ? Except to create currency directly and prevent Banks from creating it for us.

    “In the first plan in 2010 the government aimed to borrow an additional £451 billion over the five years of this Parliament. The following year they increased this to £485 billion, and this year to £556 billion”

    Do you mean – issue £556 billion worth of ‘Treasury Bonds’ – thereby expanding the Money Supply or; at least, reducing it’s collapse?

    Banks are reducing their lending in proportion to Loan Repayments – therefore our money supply is still shrinking.

    People are not expecting another more severe House Price Crash, so borrowing is down there to.

    The Best way to solve the inevitable collpase is for the Government to get more Private Banks competing on a level playing field. The only way to do that – and get rid of “Too Big to Fail”, is for Governments to create Currency and Not Treasury Bonds, outlaw the creation of Money (Commercial Bank Money or Credit) from Banks, so that smaller Banks can enter the Market. More Regulations to help Smaller Banks grow by eliminating this enormous advantage that Big Banks have in being continually bailed out by Governments.

    QE only slows the decent – it will not prevent a cataclysmic Financial Disaster from happening. Mervyn King has exlained that QE only prevented a worst catastrophy by giving Central Bank Money to the Reserve Accounts of Big Banks inorder to keep them alive a little longer, but it is not going to jump start the Econmy.

    QE is Life Support.

    The Banking System needs open heart surgery – otherwise it could have another seizure anytime soon.

    Carry no talking about Deficit Reductions and Clever Tax adjustments if you like -but it’s just re-arranging the Deck chairs on the Titanic before it breaks in two and sinks.

    It’s impossible to talk about Deficit Reduction in our System – our money is Debt. We need Capitalism – not State Capitalism with Government’s picking winners. Whatever happened to Price Discovery or is the only way to win in this system to have Lobbyists at the House of Commons?

  38. Sean O'Hare
    September 13, 2012

    There is a lot to be said for a policy which drives public sector productivity much higher…

    Public sector productivity? You’re having a laugh John! There’s much more to be said for a policy which cuts backs the public sector to a bare minimum. By that I mean no public sector workers whatsoever other than in law enforcement or defence.

    1. Conrad Jones (Cheam)
      September 13, 2012

      As Banks are heavily subsidised perhaps Mr Redwood is referring to the Public Sector Workers who work for RBS, Northern Rock, HSBC, Barclays and Lloyds – they are all funded through taxation – they are therefore Public Sector Workers but they don’t produce anything except Debt – which is our money supply. This is the ultimate in Public Private Partnership. Letting a Bank fail is the same as letting the Police Service Fail.

      Public Sector Workers in the NHS, Police, Fire Service, Waste Disposal, Ambulance Service, Council Services, Education etc., do produce something. As the Banking Sector has increased, the money available for true Public Services has been cut. It is not a coincidence.

      We effectively funded Banks through Deposit Insurance, Bailouts and loss of seigniorage, to inflate House Prices, making it increasingly difficult for the rest of us to afford a place to live while the City of London grows fat and happy due to a flawed Monetary System. Of course Banks aren’t going to change the system because it is humanly impossible to change a system that would cause loss of profits. This does not seem to be undestood by the Government because they naturally assume that the best advisers are those who have worked for the most successful Investment Banks.

      Wouldn’t it be great if Banks really did just take in Depositor Money and Lend it out instead of creating money out of nothing and lending it out at interest. This is the route of the problem. If it not addressed then … I guess we should all put the kettle on and make a cup of tea while we wait for the next Financial Crisis.

  39. Vanessa
    September 13, 2012

    The trouble is that recent governments have no idea how to cut only to spend. They have become so used to controlling everything and pinching most of our (taxpayers) money that they have no clue as to what or how to cut. The public sector is being paid for by ordinary people with jobs and savings etc. to people who seem to think that money grows on trees and it is their RIGHT to have our money. This thinking is completely toppsy turvy and the sooner the public sector lose their HUGE salaries and HUGE pensions the sooner the private sector can get on with filling the hole and creating normal jobs which are valuable. Have you seen the latest job advertisements for the BBC with salaries to die for? They sound as if they are on planet Zog.

  40. go
    September 14, 2012

    I all the time used to study post in news papers but now as I am a user of web thus from now I am using net for posts, thanks
    to web.

    1. outsider
      September 14, 2012

      Yes GO, and we should thank not just Mr Redwood for this blog but also Sir Tim Berners-Lee, who gave the web to us all “free, gratis and for nothing”.

  41. Derek Emery
    September 15, 2012

    Productivity in the public sector has declined whereas over the same period it has increased greatly in the private sector. See http://www.taxpayersalliance.com/bettergovernment/2010/07/public-sector-productivity.html

    some quotes:
    …The report compiles the official data for input (quantity of labour, materials and capital assets used in production) and output (activities performed together with some quality adjustments) for each year from 1997 to 2008, and subsequently calculates each year’s productivity as the quantity of output produced divided by the quantity of input used. Over the period examined, inputs increased by an annual mean rate of 3.2 per cent, while the equivalent increase in output was 2.9 per cent. The annual mean productivity fall of 0.3 per cent is deeply worrying as public expenditure has nearly doubled from £318 billion to £621 billion.

    ..The Centre for Economics and Business research (CEBR) found last year that the cost of public sector inefficiency was £58.4 billion – or half of income tax receipts. They found that private sector productivity increased by 27.9 per cent over the same period while public sector productivity was falling. The difference between private and public sector efficiency reported by the CEBR is staggering.

    There are massive savings to be made if anyone was up to the job of being effective change managers.

    Surely the percentage who remain as public sector employees should be minimized as there is no way ever that the public sector can ever be productive. A lean team should put out work to the private sector.

    I am not sure that the UK has civil servants who are up to this job judging by the passed PFI that are little more than scams that got past them and New Labour government. I suspect the UK would have to employ private sector consultancies to ensure government does not sign up to any more new scams than absolutely necessary.

    If we could make only half the possible savings mentioned in the report it would turn round the UK economy from the reduction in tax and debt.

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