2013 – a capital time for spending?

It is now fashionable to say that the UK economy needs more capital spending in general, and more public capital spending in particular. The one area where both the outgoing Labour government and the Coalition government did decide to cut was capital spending. Both now think they need to abate these cuts.

It is always advisable where there is an establishment consensus in the UK to probe it. It is often wrong. The establishment combined to recommend the ERM, and to claim the benefits of belonging to the EU as designed  by centralisers on the continent. So how well have they thought through public capital spending?

The first thing to recognise is there are various types of capital spending. Let us identify four:

 

1. Spending to put in new facilities and to open new services – “growth” spending. E.g. HS2, to provide a new faster train service to Birmingham from London.

2. Spending to extend existing services to cope for increasing demand – as with new schools or hospitals in  busy areas, often coping with the increase in population  E.g. new primary schools in Wokingham

3. Replacement capital – new schools or rebuilt roads to replace existing capacity

4. Investment in labour or energy saving or other productivity enhancing improvements in service delivery.

More of type four, cost reducing and productivity enhancing investment in the provision of public services could be a very good idea. It helps to bring the deficit down over time, assuming a decent return on the investment made through cost saving.

Type one is clearly incompatible with bringing the deficit down. Anything which increases the future current spending of the government through offering new or additional service makes it more difficult to control the deficit..

Type two also swells the deficit. Controlling migration better would reduce the need for such expenditures. Having more success than the previous government in fostering private sector led recovery outside London and the South east would also help, as it would reduce the need for internal migration and extra facilities in the hard pressed south.

Type 3 spending can be helpful. It should be allied with type four, so that the replacement facilities can be run more effectively and cheaply.

All capital spending boosts total UK output, as most of the money is spent on UK building and construction work, and provides jobs for people who have to be based in the UK to carry them out. There will be imported elements in the building supplies consumed, where UK industry could probably do better at import substitution given favourable circumstances for industrial expansion here.

Those who simply urge more capital spending should recognise that some is good and some is unhelpful when it comes to curbing the deficit. Schemes with high future running costs for the state are not helpful. It is most important that new capital concentrates on doing things better and more effectively to help control running costs. Privately financed capital projects with no recourse to the taxpayer to pick up the losses would be most welcome to use some of the slack in the building industry.

I wish all my readers a happy and prosperous new year.

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97 Comments

  1. alan jutson
    Posted January 1, 2013 at 8:41 am | Permalink

    I agree that any capital investment which makes things much more efficient should proceed, the problem is we do not have joined up thinking throughout all of government.

    You quite rightly give Wokingham schools as an example of needed expenditure, but if cenral government had not forced the local Council through the appeals proceedure, to have 26,000 more new homes in its area over the next 20 years then such expenditure would not be neccessary.
    Given the above, we now are already suffering the effects of an infrastructure (roads) that cannot cope during busy times, and it will get worse.

    Again locally we had two hospitals in Reading which served the local area, Royal Berks and Battle.
    It was decided to close Battle the larger site (to sell to Tesco’s) and develop The Royal Berks (the more congested site).
    Royal Berks now has the same bed capacity as the two original hospitals combined, but with no room for any further expansion and very limited car parking.
    Thus an expanding area in housing will be short of hospital space, unless of course they bring in the much needed 24 hour working (theatres open) and weekend outpatient appointments, but bed shortage would then determine usage ability and limit those new working arrangements (if they ever happened).

    John, what we need is sensible long term planning, and joined up thinking.

    The fact is we are an overcrowded country, our services and infrastructure is being strained way beyond its designed capacity.
    The simple, easiest and most cost effective solution is to control better new people who want to arrive here, and thus slow down the growth in overall numbers.

    Limiting Child Benefit to one per adult, may also help a little in the very much longer term.

    • alan jutson
      Posted January 1, 2013 at 8:42 am | Permalink

      Happy New Year to our host, and all of his readers and contributors.

    • LB
      Posted January 1, 2013 at 11:07 am | Permalink

      It might make things more efficient, but it still makes a loss.

      • alan jutson
        Posted January 1, 2013 at 6:54 pm | Permalink

        LB

        “it still makes a loss”

        Perhaps, but any National Health Service proably still will.

        Do you want a National Health Service or not, that is the choice.

        Just think what perhaps the alternative is if someone who cannot afford to pay for treatment, has a contagious disease or even one of the most problematic flu’s or other infections.

        Do you allow then to continue to roam around infecting everyone else, or do you lock them up.

        No, the solution is to try and make the heath service as efficient as possible, and perhaps limit some of the forms of treatment to health benefit, for nationals only.

        Not everyone can or would wish to pay for Private Heath treatment.

        • Andy Cooper
          Posted January 2, 2013 at 12:20 am | Permalink

          The NHS should remain free but a two tier system to give (along with benefit cuts) incentive to those who can but do not work into taking work.
          There must be some incentive to work.
          Along with being the major importer of an immigrant popultion the Labour party also increased benefit levels higher. This removed the incentive for British people to do the lower paid jobs they had done for hundreds of years. This then made a need for foreign workers to do the jobs the British would no longer do!
          I work and live with many Polish and Latvians etc and non of them has a mortgage because non of them will stay in England once the economy crashes. They live in over crowded bedsits paying little in rent and costs due to the numbers living there.
          They all send much of their money back home to await their return.
          Then there is the growing number of European shops on our streets selling European not British goods which they purchase cheap in Poland etc and sell at British prices here.

          So returning to the NHS issue.
          If we as a country make it economically beneficial and services provided such as the NHS are better for those who can but wont work this would return us to the days where British workers did British jobs and then spent most of their money in Britian

          • uanime5
            Posted January 2, 2013 at 6:54 pm | Permalink

            Your post makes it clear you don’t live in the real world.

            Labour introduced tax credits (a type of benefit) to encourage people to work in low paid jobs by topping up their salary. Without tax credits even fewer British people would work in low paid jobs because they don’t pay enough to live on.

            Let’s not forget that those who are working in low paid jobs can also claim many of the benefits they claimed while unemployed in order to encourage them to work. The erosion of salaries is also responsible for the benefit bill rising.

            As long as Polish workers are prepared to work for as little as possible and will live several people to a bedsit they will always undercut the wages of British workers, resulting in British workers not getting these jobs. Your plan to punish the unemployed with poor healthcare will not change this.

    • Denis Cooper
      Posted January 1, 2013 at 11:41 am | Permalink

      The policy of allowing and encouraging mass immigration is already an unfolding slow motion disaster for the established population in so many different ways, and eventually it may move from being a mere disaster to an outright catastrophe for country as a whole, for the relatively new arrivals and their offspring as well as for the previously established population.

      That is not to disparage any of those who have taken advantage of the opportunity to get a better life by moving here from abroad, provided they have done so legally and not blagged their way in, it is just recognising the reality of the present and likely future consequences of the policy of allowing and encouraging such large numbers, even unlimited numbers, to do that.

      Unfortunately all three of the main political parties have been and still are in favour of that mad and wicked policy, for their own selection of different reasons none of which have any connection with the real interests of the established body of citizens who foolishly continue to elect their parliamentary candidates.

      The leaders of one of those parties, the Tory party, try to string along party members and supporters and voters by pretending that they want to limit immigration, but as their party is very largely funded by people who have selfish financial interests in its continuation and little interest in the common good it would be a mistake to expect much effective action from those politicians.

      • Posted January 1, 2013 at 6:07 pm | Permalink

        The average street sweeper and BNP member worked that one out fifteen years ago. But it’s good to see the twits in Westminster finally seeing sense: e.g. Labour’s admission that they were wrong on immigration. Though whether the aforesaid twits actually do anything about the problem is more debatable.

      • Disaffected
        Posted January 3, 2013 at 1:58 pm | Permalink

        Well said Dennis. Unfortunately the civil service want more as do the Lib Dems and Cameron is allowing it to happen while getting Shapps to spin that he doing something about immigration when in fact he is, once again, not being candid with the truth.

    • zorro
      Posted January 1, 2013 at 3:04 pm | Permalink

      We need sustainable (even if it is low) growth based on a controlled immigration policy. None of this extra spending had been factored into cost/benefit scenarios on whether increased immigration was good either for growth or the wider economy. The government is fighting a losing battle, in reality I doubt that they care very much at all. They think that things like this will never affect them in Witney or the Cotswolds……

      zorro

      • zorro
        Posted January 1, 2013 at 3:06 pm | Permalink

        Happy New Year to John and all contributors. I would like to have said prosperous, but…….

        zorro

      • forthurst
        Posted January 1, 2013 at 4:31 pm | Permalink

        “The government is fighting a losing battle, in reality I doubt that they care very much at all.”

        The reality is that the Conservative Party has become seriously infested with those who pretend to be conservative but have absolutely no interest in conserving this country, its freedoms, vistas, and traditions, but rather to change it out of all recognition by third world immigration, the EU and every globalist fad in the neo-liberal cookbook. These people are no more than carpetbaggers and pirates whose ambitions are to be influential and financially successful whilst giving the natives a good kicking, pretending to be on their side but of course ensuring that they do not have the freedom of speech to actually say what they really think.

    • Verity Cross
      Posted January 3, 2013 at 12:30 am | Permalink

      You comment that capital spending provides jobs for people who have to be based here….. once upon a time that would have meant a boost to the circular flow of income and economic growth. However, as most construction jobs seem to go to Eastern European workers this will result in even more money escaping from the UK. In the past 7 years Polish workers alone have sent £23 billion from UK to Poland. While this country is flooded with immigrants who send their money to their home country instead of spending it here the economy will never recover.

  2. matthu
    Posted January 1, 2013 at 8:55 am | Permalink

    The comments in The Telegraph following Grant Shapps’ plea to unite the Tory faithful must make pretty dismal reading for him.

    “Blah, blah, blah. Cast Iron Dave has gone. ”

    “Perfect example of how out of touch the Tory party is. I will predict that there isn’t a snowball in Hades chance that Mr Shapps will keep his seat in Hatfield. Not a dickey bird.”

    “Labour won’t win the next election, David Cameron and his inner circle will lose it, because they have ignored the views and opinions of the British people, and have actively worked against the best interests of the BRITISH people. So good riddance to the Tories and serve them right.”

    “The most absolute rubbish I have ever read,in keeping with an inept,incompetent government.”

    “you do know, don’t you shapps, that with the internet, lying isn’t as easy as it used to be.”

    “People have had enough of the lies from the coalition and labour,they are fed up with being taxed,fed up with their money being given to foreigners,fed up with immigrants,fed up with being poor, they are going to vote UKIP,its the only party that knows what is going on.”

    And many, many more comments in similar vein. Which is either indicative of a massive swing away from CP – or increased organisation amongst UKIP supporters. Either of which must be somewhat worrying to the CP chairman (and our host?).

    http://www.telegraph.co.uk/news/politics/conservative/9772944/Dont-listen-to-these-false-prophets-over-the-2015-general-election.html

    • Posted January 1, 2013 at 10:38 am | Permalink

      Indeed, I was sick of the Olympics before it even started can they not forget it now?

      The Tories are clearly already buried by Cameron in the Heath, Major style. Labour could not be much worse anyway. Grant Shapps almost makes Baroness Warsi seem competent.

      I see concerns over c02 emissions do not seem to apply to tax funded fireworks last night – it is a rather selective religion this global warming one.

      • Martyn
        Posted January 1, 2013 at 7:47 pm | Permalink

        “I see concerns over c02 emissions do not seem to apply to tax funded fireworks last night – it is a rather selective religion this global warming one”.

        Well,yes, but I observe also that no one has yet suggested that the manifold occasions upon which floodlit footie and other sporting events burning substantial amounts of electricity each week and especially so at this time of the year be strictly curtailed or abolished to save the planet…

        • lifelogic
          Posted January 2, 2013 at 8:24 am | Permalink

          What about all those millions flying round the world for the jumped up sportsday – the Olympics – just to show they can do something a tiny bit faster or higher than someone else (on a particular day) who cares? Or Cameron flying a jumbo with Obama to a ball game or Prince Charles’s travel arrangements of £1M+ PA

          Very selective indeed is the C02 exaggeration religion.

    • forthurst
      Posted January 1, 2013 at 5:01 pm | Permalink

      According to Shapps, “It’s humbling for Conservatives that, even though our core values are shared by many ethnic minority voters, too few of them felt able to vote with us at the last general election.”

      They never will Mr Shapps.(words left out) The Conservative Party is seen as the English Party not only by immigrants but also by the Scots and Welsh even though with people such as yourself and other clowns and malevolents, it most clearly is not. All the Conservative Party is doing is alienating the English and anyone else who wishes for a viable future here, who are now turning to UKIP.

      Mr Shapps boasts that the Conservatives have reduced net immigration by a quarter; so add back in all those that have emmigrated, driven out because they cannot see a viable future here, and the improvement over Labour’s policy which was too hot to share with parliament is what, 10% 15%? Not really trying.

  3. David in Kent
    Posted January 1, 2013 at 9:02 am | Permalink

    A major reason for our present financial problems is that Gordon Brown borrowed money for ‘investment’ which turned out to be no more than wage rises and increased numbers in the civil service. Even these ‘investments’ didn’t deliver productivity gains greater than the interest we are paying on borrowing the money.
    So it is really only your Type 4 investments that the government can afford now.
    What would you say to private organisations making Type 1 investments? Certainly the roads in the Wokingham area are in dire need of upgrade.

    • forthurst
      Posted January 1, 2013 at 4:09 pm | Permalink

      “So it is really only your Type 4 investments that the government can afford now.”

      They’re code for computer systems; are you sure?

    • Mark
      Posted January 2, 2013 at 4:25 pm | Permalink

      I think much of the problem is the handing out of type 4 visas to all and sundry (add in Mode 4 workers).

  4. oldtimer
    Posted January 1, 2013 at 9:22 am | Permalink

    I agree with your analysis of the different types of capital expenditure and the need to support those that will improve productivity and/or reduce operating costs. My only qualifications are (1) that there should be an insistence on the use of hard, quantifiable cash benefits over the immediate five to ten year time horizon and (2) a rejection of schemes that will add to public sector operating costs either directly or through the subsidy of private schemes. It is all too easy, and tempting for politicians, to waffle on about intangible and other non-cash benefits; the UK`s dire financial circumstances leave no room for such self indulgence.

  5. Posted January 1, 2013 at 9:57 am | Permalink

    An establishment consensus in the UK is nearly always wrong – the EU, the EURO, the ERM, tax borrow and waste, the quack green agenda, the enforced “all will be equal” agenda, the gender neutral insurance, the over regulation of everything, the transfers to the feckless ……….

    Investment should be anything that pays back capital and interest in under about seven years otherwise forget it. Most government investment does not ever pay back, indeed much “investment” has merely negative consequences. Education is a very long term investment, especially as government tends to see it as an indoctrination opportunity.

    In short it is best left to the private sector to invest. The state sector could improve the tax and legal systems, fire the 50% who do nothing useful, halt the quack green subsidies, reduce regulation, un block planning, get some lending banks, get out of the EU and get rid of all the road blocks and pointless anti car traffic lights that they have installed.

    That would be a good start.

    • Posted January 1, 2013 at 10:12 am | Permalink

      Growth will only come from releasing the private sector – instead of mugging them and tying them up in red tape at every turn. Alas Cameron and this government are ideologically opposed to common sense and have wasted half their term already.

    • Posted January 1, 2013 at 10:26 am | Permalink

      The reason that an establishment consensus in the UK is nearly always wrong is simple they are acting in the interests of the establishment rather than the voters and the country.

      • Posted January 1, 2013 at 4:49 pm | Permalink

        I agree. We usually get common-sense from a well-informed public.

        However democracy – and the common sense it delivers – is under attack from quangoes, international treaties, foreign laws and judiciary.

        And we the public are not always well informed. In fact we are being coached by biased mass media.

        • lifelogic
          Posted January 1, 2013 at 9:06 pm | Permalink

          Indeed no real democracy at all. Mass misinformation for them too all funded by them.

  6. Simonro
    Posted January 1, 2013 at 10:20 am | Permalink

    1b. Productivity enhancing growth spending – road and rail expansion that reduces freight transit times & fuel costs, for example.

    5. Capital spending that provides future income – building public housing available on a rent to buy basis, toll roads & bridges, etc.

    The other point worth mentioning, is that debt vs. GDP (and thus deficit vs. GDP) is a much more important measure than the cash debt/deficit. If capital spending provides initial growth that leads to private growth (full order books leads to more employment leading to consumer spending, etc, etc) this naturally leads to the ratio shrinking without paying down debt.

    Future taxpayers – who are primarily also current tax payers as far as this extra debt is concerned – will not be ‘paying off our debt’, they’ll be paying the interest on the debt, from their fatter wallets.

    Unless, of course, the government insists on following it’s zero growth strategy.

    It might also be worth noting that the vast majority of this debt is held by British taxpayers.

  7. Brian Tomkinson
    Posted January 1, 2013 at 10:58 am | Permalink

    I have no confidence in the government spending any money in an efficient way. I have no confidence that this government will eliminate the deficit. I am confident that government debt will have doubled by the time this lot are seeking re-election. Having seen all three main parties fail by basically adopting the same economic policies, despite pretending otherwise, who do we vote for in 2015? Or is this all part of the grand plan to kill off democracy?
    Happy New Year to you John and all the readers of your diary.

  8. LB
    Posted January 1, 2013 at 11:06 am | Permalink

    E.g. HS2, to provide a new faster train service to Birmngham from London.

    =============

    So how does that help?

    1. The tickets will never pay for the cost. Never ever. If you put the cost on the tickets, no one would buy. So you are going to screw others over for the service. All because some MP wants to get home quickly.

    Just like expenses, its ripping us off for an elite’s advantage.

    2. Lets take Cross rail. Another example. No one will pay the full cost, because its excessive, so others get screwed over.

    Even with Crossrail, look at the alternatives. 450 DLR extensions for the same cost. That would have given a massive benefit to London. You can’t build that many, so Birmingham, Manchester Liverpool, Bristol, .. could all have benefit.

    However, some MPs want to get out of central London, fast, so lets spend other people’s money getting around quick.

    So these all add to the debts, never provide a positive cashflow either.

    3 Spending to extend existing services to cope for increasing demand

    Caused by what? The fact you can’t and won’t control migration.

    4. Investment in labour or energy saving or other productivity enhancing improvements in service delivery.

    So these will pay for themselves. You don’t need the cash.

    But you do need the cash don’t you?

    7,000 bn of debts to pay. On taxes of 500 bn. 14 times geared.

    Now you’ve been in charge at a bank.

    Would you lend to a company with a 30% annual loss, year on year, and a gearing of 1400%?

    I suspect I know the answer.

    So why are you forcing that on us?

    Time I think to make the decision. No votes for lib dims, liebour, or the tories. After all its been lies all the way.

    As Farage points out, he’s the least corrupt.

    • lifelogic
      Posted January 1, 2013 at 11:37 pm | Permalink

      Indeed.

  9. waramess
    Posted January 1, 2013 at 11:24 am | Permalink

    “All capital spending boosts total UK output, as most of the money is spent on UK value added, and provides jobs for people who have to be based in the UK to carry them out.”

    Where I wonder is all the money to come from for such capital spending. Perhaps from taxes, maybe from more borrowing or even the printing presses.

    Improvment of hospitals and schools must not be forgotten in this age of crisis but what on earth are the government doing still involved in schools and hospitals. This was a pure socialist idea which the Conservatives have embraced and which makes no sense at all.

    OK, so this is now and something has to be done but it will certainly be done in the most inefficient way possible and will be a direct or indirect cost to the UK taxpayer. Every penny spent by the government in this way will dilute the capacity of the private sector to invest and for each job created by the public sector a multiple will be lost by the private sector.

    The government should by now be preparing to divest itself of all the things that might be done best by a competetive private sector, retaining control only over the quality of the product or service provided.

    As the only part of the NHS that is not provided by the private sector is its managment then this should be the first to go.

    Margaret Thatchers boldness in the face of socialist rhetoric earned her several election victories; the Tories would do well to consider this and stop trying to be more socialist than the socialists

  10. davidb
    Posted January 1, 2013 at 11:50 am | Permalink

    Happy New Year.

    The off the books financing of unnecessary capital projects – new schools/ hospitals/ sports centres and the like via PFI is one of the reasons we are in this mess in the first place. Care should be taken not to “invest” in white elephants. The railways are a money pit, yet much capital is spent there. Wind turbines are another subsidised variant, and I expect an HS2 project to be the same – but the lobbys will push for it.

    Howsabout we look at the water supply system, public housing for rent, airport capacity, power station capacity. Could the state not undertake such projects so long as the assets were public owned – leased perhaps to the private sector/ tenants? That way we could get rid of hose pipe bans in a country famous for its rainfall, house people in affordable accommodation instead of subsidising private landlords, permit those of us on the periphery of this island to fly abroad via London instead of Amsterdam or Paris or Frankfurt, and ensure the oligopoly which benefits from restricting future supply of electricity have the powerstations foist upon them that they are unwilling to build.

  11. David in Kent
    Posted January 1, 2013 at 12:11 pm | Permalink

    Happy New year JR. Keep up the good work

  12. Julian
    Posted January 1, 2013 at 12:14 pm | Permalink

    One thing which blocks public spending waste is the idea of ‘cost centres’. These mean that it is easy to assign money to unnecessary expenditure such as cosmetic changes to roads and pavements i.e non-essential work. There seems to be a lot of this being done by local councils – they defend it by ring fencing these cost centres instead of top-down planning. The way councils operate is not cost effective – there is huge waste.

    • Mark
      Posted January 2, 2013 at 1:42 am | Permalink

      So true.

      Surrey has about 89,000 street lamps. The standards vary in age – about 10% are pre 1960, 30% from the 1960s, 25% from the 1970s, and 15% from the 1980s and likewise the 1990s, with the remaining 5% being newer. By the mid 1960s, the efficiency and longevity of sodium lighting provided a strong incentive to replace other forms of street lights: this was reinforced by rising energy costs after the Arab Israeli wars and quintupling of oil prices. Hence the age structure, which demonstrates that lamp posts have perhaps a 50 year average life.

      SCC decided in 2009 to replace all lamp posts older than 15 years, and install new lighting in all 89,000 standards. It is to be done via a PFI.

      http://www.surreycc.gov.uk/__data/assets/pdf_file/0020/173180/St-Lighting-PFI-Bus-case.pdf

      On p9, it is revealed than this supposedly will generate an NPV of the economic benefits from reductions in crime and road traffic accidents for the preferred option [of] £299.8m. The BCR achieved is 4.38. It is not stated what this is compared with. (There is no substantiation of the figure, but a strong suspicion that it is on the high side given other ways in which crime and RTAs can be reduced). Elsewhere, we are told that the plan will save £12m for taxpayers over 25 years (compared with what?), along with 150 million kWh (at an expensive 10p/kWh worth just £15m over 25 years – and dependent on dimming/switching light off, because the lights will be less efficient than the sodium they replace) and 60,000 (or is it 65,000?) tonnes of CO2 emissions – an exaggeration because night time generation has a high proportion of nuclear.

      However, it is also revealed that the project depends on £148.4m of PFI grant from central government. So either there is at least another £350m of hidden benefit (4.38×148.4 – 299.8), or the economics are no longer that attractive, with the cost for the fancy radio controlled lights being more than double the estimate.

      The ~£150m of cost is being spread over 5 years: at £30m per year it is more than twice what SCC spend on highway maintenance, which is inadequate for repairing some of the most potholed roads in the country. The Council don’t seem to have a good idea how to balance priorities. Footnote: the Highways Agency spends under £400m p.a. on road maintenance against depreciation estimated at ~£900m p.a. (and VED of £6bn, motoring taxes nearly £40bn…) so our main roads are deteriorating too.

      Hidden away is a trick question: why didn’t SCC opt for LED lighting? The answer is that if they had been sensible, and only replaced where needed for now, LED street lighting technology would have had the time to reach maturity, and it could have offered much greater savings. LED lighting is rapidly becoming both cheaper and more efficient.

      http://www.lightingwizards.com/Downloads/LED_vs_Induction_Streetlights.pdf

      Lessons:

      1) It is a bad risk to replace everything all at once, as well as being economically inefficient, retiring assets with useful life early. See also: Large Combustion Plant Directive

      2) It helps to have someone who is both technically and economically literate evaluate the choices. See also: DECC generally

      3) PFI funding cost of the capital cost will far exceed public sector funding cost. See also: NHS, etc.

      4) Councils will spend money if it is allocated by central government, regardless of the real merits of the spending. Parkinson’s Law of Budgets: the spending expands to absorb the cash available. See also: central government departments, quangos.

  13. Gordon
    Posted January 1, 2013 at 12:25 pm | Permalink

    Likewise Mr Redwood,
    A Happy and Healthy New Year to and yours, with the wish that commonsense will become more prevalent this year
    Gordn

  14. matthu
    Posted January 1, 2013 at 12:44 pm | Permalink

    I thought I would share a couple of the other things I have been reading.

    A neighbour of mine produces “the Wokingham Word” (a fun, free, friendly guide to Wokingham which is distributed to over 24,000 homes). Her closing editorial for 2012 included an uncharacteristic rant against all that went wrong in 2012:

    “One of the most disappointing themes of 2012 has to be people not doing their jobs properly … the incompetence and laziness of certain individuals, especially those in prominent positions with huge responsibilities … the dirty, dishonest, deliberate deceit of a small minority is truly appalling.”

    She goes on to mention the Leveson inquiry, the Hillsborough disaster, the Jimmy Saville revelations, tax avoidance of celebrities and international businesses, corruption in politics, the church, the police…

    Then she goes on to say “Thankfully, I can find the silver lining in almost any situation. Here it is. We are only responsible for our own actions (and our children’s until they are old enough to be responsible for themselves). We are not individually responsible for the woes of this country. If we each continue to play our own amall part by doing the right thing, abiding by the rules, living kindly and responsibly, our consciences will be clear and we will sleep at night. I am comforted by the fact that those with dark and dirty secrets will be tormented by their actions and never know the peace that most of us enjoy.”

    I have also been reading Daniel Hannan’s essay (which my daughter gave me for Christmas and which I heartily recommend) “A Doomed Marriage: Britain and Europe” and came across this quote: “As Upton Sinclair used to observe, it is remarkably difficult to make a man understand something when his salary depends on his not understanding it.”

    Somehow I feel this is relevant to renewable energy just as much as to retaining our membership of the EU.

    Finally, to those people who would criticise UKIP for being too naltionalistic, there was another quote on the same page that I liked: “De Gaulle was right to say that democracy and national self-determination are the same thing. Deny the second and, pretty soon, you find yourself having to deny the first.”

    Happy New Year to you, John and all readers of your blog. I feel sure 2013 will portend momentous change in one way or another.

    • lifelogic
      Posted January 2, 2013 at 5:10 am | Permalink

      I largely agree – But are the sort of people who commit “the dirty, dishonest, deliberate, deceit” – “tormented by their actions and never know the peace that most of us enjoy.”

      I suspect they are the sorts who are not at all tormented by such things or surely they would not have done them in the first place. Hillsborough in particular was appalling and such a huge number involved in the cover up police, politicians lawyers and so many more.

  15. margaret brandreth-j
    Posted January 1, 2013 at 12:50 pm | Permalink

    Happy New Year to all. Thankyou for the first lesson of 2013 on Capital. And all went to be taxed , everyone into his own city. This teaching really is another way of gaining knowledge other than paying for a degree in economics( which to be honest ,would not be open to me anyway).

    On the building of new hospitals to replace exisiting services..surely the box into which it falls is a little wooly . The NHS has built other hospitals, others closed down, services have been expanded and others shrunk ( and sub contracted). In short there has been movement between type 1- type 3 . The demographics have been changed and the waste in attempting to centralise services has been demonstrable.

    Type 4 in the NHS has also demonstrated waste plus ,as the UK had much of its own very qualified staff to staff all hospitals including the newly qualified, yet human resource was brought in from other countries.No blame can be put on the immigarants and all should respect these staff equally , but the initial management was ludicrous. NB The staff were not on less salaries.

    In tackling type 4, efficiency and effectiveness do not go hand in hand, what may appear to be a cheaper way of employing staff could be financially disastrous as more amd more mistakes are made , more legal cases are fought and competition becomes even more negative.
    How we make our debts cost less , surely is up to the ‘big boys’ and these small adjustments won’t really matter in the long run. I used to listen daily to the ERM and really thought that streamlining EU and pounds may help : I was taken in.It is this lack of general understanding that we in the UK possess. Can we change that in order to make our own minds up, rather than simply react to spiel?

  16. John B
    Posted January 1, 2013 at 1:12 pm | Permalink

    Mr Redwood: the State should not be ‘investing’ in any of the above, because to do so they take away money which would be invested elsewhere by the private market.

    It therefore supposes the State is able to pick winners and invest in what will meet the future needs of the population, but a small group of politicians and bureaucrats can never know what these will be.

    These ‘investors’ carry no prsonal risk as they are investing other people’s money who have no alternate but to hand it over, keep handing it over and pay for any losses.

    Investment in winners and losers is a complex process of trial and error, done in response to the many signals from the market and life conditions, by the millions of minds which make up our populations, not just in one Country, but around the World.

    There is no central planning committee: no coordination.

    No clever bunch of politicans investing txpayers’ money or even clever business people decided we all needed Smart Phones, or tablet computers, for example, it was the large undisciplined ‘mob’ which decided they liked an idea among many other innovations…. more innovations never make it than do, by a large factor.

    How can Governments ‘know’ which will make it and which won’t and invest accordingly?

    How can they know investing in a High Speed rail link is the right thing to do? If private investors will not invest and risk their money because of the uncertainty of outcome, why should the taxpayer be forced to risk their money?

    Schools and health. All the Western Countries have departments of Government specifically to prevent monopolies. They do this for very good reason based on historical evidence. Monopolies are not good for the people who use their goods/services and even with the best intentions end up serving those in them, who can ignore the needs and wishes of those whom they supply because there is no competition, no alternative and that most important weapon a consumer has, choice, is absent as is the threat of loss of business.

    Why then if politicians consider monopolies intrinsically bad even evil, do they support the worst of all monopolies, State monopolies?

    At least with private monopolies there is in many cases a choice, one can simply not buy from them and keep ones money, with State monopolies one must pay whether or not one uses their output.

    That free market destruction of enterprises which are not providing what their customers want, for whatever reason cannot happen as the Sate guarantees the moribund in a permanent vegetative state if need be, with increasing amounts of ‘investment’ aka taxpayer money.

    Private investors can withdraw their investment, they can of course lose it too, they can sell it on, they can earn from it. State ‘investment’ is fossilised for ever, unrecoverable by the true investor, the taxpayer, not transferrable, not resalable.

    Isn’t the current problem State investment? Does not the UK have a National Debt of £2.3 trillion…. where is that ‘investment’?

    State investment in ideology according to transient political whim and fantasy, rather than leaving wealth in the hands of those who create it to invest in innovation for everyones’ future prosperity.

    There are very few things the State alone can do: external and internal security, criminal justice system, general public health. I cannot think of another which cannot be better and more efficiently done by private endeavour or via localised organisation and government.

    By the way: jobs are a cost not a benefit to the economy. If all jobs could be replaced with automation, then the money spent on labour could be spent on reinvestment.

    I am not suggesting all jobs could be or should be replaced, but please stop this nonsense that ‘investment’ in jobs is good for the economy: it is not that is why companies invest in automation and moving to Los labour cost areas to eliminate jobs and thrive.

    When the political class still talk in prams of investment and has no clear idea of how Humanity works, we shall ever be in trouble.

    You want true Conservative values? Look up ‘laissez-faire, upon which principle thr greatest leap forward in prosperity took place in he history of Mankind.

    • waramess
      Posted January 1, 2013 at 5:06 pm | Permalink

      Surprisiing this needs to be said at all, particularly on this blog. 100 percent right and 100 percent ignored by the current gaggle of politicians who are busily feeding their egos at the expense of the taxpayers.

    • margaret brandreth-j
      Posted January 1, 2013 at 5:08 pm | Permalink

      If all were automated , then without any jobs around ,industry would come to a standstill ,as no one would buy products and even private industry would have to rely on that fossil, the state.

    • uanime5
      Posted January 1, 2013 at 7:04 pm | Permalink

      When people don’t invest in something necessary because it is risky or the returns are low then the Government has to invest in it. That’s one of the most effective ways to improve the economy.

      Given that there’s private healthcare and education in the UK despite there being free healthcare and education it’s clear that state monopolies don’t cause the “free market destruction of enterprises”.

      Care to name a way private companies can provide education and welfare better than the state? If not then add them to your list of the things the state should do.

      Laissez-faire is and has always been a disaster waiting to happen. Fast growth does not justify the destructive crash caused by unsustainable growth.

      • waramess
        Posted January 2, 2013 at 4:39 pm | Permalink

        uanime5 How silly. Why, if the private sector has decided an investment is too risky, should you permit a bunch of politicians to decide to spend your hard earned money on such a project?

        Private education and healthcare exist because the State system is so awful but, it exists as a small part of the system because most people are not able to pay for either twice.

        There are so many private institutions that can provide a better serice than the State that a reply is unnecessary however the principle of laissez-faire is, in these times of government meddling, becoming pretty irresistible

    • zorro
      Posted January 1, 2013 at 9:18 pm | Permalink

      ‘By the way: jobs are a cost not a benefit to the economy. If all jobs could be replaced with automation, then the money spent on labour could be spent on reinvestment.’……You are not describing Conservatism, but rather extreme liberalism. What will people in society do if they do not have jobs or the possibility to live a purposeful life. I often rail at what Bazman says, but even I can see that this is uber theoretical fantasy…..I am sure that he will add his usual comment

      ‘I am not suggesting all jobs could be or should be replaced, but please stop this nonsense that ‘investment’ in jobs is good for the economy: it is not that is why companies invest in automation and moving to Los labour cost areas to eliminate jobs and thrive.’…..Of course, automation can be useful and improve productivity, but humans need to be busy and not all are suited to business but can be useful employees. In modern society, people need to have a stake, and the extreme positions you take here are wholly impractical.

      zorro

      • Bazman
        Posted January 2, 2013 at 12:03 pm | Permalink

        I’m not a Luddite by any means robots kept me on work for years and how do you think the cheap nasty washing machines for less the 200 quid are produced? £40 of that £200 is tax. The actual machine costs less than £60. If a job is a cost to the state then what is employment? The armies of often woman who manned the production lines of the washing machine factories are now replaced by a few technicians. The problem in an advanced economy is finding some work for these people to do. This reinvestment is good if you are the investor, but what about the rest of the population who buy the machines? Maybe they could live in special peasant enclaves growing their own food and supplying cheap labour to the more wealthy population? Low wage employes given free travel into Londistan the wealthy arguing that their taxes pay for the transport of this servant class and they provide jobs like cleaning and childcare.

        • Edward
          Posted January 3, 2013 at 2:38 pm | Permalink

          Bazman,
          “the problem in an advanced economy is in finding work for these people to do”
          I think you have got it absoutely right.
          There are now a good few million unemployed in the UK who would have done the jobs that automation is now doing.
          This echoes with my experience in engineering in the Midlands where in the 70′s and 80′s well paid jobs were everywhere. Even if you lost your job at one firm then you could find another well paid job the next week.
          The pubs and the works social clubs were rammed, (to use you terminology).
          Most manufacturing companies who have survived from those days now produce more with a tiny fraction of the staff they had back then.
          I sometimes go back to the town where my mother was brought up and where the mining, steel making and engineering jobs have all gone, leaving it today as a miserable place for previously proud hard working people.
          The main recent growth of jobs in the UK has been part time jobs and admin jobs and in retail and these have, in general, better suited females.
          Leaving young and older un-skilled males and semi skilled males in a very difficult labour market.
          I have no solutions to this problem, tariffs on cheap imports from China and India, better labour mobility and more retraining, might work perhaps.

    • lifelogic
      Posted January 2, 2013 at 5:14 am | Permalink

      Jobs are a cost, but people with no jobs are a cost too unless you are going to let them starve.

    • Bazman
      Posted January 2, 2013 at 10:11 am | Permalink

      ‘At least with private monopolies there is in many cases a choice, one can simply not buy from them and keep ones money, with State monopolies one must pay whether or not one uses their output.’
      I’ll remember that fantasy when I do my gas and electricity shopping.

  17. Vanessa
    Posted January 1, 2013 at 1:18 pm | Permalink

    If you read some investigative journalists, their research says the government’s figures on HS2 are completely wrong as capacity on trains is falling. Another example of the lying “toads” in government and the ignorance and incompetence of those who dream up these ideas and are incapable of then saying they were wrong and pulling stupid ideas paid for by US.
    We will go on falling into a black hole as I am sure there will be more printing of money (paper) and spending on unnecessary things none of us, the British people, want or need.

  18. Manof Kent
    Posted January 1, 2013 at 1:28 pm | Permalink

    The initial aim of the Coalition was to eliminate the deficit by the 2015 election.
    A fixed term of 5 years was given to achieve this aim.

    Progress to date has been so disappointing – 25% achieved so far.

    One of the elements is of course capital investment ,surely priority should be given to projects giving a payback within the fixed term.[not HS2 which is costing hard cash now with no prospect of a return for many years if ever]

    Sadly the initial time scale was blown out of the water in the 2011 Autumn Statement and now seems to be a minor consideration as each new forecast simply pushes a balanced budget further and further out.

    We seem to be wallowing in obfuscation ['we are paying down the deficit'] and sloppy thinking generally .

    There is no longer any clarity of thought on capital investment within the constraints of deficit reduction.

    All just very disappointing.

  19. Chris Rickard
    Posted January 1, 2013 at 2:40 pm | Permalink

    As an industrialist myself, I am not convinced by this analysis. I don’t really see much of a difference between what Mr Redwood calls type 1 & type 4. Both require an acceptable payback analysis as the cost is incurred before the payback. Type 1 is indeed a growth ie revenue story so the underlying assumptions about demand & need have to be realistic. I am not sure that is the case for HS2, but it’s the principle that’s important here. Type 4 is much more a cost reduction and productivity story so is the easiest of the 4 to justify to my mind by far. Type 3 is clearly a demand on the public purse but it’s an ongoing demand. It’s impact on the deficit is / should only be relevant to the extent that there are spikes in the normal run rate – upwards, which increases the deficit or downwards (which this Chancellor has done). Type 2 is the most problematic. Increasing demand for services should, all things being equal, come from an increase in population which should, again all things being equal, also result from an increase in GDP. It will not if the population growth is from a reduction in the working population to the contrary. All evidence, despite the increasing numbers of elderly, points to the contrary. This demand should therefore be afforadable out of growth. That it is not requires urgent investigation and is the most difficult capex to countenance at the present time. Types 1 & 4 shoud both be encouraged at the present time if the payback criteria are sound. The problem with current Gov spending is the overly high “current” spending which requires significant reduction.

    Reply: Type one, growth spending, means future increases in revenue spending to maintain or subsidise the extra facility provided. In the case of a very expensive train like HS2 there will be very large future operating subsidies required from taxpayers. This is quite different to cost reducing productivity enhancing investment.

    • Chris Rickard
      Posted January 1, 2013 at 4:04 pm | Permalink

      Hopefully, that is just a unique feature of HS2 which would mitigate against HS2 being undertaken. I completely agree that capital spend which subsequently requires operating subsidies is not what we need at this point of time (if indeed it can ever be justified). It would not apply to increased airport capacity for example (wherever the decision on location is – although location may well have an impact on the quantum). Nor should it apply to increased UK energy capacity (nuclear or renewables) to the extent that it is a genuine increase in capacity rather than a more cost effective replacement of existing capacity.

      • Richard1
        Posted January 1, 2013 at 5:04 pm | Permalink

        The bogus analysis of the supposed benefits of HS2 shows the dangers of ascribing special virtue to govt capital spending. There are not sufficient market controls on a solvent govt like the UK to prevent waste on vanity projects.

    • zorro
      Posted January 1, 2013 at 9:25 pm | Permalink

      The simple fact is that there is no real business benefit in building HS2, neither in real door to door timing or in the chaos that will ensue during the building process. Building a new airport can be justified if necessary, as can investment in fuel efficiency. Government can finance that and reap some benefits through extra taxation in the future, but should not use PFI schemes but rather issue non interest bearing treasury notes to finance them.

      zorro

  20. Posted January 1, 2013 at 3:33 pm | Permalink

    I agree with these comments about capital spending. It is about time that other politicians and the media got some of these basics right when discussing and reporting spending programmes.

    For what it’s worth, I think this blog has had a very healthy influence as I see it being referenced in the media on a regular basis – even occasionally by the BBC.

    Keep batting John: you and your colleagues are making steady progress.

    NB One petty moan: it’s a pity to see some very quotable lines spoilt by bad spelling.

    All the best for 2013.

  21. Pleb
    Posted January 1, 2013 at 4:16 pm | Permalink

    ((“HS2, to provide a new faster train service to Birmingham from London”))
    It doesn’t even go to Brum Station. You have to catch another train to get to the center!
    So the 15 mins you save is lost.
    Madness and a vanity project.

    • lifelogic
      Posted January 4, 2013 at 11:37 pm | Permalink

      Indeed.

  22. Antisthenes
    Posted January 1, 2013 at 4:26 pm | Permalink

    “I wish all my readers a happy and prosperous new year.”

    I thank you for that but I have my doubts that it will be.

  23. peter davies
    Posted January 1, 2013 at 5:48 pm | Permalink

    happy new year – agreed, if it is spending with corresponding savings by making something more efficient long term then it makes sense, the trouble is politicians often look short term.

    I don’t see how HS2 is going to help – spending £20BN to knock 20 minutes off a journey simply does not make sense.

  24. Stu H.
    Posted January 1, 2013 at 6:07 pm | Permalink

    Dear John Redwood,

    Firstly, thank you for responding to my e-mail so quickly, very impressive, and pointing me to this site.

    Back to my original e-mail concern, which is that the Govt debt now cruising past the £1 Trillion mark, it does seem the Govt practice of borrow+spend may now need revising?

    Even with the very low lending rate at the moment the interest alone on our debt will be more than we spend on defence this year.

    Currently UK plc is overspending by just under 1/2 a billion pounds a day, and has been for many years under both Labour and Con/Lib.

    Our housekeeping is way off the mark, and we are building a time bomb for generations to come, if not even this one if the markets raise the rates or we lose our AAA rating (all 3 rating agencies have us on ‘danger’ currently).

    Therefore this must be a priority?

    Best regards, as ever,
    Stu-H.

    Reply: Yes of course action has to be taken to control the debts. This site has articles with suggestions of how public spending could be brought under tighter control with that in mind.

  25. Posted January 1, 2013 at 6:17 pm | Permalink

    JR is normally very clued up, but he has got the whole issue of investment and the deficit hopelessly confused. First, the deficit does not “need” to go up or down. As Keynes correctly observed, “Look after unemployment and the budget will look after itself”. I.e. the deficit is simply a number that comes out in the wash after unemployment has maximised. And maximising it can result in a thumping great SURPLUS or a deficit. Which of the two actually transpires is utterly and completely immaterial. (It depends on whether the private sector is in irrational exuberance mode or is being cautious.)

    As to investment, the amount of investment (which of John’s four types doesn’t matter) should simply be: “whatever makes economic sense”. Or “whatever pays for itself”.

    • zorro
      Posted January 1, 2013 at 9:32 pm | Permalink

      I am convinced that what has handicapped the Tories attempts at getting a majority or being trusted on the economy is the public’s historic mistrust about its attitude to unemployment. The mass unemployment in the 1980′s and the ‘unemployment is a price worth paying’ quote have engrained themselves on the public mind.

      zorro

    • waramess
      Posted January 2, 2013 at 4:21 pm | Permalink

      I think Ralph that you also have read too many books, or maybe you like quoting out of context. The government have no control over unemployment other than to get smaller and to remove all employment laws that presently exist which is entirely contrary to the picture Keynes was painting.

      Abandon Keynes and start thinking smart.

  26. uanime5
    Posted January 1, 2013 at 7:08 pm | Permalink

    While most of these plans do benefit those working in the construction industry the problem is that not everyone does or can work in this industry. So this will only do so much to reduce unemployment. Unfortunately it’s only the projects that result in increased long term costs to the Government that provide other types of jobs in the long term (such as schools which provide jobs for teachers once they’ve been built).

    • Bazman
      Posted January 2, 2013 at 12:12 pm | Permalink

      For better or worse much of the engine of the economy or the world is the construction industry funded by government spending. Big projects like the Olympics. The tools and materials required the accommodation and servicing of the workforce, the vehicles etc are what puts the money into the pint glass.

  27. Jon
    Posted January 1, 2013 at 7:39 pm | Permalink

    Happy new year to all.

    My favourite political joke last year was Austin Mitchell on the Public Accounts Committee with Amazon under the spotlight.

    “I’m a very satisfied customer of Amazon, and I like that when I buy a copy of John Major’s biography, you suggest that I may also like ’50 Shades of Grey’.”

    • Bazman
      Posted January 2, 2013 at 12:22 pm | Permalink

      The Amazon guy did not have much to say did he? His unwillingness to answer the most basic questions was laughable at times. ‘I’ll get back to you’ was his standard response to almost all questions. Interesting to see what Amazon thinks of leaving the EU as they operate here, but pretend they are based in Luxembourg for tax purposes.

  28. Wilko
    Posted January 1, 2013 at 9:04 pm | Permalink

    Much of Govt decision-making about spending is inept. Govt spending on motorway ‘improvements’ is misguided; compounding the problem owing to inadequate thinking.

    Existing UK motorways can be modernised into safer, more efficient Fast Edge Motorways, with simple adjustment.

    A typical UK motorway has 6 lanes, 2 hard shoulders plus a central barrier, occupying the equivalent of 9 lanes of driving space. The barrier was added as an afterthought, to prevent vehicles in adjacent lanes colliding at 140mph. However, many UK roads allow drivers from opposite directions to SHARE a single central overtaking lane, risking similar or worse danger.

    Look at the 9-lane motorway resource sensibly. In nature, least motion occurs at the pivot. It is the entities most distant from the centre which move fastest. Govt designed motorways forcing the fastest traffic closest together! And still does.

    In a Fast Edge 9-lane motorway, no wasteful obstructive central barrier is needed. The central lane is the stationary hard shoulder. The fastest vehicles travel 8 lanes apart. Usable road space is increased by 33%. Those assessing the difference will realise the substantive saving in cost, safety & efficiency that can be achieved, using most of what we have already paid for.

    George Osborne complains about having to make tough choices about spending. Why is he so unaware of major efficiencies that readily exist?

    • Mark
      Posted January 2, 2013 at 2:11 am | Permalink

      The momentum of a 44 tonne truck travelling at a speed limited 56mph is still rather more than that of a 2 tonne BMW at 90mph. It has more than 10 times the kinetic energy.

      Your idea would require overtaking on the left on motorways, confusing drivers who otherwise overtake on the right. It also poses problems for junction design.

      • Wilko
        Posted January 2, 2013 at 11:19 am | Permalink

        Thanks for your comment, Mark. On a Fast Edge motorway, the truck & BMW would have 33% more space available to separate their contact.

        The reference to overtaking on the left reveals misunderstanding. Overtaking would be on the right, as now. The 33% extra road space also reduces overtaking need. It further cuts journey distance, accidents, road wear, vehicle wear, fuel use and the immense cost of congestion borne by us all.

        You correctly refer to junctions being different. A simple method exists.

        If Govt road ‘designers’ created simple efficient solutions, much of the wastefully-entangled dangerous mess of existing motorways would not obstruct those who use them.

    • Bazman
      Posted January 2, 2013 at 12:27 pm | Permalink

      Third world solution. You would then propose to blame the drivers for the increased death rates no doubt. For using the center of the motorway as the hard shoulder this is just madness.

      • Wilko
        Posted January 2, 2013 at 7:55 pm | Permalink

        The source of your reference to death rates is unexplained. In a Fast Edge motorway system, the 1st of the 4 lanes in each direction can be limited to 30mph. Risk of impact with stationary vehicles would be similar to that of other roads. A further safety benefit of the 30mph lane, is that traffic entering the motorway do so smoothly, instead of having to merge with vehicles approaching at 70mph.

        The irony of your point is that, even if all 3 centre lanes were static, the remaining 6 lanes would have no less capacity than the present crush allows. Even so, emergency services would be able to reach someone in distress, without an obstructive barrier to prevent them.

        Criticism of all kinds is welcome. It enables methods to be improved. Constructive ideas are welcome too. It is we who have to deal with the failings of the present system. Unless someone changes it, it worsens.

        • Bazman
          Posted January 3, 2013 at 3:37 pm | Permalink

          Show any reference to this fast edge fantasy. If the hard shoulder was nearest the fastest lane you can be sure that rear end collisions would be more often and more deadly. You are already talking about restricting the speed of the first lane. Basically the idea is to put the hard shoulder in the middle and use the existing hard shoulder as another lane. The centre 3 lanes are static? The hard shoulder in the centre is just another lane? The ambulance would be there to pick up the dead people you can be sure. I certainly would not like to break down or drive the breakdown truck in you on the cheap road fantasy which is no doubt not dissimilar from the idea of turning railways into roads.

          • Wilko
            Posted January 4, 2013 at 12:07 pm | Permalink

            On a Fast Edge motorway, the fastest traffic would be 8 lanes apart. Your description of a hard shoulder juxtaposed with a fast lane does not apply.

            Increasing the usable road space by 33% adds safety & many consequential benefits, including overall speed.

          • Bazman
            Posted January 5, 2013 at 9:44 am | Permalink

            The hard shoulder would be passed by two lanes of traffic, so as I said you idea is basically getting rid of two hard shoulders and replacing them with one in the center. Rear ended or run over at 50 0r 80+ mph would have the same outcome. You are sacrificing safety for more lanes of traffic and this cannot be escaped as the hundreds of deaths that occur every year on the hard shoulder as it stands with the one slowest lane passing. The driver does have the option of leaving the vehicle for safer higher ground your idea would not allow this.
            Show some reference to fast edge motorways or is this just your own fantasy? Do you seriously think anyone has not thought of getting rid of the hard shoulder and why it has not happened?

          • Wilko
            Posted January 6, 2013 at 9:50 am | Permalink

            If the centre lane of a Fast Edge motorway has an opposite-destined vehicle lane on each side limited to 30mph, a driver causing a 2-lane error risks impact at 60mph. On UK non-motorway roads, opposite-destined drivers share the overtaking lane, as intended, risking impact at 120mph. Better use of space separates risk of impact.

          • Bazman
            Posted January 6, 2013 at 7:53 pm | Permalink

            30 mph now on the motorway? As if. Show reference to your fast edge lane motorway self abuse. Noone denies the danger of country roads and the speed of impact. There is no better use of space, just more. I want references. You are not credible without. A silly personal fantasy that can be rammed. Ram it.

          • Wilko
            Posted January 7, 2013 at 10:49 am | Permalink

            Opinions vary. Thank you for yours.

    • uanime5
      Posted January 2, 2013 at 7:08 pm | Permalink

      One way to reduce traffic jams is to put gaps in the central reservation so that people stuck in traffic can go from the right hand lane that isn’t moving to the 3 lanes going in the other direction that are moving.

      • Bazman
        Posted January 3, 2013 at 3:42 pm | Permalink

        In the opposing direction? Any gaps in the barrier will result in illegal U turns. Count on it. There has been some terrible crashes in past due to roadworks and contraflows narrowing the lanes. Staying out of the far right hand lane in a contraflow is wise.

      • Wilko
        Posted January 4, 2013 at 12:19 pm | Permalink

        The Fast Edge motorway system has Turn Pods, enabling drivers to reverse direction within the slow centre of the motorway, or seek refuge there if they need.

        An earlier version of the Fast Edge motorway system included 45 degree angled fence units, absorbing impact gently & allowing emergency services access without obstruction. If the fastest vehicles are adequately distant from each other, performance may be better without fencing.

        • Bazman
          Posted January 5, 2013 at 9:51 am | Permalink

          Slow center? U turns? T junctions on fast A roads are deadly. At motorways speeds not real.
          ‘Fast Edge motorway system included 45 degree angled fence units, absorbing impact gently & allowing emergency services access without obstruction. If the fastest vehicles are adequately distant from each other, performance may be better without fencing.’ WTF?
          This is pure fantasy. When I Google ‘fast Edge motorway system’ Nothing come up. Explain why please.

          • Wilko
            Posted January 6, 2013 at 4:11 pm | Permalink

            Much of existing motorway speed is zero mph.

            Static vehicles in jams wear out, waste fuel and adversely affect health and environments. Jammed drivers become frustrated prisoners, forced to edge forward, often unable to change direction, use toilet facilities, or even stop to rest. Tired desperate drivers cause accidents.

            Over-use of limited space causes road wear. Lengthy repair forces traffic into tight paths of obstructions, accidents, and worse stop-start jamming. These recur daily, increase over-use, and wear the scarce remaining space still further.

            Duration time to destination is more important than bursts of high speed. Speeding & wrong assumptions are best avoided. Testing might reveal pivoted central fence units add to safety.

          • Bazman
            Posted January 6, 2013 at 7:56 pm | Permalink

            Reference Wilco or shut ….up

  29. rd
    Posted January 1, 2013 at 9:06 pm | Permalink

    It is naive in the extreme to believe that Cameron will not spend every last penny he can borrow, just the same as Brown, in a desperate and futile attempt to stay in power. Sadly that is all matters to modern politicians.

  30. Martin
    Posted January 1, 2013 at 9:29 pm | Permalink

    It is a great pity that some have never spoken out about the disgraceful behaviour of elements in your party who block private enterprise capital spending.

    Heathrow Third Runway!

    Now you complain that the public sector has to pay for things!

  31. Alan Wheatley
    Posted January 1, 2013 at 9:56 pm | Permalink

    Thank you, John, for your New Year good wishes; and I wish you the same for 2013.

    And what a good start with an excellent analysis.

  32. Caterpillar
    Posted January 1, 2013 at 10:19 pm | Permalink

    Presumably ‘we’ are looking for public investment that crowds-in, not crowds-out, therefore care has to be taken in the examples and typology. If HS2 is merely service provision then it may well crowd-out, on the otherhand if it is monopoly breaking infrastructure (as transport between Birmingham and London may well be) then it probably crowds-in, and thus leads to productive gain. Care with the effect of naming on the narrative ought to be taken.

    • waramess
      Posted January 2, 2013 at 4:12 pm | Permalink

      Maybe they have removed you from your straight-jacket for a while. Very bad decision.

      Otherwise, if you are sane, you might consider reading a little less and thinking a little more.

      • Caterpillar
        Posted January 3, 2013 at 7:56 pm | Permalink

        Waramess – Amusing, nonetheless try to both read and think about my comment, you may find a strict delineation between reading and thinking is not always for the best.

  33. Electro-Kevin
    Posted January 1, 2013 at 10:34 pm | Permalink

    Happy New Year

  34. Andy Cooper
    Posted January 2, 2013 at 12:48 am | Permalink

    I think that this Parrot called the British economy is dead, dead dead!

    As John has stated in an earlier article the Conservatives have only cut 25% of the deficit and recent borrowing is slowly increasing.
    We havent even touched the National debt and look to lose our AAA rating this year.

    Government austerity cuts (causing job cuts) along with cheap EU workers reducing wages (and sending money home) will result in less spending in our shops.
    You can use any of four capital spending methods unless you get money back into the publics pockets to spend IN BRITAIN on BRITISH GOODS then you will add to the National debt, the one we cannot cut because of the deficit.

    Less spending means less revenues through taxes and thus the Government needing to borrow more money. Businesses also making less money either collapse or reduce wages.

    A vicious circle.

    So how do you break the circle and have the Government have the gut’s to act?
    No they haven’t they have engineered this situation and only when the whole system collapses will they and greedy short sighted businesses rebuild.

  35. Lindsay McDougall
    Posted January 2, 2013 at 6:28 pm | Permalink

    You are right to stress that capital expenditure that puts up future current expenditure is best avoided for now. We also have a difficult problem in retaining the confidence of the markets after the 2013 budget. We need to press the LibDems for agreement to further welfare cuts, and to prepare other measures to help cash flow. Selling the government’s share holdings in RBS and Lloyds is one. Another is to offer a discount of say 15% to graduates who repay their loans within 5 years.

    In general, we need to pluck all the low hanging fruit for short term deficit reduction. I would be interested in other people’s ideas.

  36. Neil Craig
    Posted January 3, 2013 at 1:12 pm | Permalink

    The problem is that experience shows government capital spending projects tend to average 8 time more expensive than they could be & are elsewhere in the world. For example of the £650 million the Dome cost to build only £42 million was building cost. I may be naive but I think more of this is wasteful bureaucracy than outright fraud but eitther way it means 7/8ths of such capital spending is wasted and should not be undertaken until it is possible to do so competitively.

  37. Richard
    Posted January 3, 2013 at 7:28 pm | Permalink

    Some interesting comments on HS2 which I have to agree with. Not good value for money and calling it a vanity project might turn out to be a misnomer if the spending continues and it’s proponents end up with egg on their faces. We should halt the spending on this project unless its PROVEN to have any nett benefit whatsoever.

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  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
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