Why hasn’t there been a private sector led recovery?

The original idea behind Plan A that we need a private sector led recovery to rebalance the economy and pay more of the public sector’s bills was a good one. The trouble was the government also tried to pursue other objectives at the same time. Several of these got in the way of recovery.

The government signed up to carbon taxes, renewables and dear energy. That has cut into people’s spending power, and made industry less competitive.
The government carried on attacking the banks and bankers, and forced them hold more cash and capital. As a result they were unable or unwilling to lend to smaller and medium sized enterprises to help them expand.
The government left RBS to get on with it, instead of insisting on an early and full clean up of the outstanding debts and balance sheet. As a result parts of the property market are still suffering from the overhang of the past, and a shortage of new credit for new purchases.
The government backed a High Speed Train plan, and more expensive replacement of railway bridges, instead of spending money on improving the crucial road network which transports more than 90% of our goods.
The Bank of England presided over a rapid inflation, which cut into people’s take home pay and left the markets short of confidence and spending money.
The government’s tax rates on higher incomes, on fuel, and on capital gains were too high, leading to a loss of revenues rather than bringing in more tax. These taxes meant some people left the UK altogether to earn large sums abroad instead, and others could only afford to do less. High inherited fuel taxes have hit everyone, and left many families short of spending power.

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155 Comments

  1. lifelogic
    Posted February 26, 2013 at 6:22 am | Permalink

    Indeed you cover most of the main reasons. The religious expensive energy, RBS and banks in general, over taxation, tax borrow and waste and a total lack of confidence in the government direction. Also the certain prospect of Labour in 2015. In short a squeeze on the private sector and a continued bloating of the wasteful state sector – when exactly the reverse was needed.

    I left a few years back and will certainly not be returning.

    We could add the failure to deal with employment laws, nearly everything that comes from the EU (the gender neutral insurance drivel for example and energy certificates), the soft loans to the pigis and IMF. The augmentation of the numbers of feckless by clear government design.

    The general tax borrow and piss down the drain approach of this government.
    £25M just on the failed incompetent west cost main line bidding process I read.

    • sjb
      Posted February 26, 2013 at 9:24 am | Permalink

      £50m and counting, LL. Two causes of failure attributable to staff cuts and failing to follow legal advice.

      “The franchising process was littered with basic errors. The department yet again failed to learn from previous disasters, like the Metronet contract. It failed to heed advice from its lawyers. It failed to respond appropriately to early warning signs that things were going wrong.

      “Senior management did not have proper oversight of the project. Cuts in staffing and in consultancy budgets contributed to a lack of key skills.

      http://www.parliament.uk/business/committees/committees-a-z/commons-select/public-accounts-committee/news/lessons-from-the-west-coast-franchise-competition/

    • Disaffected
      Posted February 26, 2013 at 9:38 am | Permalink

      Christopher Booker’s article in the DT this week sums up the stupidity of Cameron and Clegg regarding energy. Our energy prices will double to make wind power look competitive to other sources of energy. So they will effectively be putting millions of people in fuel poverty and making industry less competitive than anywhere else in the world at a time when the economy is in slump and needs as much help as possible (allegedly their number one priority- yeah, right).

      Let us not forget, this is to fulfil an EU directive and emission target that is not soundly based on evidence. 5 coal fired power stations will shut next month, which are perfectly serviceable, to allow wind farms to produce 0.1% of electric (last Saturday) and cannot produce electric in high winds or no wind. Taxes will increase on 01 April on other forms of power stations to make wind power look competitive- is this not lunacy?

      Brought to you originally by Blair signing up to wind farms, Miliband furthering it as energy secretary and the half-wits Cameron and Clegg implementing the Labour policy. Now where are the threats that voting UKIP will get Labour back in power? As I see it, there is no fear. The Tories have continued to implement Labour Policies ie Budget, energy, mass immigration, less crime and disorder more ECHR. Move over Cameron, you are not up to the job.

      • Disaffected
        Posted February 26, 2013 at 9:49 am | Permalink

        Cameron and Clegg would scrap the Climate Change Act 2008 as a matter of priority if the economy is the number one priority. Change the extreme socialists in charge of key public sector organisations/quangos to make sure sensible policies get implemented.

        Lib Dems are a sordid party . We had the expenses scandal and Clegg claiming the gates of Westminster ought to be shut until politics was cleaned up- at a time when the Rannard scandal was occurring and it appears he had his head buried in the sand. Laws resigning for expense fiddles, found guilty and then returned to cabinet, Huhne being convicted for a dishonesty offence, Cable caught acting inappropriately in the media, central election theme on tuition fees abandoned without any resistance as promised, No EU referendum as promised, it goes on and on. No right minded person would believe a word they say- I accept Cameron does, but he has form for poor judgment.

    • Bob
      Posted February 26, 2013 at 1:25 pm | Permalink

      @lifelogic
      “I left a few years back and will certainly not be returning.”

      I don’t blame you, our MPs have lost all sense of decency.

      The family of a WWII flying ace known for his mercy by aiming at enemy planes’ engines have been forced to sell his medals to pay for hero’s care home fees.

      http://www.dailymail.co.uk/news/article-2284673/World-War-Two-heros-family-forced-sell-medals-pay-heros-care-home-fees.html#ixzz2M0kkqEef

      • stred
        Posted February 27, 2013 at 11:04 am | Permalink

        What an admirable man and a shame his medals will be lost to his family.

        At the bottom of the report there was an advert about compensation claims for abuse from the Criminal Injuries Compensation Board. Click it folks.

        It gives an insight into the present claims frenzy. The site is based in 0151 with a Liverpool address. The Board is based in Glagow, gives out £200,000,000 pa. of taxpayers money and employs 450 staff. They put claimants in touch with no win no fee lawyers. The number of claimants from the Saville and high profile persons is publicised.

        Yesterday 3/4 0f my calls were from the claims industry, mainly against banks and (some? ed) untruthful.

        In the Mail there is also an article about a young lady from Southamton who made 11 false claims of rape before being sent to prison for a short while, having caused great damage to the latest victim.

        I hope JR will raise this issue.

        • stred
          Posted February 27, 2013 at 2:49 pm | Permalink

          No. All were false and said I had a valid claim for insuring loans when mi-sold. But I had no loans for 20 years and then the insurers paid up. It is racket.

    • uanime5
      Posted February 26, 2013 at 1:30 pm | Permalink

      How exactly is removing employment laws on minimum wage, safe working conditions, discrimination, and sick pay going to encourage more people to work? It’s noting but a right wing delusion to believe that you can continue to screw down the workforce without suffering any negative consequences.

      • John McEvoy
        Posted February 26, 2013 at 9:27 pm | Permalink

        Cart before the horse. In order to work, you need someone to decide to employ you.

        How many people do you employ on above average wages? (There’s no law against it you know.)

        • uanime5
          Posted February 28, 2013 at 12:12 am | Permalink

          In order to have customers who are able to buy something they need to earn a decent wage.

      • A different Simon
        Posted February 26, 2013 at 9:58 pm | Permalink

        Uanime5 ,

        It’s not about encouraging more people to work .

        It’s about encouraging small employers to take on more staff .

        If they were exempted from equality laws , didn’t have to keep positions open during maternity/paternity leave etc , didn’t feel they were in danger of being sued they might do so .

        Have you actually talked to any small business owners about this ?

        • uanime5
          Posted February 28, 2013 at 12:14 am | Permalink

          Why would anyone want to work for a small business when they’ll have less rights than if they worked at Tescos? Only focusing on things the employer wants, while ignoring the employees, isn’t a viable business model.

          • lifelogic
            Posted February 28, 2013 at 10:33 pm | Permalink

            All sorts of reasons why they might prefer the small employer but some may prefer Tesco so what? What ever suits them best but keep the state and daft regulations out of it. That is just the route to no jobs available.

      • Leslie Singleton
        Posted February 27, 2013 at 4:25 pm | Permalink

        unanime–You rather beg the question whether the workforce is indeed being screwed down. The worst that could possibly be said (Please no meaningless numbers) and giving you the benefit of the doubt is that things are back to say 5 or 10 years ago which though of course not good I do not see in the wider scheme of things as meaning that anybody is being “screwed”. Stuff happens.

        BTW are you still full of the joys of (the Italian) Spring, the balance of power and proportional representation?

    • A different Simon
      Posted February 26, 2013 at 1:42 pm | Permalink

      Where are you living now Lifelogic ?

      (I won’t be upset if you tell me to mind my business )

      • Bazman
        Posted February 26, 2013 at 8:21 pm | Permalink

        Outer space as there is no tax laws.

      • lifelogic
        Posted February 26, 2013 at 9:02 pm | Permalink

        Good.

      • Bazman
        Posted February 28, 2013 at 8:13 pm | Permalink

        As he cannot even say which country he lives in on a site like this then he obviously lives in cloud cuckoo land and like his ideas, when placed, just fall to bits.

        • Edward2
          Posted February 28, 2013 at 11:59 pm | Permalink

          Post your address then Baz and by your logic your ideas suddenly become valid.

        • Bazman
          Posted March 1, 2013 at 6:18 pm | Permalink

          It’s England.

    • Bazman
      Posted February 27, 2013 at 9:05 pm | Permalink

      Back to employment laws are we lifelogic? Specifically which ones? Short term contracts, agencies, umbrella companies, self employed etc. Not enough for you? Legal on the black with no rights or minimum wage is not going to happen nor should it for the employee or the state. No reply? I wonder why? Don’t write about it again or else it will be a’ think’ and a religious view without basis put forward by right wing types who live in dreamworlds.

  2. Brian Taylor
    Posted February 26, 2013 at 6:31 am | Permalink

    Again you have mentioned,carbon tax,renewables and high energy costs.
    Douglas Carswell has come out! And said he regrets voting for the 2008 Climate Change Act it has been reported that only 3 MPs voted against it,one being Peter Lilley.
    With the EU now forcing us to close some of our coal fired power stations,and Germany now building 20 new coal fired power stations,what’s going on here?
    Why not start Fracking and building new gas powered station,as every MW of wind power that we are stupid enough to build we have to have the same in gas to cover it when the wind don’t blow!
    How can electricity prices come down if the DECC are to pay a similar for Nuclear that they pay for wind power.
    It must be time to start a campaign to repeal the 2008 Climate Cgange Act and take control of our own energy.
    But there is not enough MPs who are prepared to put there heads above the parapet!
    Therefore NO MP can say a thing about supporting the economy and keeping industry in this country until they start this campaign to get cheap energy!

    Re3ply Most MPs were enthusiastic for the Climate Change Act. I argued against and refused to vote for it- there were 3 line whips in favour for all 3 main parties.

    • APL
      Posted February 26, 2013 at 8:13 am | Permalink

      JR: “I argued against and refused to vote for it ”

      Good for you. Would you explain why an abstention is as good as a vote against?

      Reply As practically no-one else was against it seemed to make ltitle difference.

    • lifelogic
      Posted February 26, 2013 at 8:28 am | Permalink

      Well done JR for being one of the three? But what is so wrong with politics that a proposal as mad, damaging and insane as the climate change act gets voted through and with only three(?) sane voices against it? Is it the general state sector, EU and BBC indoctrination on this issue. Is it just self interested corruption driving this religion?

      Any sensible numerate person and nearly all (honest) energy engineers and scientist can see it is pure madness within a few hours. I am surprised at Douglas Carswell an East Anglia, history graduate I see.

      A new book is out- The Age of Global Warming: A History – Rupert Darwall which put this mad religion in excellent perspective.

      • A different Simon
        Posted February 26, 2013 at 10:04 pm | Permalink

        Lifelogic ,

        (Will more former regulators join the Board of large companies they have been regulating?-ed)
        The gravy train must hit the buffers soon , surely ?

      • uanime5
        Posted February 28, 2013 at 12:18 am | Permalink

        Rupert Darwall is a lobbyist, not a scientist or engineer, so I doubt he has anything meaningful to add.

        lifelogic that fact that you claim that scientists and engineers don’t support global warming yet constantly fail to provide any scientific literature to back up your claims shows just how devoid of logic your claims are. There’s a reason why scientists are the ones who have shown global warming is real.

        • Bob
          Posted February 28, 2013 at 10:35 am | Permalink

          @uanime5
          How much has the global average increased in the last 15 years?

        • Richard1
          Posted February 28, 2013 at 11:13 am | Permalink

          There are many distinguished scientists who do not agree that man-made global warming is the threat it is made out by alarmists to be. Freeman Dyson, Richarrd Lindzen and many others. There is no monopoly of truth on this issue, and statements such as the one you make undermine your credibility as they demonstrate fanatical unwillingness to listen to any opposing evidence or views.

        • Edward2
          Posted March 1, 2013 at 12:03 am | Permalink

          “Global warming is real”…sounds like one of those T shirt banners……yes we all know average global temperatures in the 20th century rose by approx 1 degree centigrade, the argument is what caused it.

    • Liz
      Posted February 26, 2013 at 8:53 am | Permalink

      Why are we in suich a rush to obey every little whim of the EU whilst other EU coungtries don’t – even to the extent of being prepared to close down the economy?. Shutting these coal fired power stations with the very real risk of power cuts is madness. Power cuts in the 21st century will be much more devastating than in Arthur Scargill’s time. It is criminal for successive Governemtws to have allowed this to happen – far worse than losing our triple A rating – it will be third world here we come. The Government in “power” at the time can forget about being re-elected for many more elections afterwards.The elctorate will be slow to forgive any Government that imposes no heat, no light,no work,no commerce,no computers etc. on them when it could have been avoided with forward planning.

    • Sue
      Posted February 26, 2013 at 11:42 am | Permalink

      “With the EU now forcing us to close some of our coal fired power stations,and Germany now building 20 new coal fired power stations,what’s going on here?”

      If Germany are building new coal fired power stations then it can’t be an EU requirement surely? Why aren’t we rushing through the nuclear option? I would much rather our money went on supplying cheap energy for the future than the Bangladeshi express from London to Birmingham.

      Why are we particularly being ripped off with ridiculous renewables which produce more carbon as they have to be constantly backed up by old technology? Perhaps it’s because too many of the “old boys” stand to gain giant subsidies for land usage or some like Yeo with his finger in the most inappropriate pies!

      It’s fine for you lot, you can afford to heat your homes but after the cold winter we have just had, I know of many families who are struggling to pay off debts mainly to energy companies!

      • uanime5
        Posted February 28, 2013 at 12:20 am | Permalink

        Given that it takes 10 years to build a medium sized nuclear plant it’s not possible to build them in a short time period.

    • uanime5
      Posted February 26, 2013 at 1:37 pm | Permalink

      The EU’s Large Combustion Plant Directive requires that all power plants have to meet certain emissions criteria. So repealing the 2008 Climate Change Act will have no effect on the coal plant closures.

      http://en.wikipedia.org/wiki/Large_Combustion_Plant_Directive

      Germany can build more coal power plants because they meet the directive’s criteria. The UK has had 25 years to negotiate more opt-outs, build new plants, to upgrade the existing one but instead did nothing. This is the fault of the UK, not the EU.

      • cosmic
        Posted February 26, 2013 at 11:23 pm | Permalink

        The CCA goes far beyond EU requirements. Repealing it would be an excellent measure.

        As for the rest of your post, it makes an excellent argument for leaving the EU. Our government doesn’t understand it, but it thinks it does. It’s determined to ‘lead the way’, but it doesn’t. It just draws the short straw and we end up paying.

    • David K
      Posted February 26, 2013 at 2:52 pm | Permalink

      There is an epetition and website for the repeal of the act, please sign up.

      Reply to Reply: Thanks again for your honourable stance (as always).

    • NTropywins
      Posted February 26, 2013 at 3:34 pm | Permalink

      John

      time to come out and tell the world that the CCA is the single most stupidest thing the UK government has ever done and get the f*cking thing repealed. Don’t leave Carswell out in the open on his own. Time to stand ‘shoulder to shoulder’ and all that cliche-ridden stuff. But just get something done rather than pointing out how stupid your colleagues have been.

  3. Mark B
    Posted February 26, 2013 at 6:48 am | Permalink

    Reading this, you make it sound like its still Labour that is running things.

    True or False ?

    • APL
      Posted February 26, 2013 at 8:16 am | Permalink

      Mark B: “True or False ?”

      False, Labour and this ( I hesitate to call it Conservative ) administration are simply implementing the policies and directives that originate in Brussels – or the UN.

      Why does it appear that they are similar? Because they are.

      The political parties in the UK have become a means of distributing tax funds to a select few masquerading as politicians, pretending to represent the people.

      • uanime5
        Posted February 28, 2013 at 12:23 am | Permalink

        The UN can’t create directives because they don’t have a Parliament.

    • lifelogic
      Posted February 26, 2013 at 8:29 am | Permalink

      In effect it is exactly that. Labour in drag, Libdums and the EU.

    • formula57
      Posted February 27, 2013 at 11:36 am | Permalink

      Agreed – could (should) have been words describing a Labour government. At least we do not have to fear what living under one would be like though.

      Where oh where is the British Beppe Grillo?

  4. Mike Stallard
    Posted February 26, 2013 at 6:59 am | Permalink

    Another trenchant analysis – thank you.

    Apart from the inflation/QE, the RBS and (possibly) some of the banking crisis, the rest is squarely at the door of the EU.

    The EU works in secret. It is not reported properly. It is unelected. It is unaccountable. The commissioners preside over a vast regulating machine which pours out directives and advice. The DGs decide about HS2, the carbon tax, the windmills, shutting down our power stations next month, the bank reserves, and a large part of our export trade. They also arrange for us the terms of trading with the rest of the world. They decide on our very expensive foreign policy through Baroness Ashton. (Mali? Syria? Iran?) And we spend a lot less on defence than we do on paying off the interest on our run-away debts so we are pretty powerless anyway.
    Until this is dealt with, we can kiss any hopes of recovery goodbye. And we cannot deal with it because everyone in power (including the President of the USA) seems to think it is natural and quite OK for Britons to be slaves.

    • Pleb
      Posted February 26, 2013 at 1:27 pm | Permalink

      The EU is simply a forth reich.

      • John McEvoy
        Posted February 26, 2013 at 9:29 pm | Permalink

        Do you mean forth-right? Or FOURTH Reich?

        • Pleb
          Posted February 27, 2013 at 5:10 am | Permalink

          The one where Germany tried to dominate Europe against the peoples wishes, Luckely we managed to stay out of it and were able to liberate Europe in the end.

          • Dan H.
            Posted February 27, 2013 at 5:45 pm | Permalink

            The EU was originally a ploy to try to prevent a fourth major war in Europe, by breaking up major European nations into sub-units too small to cause trouble and by uniting everything under one unified currency and code of laws.

            Fortunately for us, most countries simply ignored the EU regionalisation policy whilst we appointed the perfect man for not getting this vital (to the EU) job done: John Prescott. It took a fair old time and many a pie to accomplish, but he got there in the end: project canned permanently for being useless.

            Much the same has happened with most other EU projects; the original purpose has been lost, and the entire edifice is now in permanent firefighting mode. You know the “rabbit in the headlights” look that most European heads of state sport these days? That is completely genuine; they really do not know what they are doing, how they’re going to do it, or how to prevent the crisis happening again. The entire EU is basically lost now, waiting for that final crisis to put it out of its misery.

    • uanime5
      Posted February 26, 2013 at 1:43 pm | Permalink

      @Mike Stallard

      Yet more nonsense from a Europhobe.

      The EU isn’t secretive and you can watch it in action here:
      http://www.europarl.europa.eu/ep-live/en

      EU Councillors and MEPs are elected, while commissioners are chosen by Councillors and have to be approved by the European Parliament. So your claims that the EU is unelected and unaccountable are nonsensical.

      Though directives come from the commissioners they have to be approved by the Parliament, which is free to amend or reject these directives.

      What DGs are you talking about?

      In conclusion spewing the same europhobic rants over and over, and blaming Johnny Foreigner isn’t going to fix problems cause by UK politicians.

      • Leslie Singleton
        Posted February 26, 2013 at 6:47 pm | Permalink

        unanime–It must be frustrating for you – and believe me it shows – to be in a minority now and increasingly so

        • uanime5
          Posted February 28, 2013 at 12:24 am | Permalink

          The fact that you failed to rebut any of my points shows that I was right about the EU. Especially that the UK’s main problems are caused by UK politicians, not EU politicians.

  5. Gary
    Posted February 26, 2013 at 7:09 am | Permalink

    Because the pool of capital has been destroyed by QE. As rates are lowered by printing money and various Twist operations of the central bank, as well as base rate rigging, the present value of liabilities increases. While at the same time company revenues are falling as the consumer if tapped out by debt, this wipes out company equity. Balance sheets are decimated. Add to that the mis-allocation of investment due to the rates being manipulated, and you have a recipe for disaster. Savings dry up. Nobody saves when negative real rates is a cost to saving. The pool of investment funding dries up. The market feedback link between rates, savings and investment is severed.

    There is no free lunch, there is no free money. There are consequences to rigging markets, everyone became a property speculator, nobody built factories. The govt is trying to subsidise more of the same, to “get the market moving”, if it didn’t work before it is because they think we didn’t do enough of it. Madness. We have painted ourselves into a corner that has no escape. We tried the get rich quick scheme and now we are stuffed.

    • Gary
      Posted February 26, 2013 at 7:32 am | Permalink

      Btw, despite the propaganda that we are ok because the duration of our debt is relatively long term ,however, the longer the term of the debt the more susceptible it is to rate changes. A small rise in rates will do relatively more damage to the creditors. Unfortunately, in this case the largest creditor of govt debt, due to QE, is the central bank and they have nobody that will take the bonds off their hands. What a mess.

  6. alan jutson
    Posted February 26, 2013 at 7:33 am | Permalink

    A private sector recovery is based on people spending money.

    Given that tax rises have taken disposable income away from everyone.
    That low interest rates on savings have reduced disposable income.
    That annuity rates are at an all time low, so the return on a pension pot is reduced
    That VAT rises have increased the price of almost everything.
    That general inflation has increased the price of almost everything.
    That green energy taxes have increased the price of fuel.
    That increased fuel (petrol diesel) taxes have increased the price of transport.

    Couple all of the above, with a cut in wages for many, is it any wonder why the private sector is now still struggling.

    Meanwhile the government spends, borrows and wastes ever more.
    Gave a 5.2% tax free rise to all those on Benefits last year, and allows our system to be abused by tens of thousands of overseas visitors who have never paid a penny into the system.

    I am now getting confused about doing the so called “right thing” as by living that way, you seem to automatically exclude yourself from the so called safety net for which you have made a lifetimes contributions.

    Difficult to understand why the politicians (our host excluded) simply do not get it !

    • Nina Andreevaa
      Posted February 26, 2013 at 8:47 am | Permalink

      Al no need to drop your standards the benefits class will soon need to change their lifestyle whether they like it or not. The market will determine the day when the free money no longer emerges from the ATM or if it does they will no longer be able to afford their lager, crisps and videos (Jerry before you get excited that is not me being impolite, “LCV” is a term used by marketeers to identify a certain subset of the population, google the term if you do not believe me) To avoid getting sucked into the same vortex just make sure you do not hold cash and invest in real assets.

      • Bazman
        Posted February 26, 2013 at 8:40 pm | Permalink

        You assume that the market does not include civil unrest and everyone will just take it. They might, but that may be expensive itself. Most do not have the option of opting out of expansive double glazing for a higher heating bill or a jumper Nina and the rest do not have Doctors as husbands struggling on £50k or more, so when you talk of revolution do bear this in mind. You can ram it also and go and watch your quality TV.

        • Edward
          Posted February 26, 2013 at 11:29 pm | Permalink

          How rude and unpleasant you sometimes are Bazman
          Quite the bully.
          Stick to the political debate you are quite good at that.

          • Nina Andreeva
            Posted February 27, 2013 at 12:42 pm | Permalink

            Ed thats the left for you! You would expect something different from people who claim to be on a moral crusade for the betterment of mankind or maybe he is just jealous?

          • Bazman
            Posted February 27, 2013 at 8:26 pm | Permalink

            This is the political debate. The middle classes supporting the overclass and claiming it to be aspiration. A person on 25k about the average wage, a year would have to save for 80 years to buy a £2 million house and only could afford that if they saved it all, paid no tax, NI and no interest or inflation costs. Now predictably the jealous left card will be played, but that is not the case. We live in a democracy and this democracy is being undermined by a financial elite that no matter what aspiration fantasies are presented almost nobody will achieve this level of wealth leading to a the question of why are we being governed by a political class who seem to have this elite at the forefront of their thinking and policies? The evidences that they are wealth creators is a fallacy, wealth creation for themselves yes, but the rest of us are just adding to the trickle up effect whilst they tap their pencils in their drawing rooms wondering how it all went right. Demand crates jobs not the rich. Nina paints this country as poverty stricken and this is far from the truth. Britain is one or the most wealthy countries in the world. The idea that the poor should become more poor to increase the wealth of the few is wrong and the idea that the rich have greater entitlements than the poor is very wrong. There is an entitlement to a certain living standard in this country and it will be paid for in one way or another. You think that we will all just live like peasants which is not possible anyway, because we are told we have too? If you think satellite TV is a good substitute for the BBC then it show us how far you are out of touch with reality Nina. Your husbands salary as a Doctor is paid from taxes and is a cost of the infrastructure. The sooner the rich are made to pay the corrects tolls for this the better. Pay or leave. We have seen the results of your talents and genius enough. The game is now ours.

          • uanime5
            Posted February 28, 2013 at 12:26 am | Permalink

            Penalty for attacking the man and not the ball.

            Also you failed to rebut any of Bazman’s points that bullying those on benefits is likely to result in civil unrest.

          • Edward2
            Posted March 1, 2013 at 11:19 am | Permalink

            Thats better Baz.
            You assume everyone with differing views to you wants more inequality and more wealth only for the richest, at the expense of the less well off.
            We dont.
            What we disagree about is the methods to achieve the same outcome.
            A better standard of living for all people and an end t0 poverty and unemployment.
            Your answer I gather, is forced redistribution by taxing the rich and Statecontrolled socialism.
            My answer is the opposite of that, as every example I have seen, has led to more hardship for the less well off and less freedom.
            You blame the rich for the existance of the poor and your solution is a modern variation of the French revolution, kick the rich swines out or tax them so hard they leave.
            With the richest 2% already paying over 25% of all income tax you would have a big problem if they did as you wish.
            Equality of poverty is no equality at all.

        • Nina Andreeva
          Posted February 27, 2013 at 2:15 am | Permalink

          Bazza being the intellectual giant that you are, you should be able to deduce that the printing press that will soon provide worthless benefits to the downtrodden is also the source of too of Dr Andreeva’s NHS salary (being part of the omnishambles the coalition settled for a GP, a sum in excess of twice as much of the amount that you state above to the BMAs great amazement too) so it is more than likely after the day of reckoning that the Andreevas will be lining up for soup as well.

          Without resulting to personal attacks as you do, people such as yourself need to realise that the UK will change out of all recognition soon. LibLabCon cannot defeat the maths no matter what crap they keep telling you. The tax base is not there to support the welfare state in its current form and apart from the phoney buyer of gilts in the Bank of England, its unlikely that the rest of the world will want to lend to keep propping it up either.Healey, Lamont (inc his ex SpAd) and any other fool who thought otherwise will always admit in the end that the market will determine what a government can and cannot do.

          • Nina Andreeva
            Posted February 27, 2013 at 2:32 am | Permalink

            If you want to know what the future holds follow the experiences of the middle class in Argentina which is just as debtoholic as the UK though in the ’50s it was far more prosperous

            http://www.ft.com/cms/s/2/7accf8b0-a785-11e0-beda-00144feabdc0.html#axzz2M3wFcJiG

            nb the UK will not default as Argentina did, we do not need to as the debt is all sterling denominated so we will just service it with billions upon billions of near worthless pounds

          • uanime5
            Posted February 28, 2013 at 12:31 am | Permalink

            Nina is you believe that those currently dependent on the welfare state will simply accept being thrown into the gutters so that the wealthy can maintain their current lifestyle expect reality to show you just how powerless the market is. The UK can no longer function without a welfare state.

    • JoolsB
      Posted February 26, 2013 at 11:29 am | Permalink

      Unfortunately it doesn’t pay to do the right thing even under this Tory led government. Pensioners in the private sector are seeing ther pensions hammered and to get the best of a bad deal are taking much lower non-index linked pensions which means the cost of everything will keep going up except their small private pensions. So what did Osborne do last year at the same time he was increasing benefits by 5.2%? He was freezing the age related personal allowance which means some of the tiny increase in state pension will be handed straight back to the Chancellor and what’s left will go on the increase in council tax. Unlike those pensioners on benefits who pay neither income tax or council tax, there are pensioners out there who get no help with anything and by the time they’ve paid their council tax and income tax are left worse off than those on benefits. It’s no wonder many in the private sector are not bothering to save for their old age when the state will look after them much better if they don’t.

    • uanime5
      Posted February 26, 2013 at 1:47 pm | Permalink

      The 5.2% increase in benefits meant that in real terms they stayed the same, so the amount of spending money people had wasn’t reduced. Odd that you didn’t realise this considering that you whole post was about how people are spending less because they have less money.

      • alan jutson
        Posted February 26, 2013 at 6:50 pm | Permalink

        Uanime5

        Yes I did realise that people on Benefits had their purchasing power protected by the taxpayers.

        Unfortunately those of us who worked and paid for this luxury did not.

        Thus my later comment about doing the “right thing” and then being penalised for it.
        Nobody protected my purchasing power, indeed the government reduced it by their actions.

        Then they wonder why private spending is down and there is no growth !!!!!

        • uanime5
          Posted February 28, 2013 at 12:32 am | Permalink

          Many people work work also claim benefits, such as tax credits. So quit pretending that those who claim benefits don’t work.

          • alan jutson
            Posted February 28, 2013 at 6:50 pm | Permalink

            Unanime5

            I simply said that working taxpayers paid for the increase in benefits.

            The government has no money it gets it from the people who earn it and spend it.

            Thus you could claim with your logic that those on benefits also pay for it as well, (which to a degree is true) but in reality they pay back only a small percentage of what is given to them in the first place.

            I did not mention working credits, but the simple fact is these type of benefits encourage employers to pay low wages, and have their businesses funded by the State (taxpayer again)

            What we should be doing is encouraging the work ethic.

      • Leslie Singleton
        Posted February 27, 2013 at 12:21 pm | Permalink

        unanime–Are you complaining now that benefits are too high? I thought your plan to put us right was to pay everybody (even the undeservers) tons of dosh so they could ramp up demand blah blah. And please don’t write that there is no such thing as the undeserving poor (to be heavily distinguished from the deserving) because there very evidently is–the problem we have is that we have no means judged allowable to distinguish them.

        • uanime5
          Posted February 28, 2013 at 12:36 am | Permalink

          My point was that reducing benefits in real terms will reduce the amount those on benefits can spend.

          • Leslie Singleton
            Posted February 28, 2013 at 9:51 am | Permalink

            unanime–It might also reduce our simply incredible and unsustainable welfare state

        • Bazman
          Posted February 28, 2013 at 8:40 pm | Permalink

          There are minimum living standards and entitlements in this country whether they deserve it or not. We all deserve that.

  7. Anonymous
    Posted February 26, 2013 at 7:38 am | Permalink

    Punitive stamp duty on modest houses has prevented people from trading up the housing ladder – this would free up starter homes and increase the supply.

    We are a society big on ideals, administration and redistribution. This requires an awful lot of tax to run.

    • Bob
      Posted February 26, 2013 at 12:53 pm | Permalink

      @Anonymous
      “We are a society big on ideals, administration and redistribution. This requires an awful lot of tax to run.”

      And it acts as a brake on the economy.

      • Bazman
        Posted February 26, 2013 at 8:34 pm | Permalink

        Which given the past 10 years might be seem as ‘regulation’ Bob and we might not be in a flat tail spin as we are now? You are a silly retired fantasist I suspect. Right? We will take that as a yes.

        • Leslie Singleton
          Posted February 27, 2013 at 12:31 pm | Permalink

          Bazman–Did you mean ‘retired’, (etc ed)? I hope you are proud of being the rudest on this site, not to mention hideously and continually wrong. You do not even know enough to appreciate that personal comments just bounce off back to you. Very poor show. I write as someone who is retired. BTW when are you going to set up one of these easy-money making companies thus showing us how easy it is to do it (says you)?

          • Leslie Singleton
            Posted February 27, 2013 at 4:32 pm | Permalink

            Postscript–John, it was Bazman who gratuitously introduced the word “retarded” last time so, no big deal, but surprised at your editing that out here

          • Bazman
            Posted February 27, 2013 at 8:32 pm | Permalink

            I meant he was retired from work, being a silly fantasist is a labour of love and ongoing.

  8. Peter van Leeuwen
    Posted February 26, 2013 at 7:39 am | Permalink

    It seems to me that the UK doesn’t do enough to stimulate its exports. To compare the UK with its peers (e.g Germany and France) I’ll copy some figures on trade in goods with the world outside the EU from Eurostat, 15-2-2013:
    Trade surplus with rest of the world, outside EU

    (Country, 2011, 2012, change:)
    France, -83.2, -75.2, 8
    Germany, 145, 174.6, 29.6
    United Kingdom,-113.4 -152.9 -39.5

    Both France (8) en Germany (29.6) have improved their trade balance in goods outside the EU, the UK (-39.5) has not. I know that the UK does much much better in the service sector but the shouldn’t the UK try and become an industrial giant once again and boost its exports?

    • sjb
      Posted February 26, 2013 at 9:32 am | Permalink

      @PvL

      We are embarking on our usual technique of depreciating the currency, which will lead to inflation.

      Then we will adopt the euro for the same reason Mrs Thatcher took us into the ERM in October 1990.

      • zorro
        Posted February 26, 2013 at 6:58 pm | Permalink

        Oh yes….that will be a good idea to allow Cast Elastic to avoid holding his proposed referendum in the lame hope that he will actually have a majority after 2015…..

        zorro

      • Peter van Leeuwen
        Posted February 26, 2013 at 10:25 pm | Permalink

        @sjb: depreciating your currency might boost export in the short term. My argument though is that conditions for exporting goods should be created.
        Measures like (if necessary) forcing banks to lend more to SMEs, provide better tools for marketing, supporting more innovation, maybe more British to learn Chinese etcetera.

        • Bob
          Posted February 28, 2013 at 10:53 am | Permalink

          @PvL
          “…supporting more innovation, maybe more British to learn Chinese etcetera.”

          Learning Chinese – Agreed. With the decline of the EU and US China will be the new economic and military superpower.

          Supporting innovation – How? The best way I know is to make it pay, rather than taxing it to oblivion!

    • A different Simon
      Posted February 26, 2013 at 2:27 pm | Permalink

      It is a bit worrying to see Britains balance of payments with countries outside the EU as being twice as bad as Frances with the trend in the wrong direction .

      Peter ,

      I think you have drawn the classic politicians conclusion from the figures ; that exports need to grow .

      Politicians always think the answer is to increase wages and increase benefits and the number of people getting them .

      The only politician in the whole World who has drawn a different conclusion is Campbell Newman in Queensland .

      He has identified the problem as being the high cost of living and has promised to do something about it and I’m in agreement with him .

      The UK’s financial salvation probably lies more with substituting domestic production for imports and reducing the cost of living than increasing exports .

      No politician has suggested that people should try to “buy British” which is essential . No doubt they would fall foul of some sort of equalities legislation if they did .

      • Peter van Leeuwen
        Posted February 26, 2013 at 10:30 pm | Permalink

        @A different Simon:
        There are though some problems connected to “Buying British”: you may NOT get the cheapest price and thus not succeed in bringing down the cost of living. You might also end up with a situation of less competition and again, that may not bring the cost of living down. For some prodcts (e.g. meat), buying locally would make sense, but then for reasons of animal welfare and decreasing carbon footprint. Becoming vegetarian might even trump that.

        • A different Simon
          Posted February 27, 2013 at 12:57 pm | Permalink

          Buying British is about having the money circulate in your own economy where it can do some good .

          The model of having money fly overseas or straight to the bank to pay excessive mortgages before it has circulated three or four times in your own economy leads to the situation the UK is in doesn’t it ?

        • A different Simon
          Posted February 27, 2013 at 1:12 pm | Permalink

          Further to that , it is a beggar thy neighbour approach .

          If I buy from overseas to save myself say 15% and thereby deny my fellow Briton a job I’m only going to have to subsidise them with benefits until my saving actually becomes a negative saving .

          This doesn’t even touch on the social costs on families and communities and society itself and the next generation .

          The impact of the cost of food , clothing and energy on the cost of living for most people in the UK is overestimated .

          Even if they were reduced it would only be absorbed by increases in rent to landlords and rent to the bank (mortgages) – Ricardo’s Law of Rent’s in action .

          Even our civil service does not behave with a buy British where possible mentality .

  9. Nina Andreevaa
    Posted February 26, 2013 at 7:48 am | Permalink

    As someone said here yesterday even a schoolboy on an “O’ level economics course could work this one out. Companies are sitting piles of cash but they will not stimulate demand by investing in plant and creating new jobs if they do not see any increased demand from the consumer. The consumer cannot play his part because of liblabcon money printing which ensures he has to spend more on utilities, food bills and at the petrol pump just to stay in the same place. All these little attempts at extortion by the council do not help either, like fines for using the wrong type of dustbin.

    The UK needs to get off the Keynesian methodone and try some Austrian cold turkey. If it does not it will end up like most junkies dead. I saw it work first hand in Poland and the results can be seen in what Warsaw looks like today in comparison to what it did in 1990. It also noticeable that bond fund managers seem to like zloty bonds as being a reasonably safe bet. I wonder if the same will still be said of gilts?

    Ps if anyone mentions Poland’s success is due to its ability to export its surplus labour remember its something the UK’s always done too. Auf wiedersehen pet!

    • Gary
      Posted February 26, 2013 at 8:33 am | Permalink

      “The UK needs to get off the Keynesian methodone and try some Austrian cold turkey”

      But, no politician would commit political suicide to implement this much needed cold turkey. The problem of democracy is that this becomes impossible. The voters don’t want austerity and the politicians are not about to give them what they don’t want. So we go over the cliff.

      Big Govt becomes untenable and immovable. The solution is to get Govt out of the markets from the outset and then this painful housekeeping will occur naturally long before it gets to big to fail.

    • uanime5
      Posted February 26, 2013 at 1:52 pm | Permalink

      Given that in the 1990’s Poland had recently left the Soviet Union, which mainly benefited Russia, is it any wonder that they improved. Given the vast differences between the situation Poland was in (undeveloped) and the situation the UK is in (borrows too much) it’s foolish to assume that what worked in Poland will work in Russia.

      • uanime5
        Posted February 26, 2013 at 1:52 pm | Permalink

        Last sentence should be:

        “Given the vast differences between the situation Poland was in (undeveloped) and the situation the UK is in (borrows too much) it’s foolish to assume that what worked in Poland will work in the UK.”

      • Nina Andreevaa
        Posted February 26, 2013 at 7:14 pm | Permalink

        Uni please check your facts and study a bit of history before replying. When was Poland a constituent republic of the Soviet Union for example? Also one of the first problems the Poles had to deal with was the huge pile of debt left behind by the communists which they had borrowed from the West in the mid 70’s .

        • Nina Andreeva
          Posted February 26, 2013 at 7:23 pm | Permalink

          Here is something to get you started from the Polish Radio

          http://www.thenews.pl/1/12/Artykul/116918,Poland-pays-off-communist-debt

        • uanime5
          Posted February 28, 2013 at 12:51 am | Permalink

          When was Poland a constituent republic of the Soviet Union for example?

          I believe Poland became part of the Soviet Union after WW2, mainly because Russia conquered much of East Europe. Let’s not forget that the Warsaw Pact, a military alliance between several communist countries, was signed in Poland.

          Given that the Soviet Union dissolved in 1991 Poland can’t have been in the Soviet Union after this time. Officially the People’s Republic of Poland started to transform into the Third Polish Republic in 1989 but finished in 1990.

      • Bazman
        Posted February 26, 2013 at 8:31 pm | Permalink

        What would they know anyway out the differences between the satellite states and the Soviet Union. Wasting your time on aristocracy apologists and middle class wannabees. All the world loves a wannabe. Hey! Hey! Do that brand new thing! Ramit.

    • Credible
      Posted February 26, 2013 at 5:30 pm | Permalink

      The consumer cannot play their part because wages are being cut or frozen. Utilities are more costly partly because they are profit-making monopolies.

      Conservative run Wokingham Borough Council (John’s constituency) have introduced a £60 a year charge for taking garden waste (a garden tax), while at the same time sending round leaflets to proclain how wonderful they are because they haven’t put up council tax.

  10. APL
    Posted February 26, 2013 at 8:11 am | Permalink

    JR: “The government carried on attacking the banks and bankers ”

    I agree, we only got verbal assaults, intended to divert attention from the politicians to the bankers. What we needed, still need, are prosecutions.

    But since we have a politico-financial cartel, that is unlikely to happen.

    JR: “Why hasn’t there been a private sector led recovery?”

    1. we are at the (a little past ) peak of a credit bubble, unsurpassed in human history.

    The politicians have deluded the population into thinking we were in a prosperous economy by encouraging debt rather than savings. Probably egged on by the financiers. Hey, you scratch my back – I’ll scratch yours!

    2. The banks were bankrupt and are only slowly recovering from that condition at the expense of the broader economy. 1 – 2% on savings before tax, 8, 10, 15% on borrowing . Tax subsidy & QE.

    Many folk who in a normal economy would be living comfortably on savings accumulated over their lifetime, are using that capital to live. The government by its policies is destroying the available capital base – thus destroying the ability of industry to innovate and compete in the future.

    QE – QE, it a tax on everyone in the economy. Thus making the whole of the Sterling zone less competitive, just when we need the reverse to be the case. If you want domestic industry to be more competitive – then applying stealth taxes to its activity is not the way to do it.

    In short: Greece, here we come – but without the climate.

  11. Posted February 26, 2013 at 8:46 am | Permalink

    Please could you put vertical space between paragraphs?

  12. Andyvan
    Posted February 26, 2013 at 8:57 am | Permalink

    “Why hasn’t there been a private sector led recovery?”
    How could there be when it has been bearing the crushing weight of Westminster and Brussels regulation and taxation? Load a mule until it’s legs buckle and then wonder why it isn’t moving. Surely obvious to anyone that has to make a living in the real world and not simply get handouts from the tax slaves.

  13. Brian Tomkinson
    Posted February 26, 2013 at 9:19 am | Permalink

    Another succinct analysis of the reasons for the abysmal failure of the coalition to sort out the economic crisis. The 254 tax rises already brought in by the coalition, with a further 45 planned before the next election show that they are obsessed with tax, spend and waste. We have three main parties in Parliament all addicted to this and taking us rapidly down the road to economic perdition. You know what has been done is wrong but your views are ignored by your party’s leaders. The best part of three years has not only been wasted but a deliberately false impression of what has been happening has been given by your colleagues in government, aided by the largely ignorant mass media. Perhaps if UKIP does win the Eastleigh by-election then there will be more pressure within your party for your leaders to listen to reason and sound economic management. The problem is that you would have to oust both Cameron and Osborne as a first step and I doubt you have the stomach for it.

  14. Martin
    Posted February 26, 2013 at 9:43 am | Permalink

    The trouble with your energy analysis is that it ignores the awful planning system. As well a blocking power stations, roads, railways and airports are also blocked or delayed for decades. Why should any business bother? Incidentally this red tape is home grown.

    Then there is the cost of the Common”wealth”. Nice to see Dave was in India dishing out visas etc. to undercut UK IT workers. (Tax take going down yet again). Indian IT workers won’t have the wretched IR35 to worry about either.

  15. Slim Jim
    Posted February 26, 2013 at 10:44 am | Permalink

    It’s interesting to note that many commentators are citing the EUSSR as one of the reasons why we are in such a mess. I just wonder how much worse things need to get before there is a mass revolt against the political classes (Europe-wide). We are seeing such a revolt in Italy at the moment. Impending power cuts will help us to focus, not a downgrade by a ratings agency.

    To answer your question Mr. Redwood: It’s because the lunatics are still in charge of the asylum.

    • Bob
      Posted February 26, 2013 at 6:24 pm | Permalink

      @Slim Jim
      ” the lunatics are still in charge of the asylum.”

      The problem is the people who vote for the lunatics!

  16. Neil Craig
    Posted February 26, 2013 at 10:49 am | Permalink

    The big one there is the government insisting on us having energy costs as much as 14 times what they could be. The correlationn between growth in energy use and gdp growth (or decline in both in our case) is about the clearest relationship in economics.

    • lifelogic
      Posted February 26, 2013 at 9:13 pm | Permalink

      Indeed and more expensive energy for nothing but a new irrational belief system – do we how have more than enough of these already causing harm around the world?

  17. Peter Stroud
    Posted February 26, 2013 at 10:52 am | Permalink

    The most ridiculous action by the Tories in opposition was to support the Climate Change Act. And the most ridiculous boast since was to claim to be the greenest government ever. Even the warmists now accept that global temperatures have not warmed for 17 years. Yet CO2 levels have increased year on year. So all IPCC sponsored computer models have been effectively falsified. Hence science based scepticism is increasing.

    Now the CAGW brigade are trying to blame greenhouse gases for extreme weather events. Yet there is no empirical evidence to support this. But why worry? In climate science there has never been a need to verify an hypothesis, so why start now.

    Yet we are wasting billions of pounds subsidising inefficient wind and solar power production.

    It is time to set a trend and scrap the wretched CCA and follow China’s example. Build some coal fired power stations to fill the gap, at least until nuclear power comes on line.

    • lifelogic
      Posted February 26, 2013 at 9:14 pm | Permalink

      Indeed.

  18. Chris
    Posted February 26, 2013 at 10:56 am | Permalink

    The EU exerts such a stranglehold on our economy and society that it is unlikely that we will experience growth as long as we are a member of the EU. The eurozone is failing and condemned to some years of stagnation/little growth, and individual countries, such as Greece and Spain, are condemned to years of hardship and high unemployment. Never has there been a better time to cut our losses and break free – there is a charted course of action in the Lisbon Treaty with regard to trade arrangements in the years immediately after leaving the EU. It would not be a leap into chaos, but rather a leap into new territory which holds hope for growth and prosperity. As long as we are attached to the EU, we will be condemned to little or no growth, rising debt and unemployment, and decline of living standards. Hope and optimism will not feature, and to deprive the electorate of the oxygen of hope is a recipe for disaster. The government has to offer something better, and I believe this can be achieved if we are our own master, where we are accountable, and not beholden to a “system” that is corrupt and dragging us down.

    • uanime5
      Posted February 28, 2013 at 12:57 am | Permalink

      Greece and Spain has these problems before they joined the EU and the euro, by contrast Germany has none of these problems and is growing. So it seems that the problems aren’t cause by the EU but by the national Governments.

  19. oldtimer
    Posted February 26, 2013 at 11:10 am | Permalink

    This is a very clear summary of the situation we are in. On present policies there is no way out of the mess.

    On energy policy you need to keep a close watch on statements that emerge from time to time from British Gas and its parent, Centrica. They play down the prospects for the development of UK shale gas reserves. But they keep quiet about the reasons. They may have good reasons; if so I have yet to hear them. Alternatively they may be all too comfortable with the subsidy regimes in place for alternatives or do not wish to upset the long term contracts they have already entered into for imported LNG. It would indeed be unfortunate if they got control of much of the shale gas potential, only to throttle it at birth.

  20. behindthefrogs
    Posted February 26, 2013 at 11:20 am | Permalink

    Rather than spend more money on extending our road system we need action to ensure that more goods are moved by rail and more are produced closer to their final destination. We need a set of container hubs around the country linked by rail to each other and the ports. Unlike many other countries we rarely use containers for moving goods internally within the UK. Fifty years ago a large proportion of our goods were moved by rail, today this has been hugely reduced. If this traffic had used containers where this was sensible, we would still be using rail

  21. Leslie Singleton
    Posted February 26, 2013 at 11:22 am | Permalink

    Hard to see anything that this Government has done or is likely to do right really. Shifting to Italy there might be more hope–the mere possibility of an Italian referendum on the Euro might on its own achieve something for the good guys. I agree it is probably too much to ask that the vote would be an outright No (because people hate the cross border transactions in separate currencies–no other reason) but just imagine if it were–the whole (unwarrantedly complacent, and sneering, recently) pack of cards would come tumbling down. O Joy! Even a good showing for No could work wonders. Bit like Eastleigh back in the UK in that, although realistically it is not likely UKIP will win this time, looking at Grillo in Italy there must be hope (“There is always hope”) and a good showing on Thursday could be another big step in Blighty on the road to Brexit, lighting a fire under a few more MP’s.

  22. behindthefrogs
    Posted February 26, 2013 at 11:29 am | Permalink

    Looking at fuel duty. The first step should be to get rid of VAT on fuel even if this means increasing fuel tax to maintain the revenue. This would reduce the imbalance in the price of fuel paid in remote locations. It would also flatten the effect of variations in world fuel prices. Nothing is made of the fact that for every 6p rise in fuel prices 1p goes to the government. They can in fact remove the April increase in fuel duty at no cost to the exchequer as it is paid for by the extra VAT that they are collecting.

    • Mick Anderson
      Posted February 26, 2013 at 6:35 pm | Permalink

      There is a flaw in your argument. When a business buys fuel (such as the haulage companies delivering virtually everything that you buy), they can claim back the VAT because they will be obliged to be VAT registered. VAT is effectively a neutral tax for everyone except the person buying from the retailer (ignoring the costs of compliance)

      If you remove the VAT from fuel and put it on fuel duty, this can’t be claimed back. What you have just done is increase the cost of all transport to business, so all the prices in the shops go up. It might look appealing to the private motorist, but you have just increased your own cost of living elsewhere.

      When the Labour Party temporarily reduced VAT, they put up fuel duty to compensate just as you suggested. Then when VAT went back up again, the extra fuel tax remained. Not exactly a surprise….

  23. frank salmon
    Posted February 26, 2013 at 11:29 am | Permalink

    It is not enough to say 2+2 = 5
    You have to believe 2+2 = 5

  24. DiscoveredJoys
    Posted February 26, 2013 at 11:40 am | Permalink

    I don’t think we need to change plans especially, but we should get on making the planned cuts despite the lack of recovery to soften them.

    I’d prefer the UK to leave the EU too, that would reduce the ‘overheads’ considerably. But if we decide to stay in can we pick and choose how quickly and thoroughly we make EU inspired changes? There’s little advantage in following the rules slavishly while others don’t seem to.

  25. stred
    Posted February 26, 2013 at 11:44 am | Permalink

    Off subject slightly,the Parliamentary Committee on energy has been questioning Prof. Buchanan and a partner from OFGEM. Some interesting points were made. He certainly knows his stuff and has been very clear about the danger of a generation disaster in the next few years.

    Some generators are not maintaining their older stations, both coal and gas. Gas stations are not being run with nitrogen and are rusting as a result. Cannabilisation of parts is also going on. The regulations and policy dictate that it is not worthwhile. If the UK finds itself ‘up the creek’, it will not be possible to start up these stations.

    The whole system of distribution of gas and electrical grids is being re-jigged to allow for remote wind generation and the need for new gas stations which are needed for back up. The cost of this will add 15% ? to bills.

    This blog has revealed an official industry chart showing approximately a ninefold increase in the generation and distribution plant.

    The gas supply will be drawn from imports and the world demand will exceed supply at the time the UK is turning of the coal stations. This will increase the cost of gas and electricity as we will have little other available than old nukes.

    The stated profits of the power sales companies are based on the total bill, including generation, distibution, sales and energy conservation subsidies to selected customers, such as PV and insulation. The sales companies profit on the difference between their purchase and sales is therefore much higher. Of course their expenses for advertising, metering and conservation deals are passed on to all customers before these profits. It seems odd that the profit figure is given as a proportion of the whole industry when the individual companies form a smaller part of the whole. Would Tesco’s profits be quoted as a proportion of the whole processing industry and farming?

    In fact it is not surprising that the whole industry is not telling the public about the forthcoming large increases in charges, as their proportion of profits will stay the same but these will hugely increase along with the cost of the new generation and grid.

    And this is all additional to the cost of renewing the whole local gas network, which is cracking up after 30 years. When they renewed ours we were given electrical heaters to use while the boiler was off, then told not to bother returning them as re-packaging would not be worth it. My neighbour was made to renew his boiler at a cost of £1500 as the pressure was too low. Then it turned out this was because the new mains connection was faulty. He is being offered some partial compensation. It all just goes on the bill.

    It really makes customers wonder whether the splitting up of the industry is making for higher costs and prevents engineers making sensible planning decisions.

  26. Iain Gill
    Posted February 26, 2013 at 11:58 am | Permalink

    Because our best intellectual property has leaked from this country both legally and illegally and is being used by our competitors who ruthelessly use it to undercut us.

  27. Roy Grainger
    Posted February 26, 2013 at 12:57 pm | Permalink

    The cut in our credit rating is just what we need, the pound loses value, exports are boosted as they become cheaper and more expensive (or dearer as you would say) imports will fuel inflation thus lessening our debt burden. Exactly the trick Japan is trying (targetting higher inflation by debasing the currency).

  28. Cheshire girl
    Posted February 26, 2013 at 1:03 pm | Permalink

    In short, the government got it wrong all the way round!

  29. Peter Davies
    Posted February 26, 2013 at 1:26 pm | Permalink

    The bare naked truth is that the coalition have apart from a bit of tinkering gone with the same type of policies and spending decisions inherited from labour so we may have well kept Labour in and let Gordon Brown carry on his wrecking job.

    Clearly energy policy is thinly disguised EU policy over which we have little or no say which is a crucial part of the problem.

    • Peter Davies
      Posted February 26, 2013 at 1:27 pm | Permalink

      “May have well” – Bad grammar should be “may as well”

  30. uanime5
    Posted February 26, 2013 at 1:49 pm | Permalink

    The government signed up to carbon taxes, renewables and dear energy. That has cut into people’s spending power, and made industry less competitive.

    But has less effect in other European countries because their energy industry is more competitive and they upgraded/replaced their power plants so they produced less CO2 per KW generated.

    The government carried on attacking the banks and bankers, and forced them hold more cash and capital. As a result they were unable or unwilling to lend to smaller and medium sized enterprises to help them expand.

    Given that the 2008 financial crisis was caused by banks not holding enough cash and capital it’s understandable why they had banks do this.

    The Bank of England presided over a rapid inflation, which cut into people’s take home pay and left the markets short of confidence and spending money.

    Which the Government didn’t stop because it allowed them to inflate away some of their debts.

    The government’s tax rates on higher incomes, on fuel, and on capital gains were too high, leading to a loss of revenues rather than bringing in more tax. These taxes meant some people left the UK altogether to earn large sums abroad instead, and others could only afford to do less.

    I thought the Government figures showed that they brought in more in taxes than in previous years. Though they did bring in less than predicted this isn’t a loss. Also how many people left to go abroad and took their job with them (if the job remained in the UK and someone else worked in it for the same salary then there wouldn’t be any loss in tax revenues).

    • Leslie Singleton
      Posted February 26, 2013 at 7:12 pm | Permalink

      unanime–Your logic on the last point seems very dodgy to me. Even if the job as you put it remained in the UK (not particularly likely I should have thought but let that go) surely the person moving in to the job is likely to have been employed elsewhere in the UK (in that he would be likely to have had to have been high-powered, so in a job, to replace someone high-powered enough to be able to go and work abroad) so that sounds like one less UK tax-payer to me–and one less high tax payer at that or he wouldn’t be leaving. One taxpayer instead of two.

      • Leslie Singleton
        Posted February 27, 2013 at 12:39 pm | Permalink

        Postscript–And of course one could extend this back so the vacant job of the person taking on the first job is similarly refilled etc ad almost infinitum. Two taxpayers instead of three and so on, always with a loss of the tax paid by the leaver, which to repeat is likely to be large.

        • uanime5
          Posted February 28, 2013 at 1:08 am | Permalink

          You’re forgetting that as you empty and refill the jobs eventually there will be a job that will go to someone who was unemployed. This will break the chain because no more vacancies have been created.

          Thus the eventual result will be one less person unemployed.

          • Edward
            Posted February 28, 2013 at 10:24 am | Permalink

            Uni, you are forgetting that sometimes when an employee leaves the business manages without replacing that person.
            In my experience, someone leaving often encourages the redesign or automation or reallocation of the task.

      • Bazman
        Posted February 27, 2013 at 9:21 pm | Permalink

        You assume that somewhere abroad the person will find a company daft enough to employ them for the same money.

        • Edward
          Posted February 28, 2013 at 10:18 am | Permalink

          And you assume Baz that there are no nations where the standard of living is higher then the UK.
          Most emigrating to Canada Australia etc find that with the salaries offered compaed to housing costs, taxes, fuel prices, food costs etc they end up considerably better off.
          Thats why they are leaving….for a better life.

          • Bazman
            Posted March 1, 2013 at 6:22 pm | Permalink

            You think bankers and other genius like these will find more money abroad? I think not.

  31. Tad Davison
    Posted February 26, 2013 at 2:09 pm | Permalink

    ‘The government backed a High Speed Train plan, and more expensive replacement of railway bridges, instead of spending money on improving the crucial road network which transports more than 90% of our goods.’

    I think I know who we’ve got to blame for that one! The short-sighted Mr Magoo who sits beside the PM at PMQs!

    I love railways, but sentiment and a misinterpretation of the central issues, isn’t going to get us out of this mess. Only good judgement, sound logic, and proper fiscal planning will do that. Railways never will match the road transport system for door-to-door efficiency. And it’s highly debatable whether the claimed efficiencies for railways truly exist, when one factors-in all the other considerations.

    I’m all for getting this country back on an even keel, and messing around with other things is much less of a priority right now.

    Tad Davison

    Cambridge

    • Leslie Singleton
      Posted February 26, 2013 at 7:24 pm | Permalink

      Tad–I for one never understood why the once prospective “Outer Orbital” route round London did not go ahead. Free flowing traffic on our roads, and what could facilitate that better than a new Orbital (around rather than in or to London, please note, so to the benefit of whole bunches of people not just Londoners), is the lifeblood of the economy, unlike these silly misleading numbers we have to read about all the time on GDP and the rest. Who wants to go to Birmingham anyway? Unless, that is, one is already in London (and wants to go to Birmingham) which not all of us are (or do). Two ridiculous decisions for my money.

  32. Barbara
    Posted February 26, 2013 at 2:13 pm | Permalink

    Some one mentions Polands success, well its had such a lot of help from the EU, via the main contributors who, haven’t. If they had to contribute more they may not be so successful. Free grants from the EU have enabled them to expand, Germany and France and the UK are the largest givers, at some time this has to stop. We cannot afford to keep upping payments on demand, and the recent problems we’ve seen, not stopped by Cameron at all, just delaid, we will see our contributions rise, again. What for, we might ask, what do we have out of all this money being poured into this endless pocket? Nothing. Its OK for them to want the original budget carried they are not the payers, we are one of them. It seems to me MPs here, and PMs should begin to rethink policies with this outrageous organisation, which is nothing short of extortion on a large scale.
    If Italy were free to choose now it could set it’s own rates or devalue if it still held the lira, its tied into the millstone of the EU stopping it from doing anything. Cameron is doing us no favours by his stance, we should have the referedum now and settle the question of our membership now not later. Of course he won’t and there not enough MPs with enough bottle to stand up and be counted, they will of course when it’s to late.

    • Nina Andreeva
      Posted February 26, 2013 at 7:59 pm | Permalink

      Just to get Poland into perspective it has had aid from the EU, though please remember some of the crappier parts of the UK, like my native North East, have been helping themselves to the EU’s Social Fund for example for years. Poland has succeeded in transforming its economy away from socialism because it is also attractive to FDI (foreign direct investment) Unilever for example would like it because there are 40 odd million customers to sell to. While amongst that population you have a well educated and skilled workforce, which after accession to the EU, became a great resource in order for doing business in the wider EU as a whole.

      • Bazman
        Posted February 27, 2013 at 9:30 pm | Permalink

        Low wages might also be an attraction in Poland you think? The idea that the East Europeans are educated and hard working is a myth. Do you think years of soviet influence had no negative influence on them and do think that desperation is enough to make them work? If Poland is so good a place then go and live there stays as true as ever.

  33. Christopher Ekstrom
    Posted February 26, 2013 at 2:18 pm | Permalink

    This wonderful PM davey-boy ” Cast Iron” has never ceased lying to his nation (& meanwhile his goofy coalition partner has never failed to translate simultaneously the truth of this Open Conspriracy). “Dear energy” & high speed rail. That says it all. Globalism trumps the petty economic concerns of Little England. Prisoner voting. But Good Soldier Redwood marches on…

  34. Antisthenes
    Posted February 26, 2013 at 2:25 pm | Permalink

    Indeed everything that should not have been done has been done of course more often than not instigated by the EU and out of the control of parliament. There appears no end in sight to the ill advised policies and practices being carried on. 2015 and Liarbour will certainly look to perpetuate the insanity even increase it. As for banks lending more to the real economy that was never on the cards. QE, bailouts and low interest rates was only going to direct money into the financial markets especially to prop up sovereign debt. We are soon to pay the price for yet another massive error of judgement as QE and low interest rates has been a disaster and has built up asset bubbles ready to burst without ever achieving their aims. Unless of course you count low bond interest rates as achieving its true aim and even that is starting to unravel. Governments in the UK and elsewhere since the banking crises have failed to allow economic forces to stabilise but like Cnut they cannot prevent the tide of forces continuing to do that which nature has decided they must do.

  35. Christopher Ekstrom
    Posted February 26, 2013 at 2:30 pm | Permalink

    Oh & the “deep cuts” Ms. Osborne so bravely made to social spending. Quango’s have now been totally eliminated! Outstanding & a profile in courage. Also the top to bottom reform of the NHS that has resulted in removing any & all criticism of the cost of operating the Leviathon of Europe. And last but not least the political miracle of sinking that engine of Imperialism the English Navy. No one would have believed this twenty years ago. Believe it.

  36. Posted February 26, 2013 at 2:44 pm | Permalink

    Since government is the cause of all of these woes you are making out a strong case for
    a) an absolute monarchy
    b) anarchy, or
    c) a.n.other, better system.

    None of this would have happened if only politicians in general would actually LISTEN

    • Bob
      Posted February 26, 2013 at 6:34 pm | Permalink

      @Bernard Juby
      “None of this would have happened if only politicians in general would actually LISTEN”

      They do listen, to find out what you want to hear.
      Then they tell you what you want to hear, and then you elect them.

      Voters need to judge politicians by their actions rather than their words.
      Any party that can elector someone like David Cameron as their leader cannot call themselves conservative.

  37. Kingbingo
    Posted February 26, 2013 at 2:52 pm | Permalink

    “Why hasn’t there been a private sector led recovery?”

    Because taxes are far too high and regulations far to stifling.

  38. Philip
    Posted February 26, 2013 at 4:02 pm | Permalink

    You don’t like railways, do you? I presume you’d rather let railways close than replace old bridges? And that you’d rather see passengers priced off to curb the increase in demand, rather than expansion projects like Reading station?

    The argument that roads carry 90% of freight misses rail’s crucial role in reducing road congestion in removing lorries from the roads in key flows.

    And similarly for passengers. While the total number of passenger train journeys may be small compared to the number of car journeys, in corridors rail does serve, their share is much greater and their economic role is immense and indispensible, whether in terms of mass-movement of commuters, or long-distance travel, or in terms of rural lines boosting local rural economies and tourism etc.

    The problem with HS2 is that the whole thing is far too slow in getting started, and thus the huge benefits it will bring will be too slow coming.

    Yes roads should be improved (welcome improvements are planned to my local motorway), but a fast, efficient and expanding rail system is needed too.

    Reply I want railways to be more efficiently run, and do what they do best – commuter passenger traffic and freight in particular.

  39. con
    Posted February 26, 2013 at 4:32 pm | Permalink

    Why are the tories pursuing policies they disagree with?

    ‘Because we’re in a coalition’ just won’t wash any more.

    When it is so obvious that we are committing commercial suicide, who will stand against it if Cameron says enough is enough?

    Sadly, he won’t because In fear he too is signed up to the socialist / liberal agenda that is killing us.

    History will have very unkind things to say about this useless government. They are truly no better than labour. They ARE labour.

    I hear that Michael Heseltine is a leading mentor of Cameron – that explains almost everything.

  40. Credible
    Posted February 26, 2013 at 4:40 pm | Permalink

    John,
    You are so critical of your own party I think you should behave with integrity and resign.

    Reply I am not critical of my party – I am sticking to the views we fought on in the Election of 2010, and on the proposals for economic recovery I put to my electors.

    • Credible
      Posted February 27, 2013 at 6:04 pm | Permalink

      John, in other words you are being critical of Conservative party broken election pledges, or more simply you are being critical of your party.

      If we’re on the subject of pre-election pledges – ‘no top down changes to the NHS’

      Reply If you read the Conservative Manifesto it set out an agenda for change in the NHS which the government is embarked on.

  41. MichaelL
    Posted February 26, 2013 at 5:08 pm | Permalink

    Inflation and the Bank of England. Those two go hand in hand of course. Would be nice if we could get rid of both.

  42. David Langley
    Posted February 26, 2013 at 6:21 pm | Permalink

    As all the governments policies do not seem to be working, can you tell me what is the point of you? Short of cash, short of energy, short of truthful leadership, we must have some different forms of government. The Italians are starting to realise too late of course that policies are more important than parties, but as they like us are tied to a system of majority voting for one failure party or another they are rightly becoming fantastically frustrated. It is now becoming fairly obvious that labour, Liberal or Conservative even UKIP is basically the same, its only the policies that count. We all want the best but no party is going to really state the obvious because they would become instantly unelectable. UKIP can perform so much better than all the rest and so will get my vote, a new party capable of knocking heads together is what we want.

  43. David Langley
    Posted February 26, 2013 at 6:45 pm | Permalink

    Hands off my bank, the new boy is doing alright.

  44. margaret brandreth-j
    Posted February 26, 2013 at 6:46 pm | Permalink

    Mike Stallard ; I almost started singing Rule Brittania except I can’t remember the verses , but I know someone who could bluff these words well.
    John, I can tell you have a DPhil…Your view, that too many concerns were addressed at once, which got in the way of recovery, smacks of a blinkered academic focus where all peripheral issues are almost made irrelevant and don’t impact on the whole picture at all; YET you may be right.I cannot see though, that finding an alternative energy source is so wrong . One day we may be more in need of the turbines than anticipated.
    Perhaps a more balanced approach to goods trains and passenger trains may have been more conservative .I can remember the time when your adored ex- leader Margaret Thatcher was around..it threw conservativism out of the window . We used to name your party ‘The tory wreckers’ however most of my age group grew up to a notion of conservatism. We had to save , prepare for the future , only spend what we could afford and live within our means. Where did it all go? The true ‘big society’ sense of integrity and social responsibility seems to have been lost in management en-masse of the worst kind.

  45. Jon
    Posted February 26, 2013 at 7:12 pm | Permalink

    When you look at how London has grown and generates income for the rest of the UK there is a message there.

    London has a huge financial centre with expertise. It welcomes the wealthy and the financial expertise means the tax is reasonable on the whole for them. That has generated a centre that governments use to subsidise the rest of the country through its tax revenues.

    All I hear from most politicians and the media is that the financial services industry needs to be bashed and destroyed if possible at all costs.

  46. Bazman
    Posted February 26, 2013 at 8:25 pm | Permalink

    Glad to see you all ramming it middle class simpletons!

  47. Richard1
    Posted February 26, 2013 at 9:38 pm | Permalink

    What do you make of George Osborne’s effective takeover of the strategic direction of RBS and plan to sell some shares?

  48. davidb
    Posted February 26, 2013 at 11:17 pm | Permalink

    Caution on the part of business, fear on the part of consumers. Propaganda from the Ministry of Truth Salford Division repeatedly talking our economy down. Be bold, privatise them.

    Much private debt is being paid off. Once people don’t owe anything to the financial services enslavers, maybe they’ll get back to spending normally again.

    The MPC should stop the QE. Its a panic signal. Employment is up, so something is going in the right direction. I thought we were going to try some counter measure thing that dropped fuel tax as the prices went up? For the first time in my life last night, a petrol pump stopped pumping before my car was full because the cost of the fuel was higher than the credit card ceiling. Get a grip. Dear fuel is undermining peoples confidence.

    Could something not be done about the salaries of public employees at the top of the scales? In a privatised BBC I would have no interest, but Purnell is getting £295k? Come on, we have to cut benefits and yet the state broadcaster can fund jackpot salaries like that?

    We would maybe all be in it together if it wasn’t us little people that were alone in it!

  49. Ian Michie
    Posted February 27, 2013 at 11:17 am | Permalink

    The public sector big state is sucking the life out of the private sector in the UK.

    The un-productive side of the economy rules the roost.

    We borrow money to give it away to tyrants to prop up Mercedes Benz via DFID.

    We borrow money to pay £50 million+ a day to the socialist & increasingly anti-democratic EU.

    Cameron & his cabal of social democrats cannot envisage a smaller state – they, like the crypto-socialists in the Coalition & Opposition, believe that the state is the answer to everything – ever expanding its reach & influence over the lives of ordinary people. Is it any wonder we have a massive welfare addiction problem?

    Vote UKIP – small state, low taxes.

  50. Nig L
    Posted February 27, 2013 at 11:52 am | Permalink

    Your introduction, namely that Plan A was for a private sector recovery to drive us out of recession highlights the incompetence of George Osborne and the Treasury team because what they actually did was continue the tax and spend regime of the previous government, indeed ramped up taxes to the extent that any demand was further stifled whilst giving the illusion of cutting back but not on current spending and this has finally been seen through by the Ratings Agencies.

    They also completely failed (and continue to fail) to understand what happens in a severe economic downturn. Firstly sensible (or well advised) businesses or private individuals will take out cost and pay down debt.

    Secondly they are obsessed in their belief that all businesses want to expand, employ more people, have a massive entrepreneurial spirit etc. This is simply not true. Most businesses are lifestyle with many being not particularly well managed relying on easy cash in good times plus the ability to remortgage their way out of any particularly difficult bad debt situations.

    I have also worked with many businesses who have survived previous downturns and are adamant that they will not put themselves at risk again so will remain small (and manageable).

    Of course their answer was to blame the Banks for not lending.

    They lend help businesses invest in new capital equipment, but what businesses is going to invest large sums when the outlook is so uncertain and in any event many are sitting on large cash piles which they are not investing (that says something in itself). Secondly they lend to support a businesses cash flow but when the economy turns down why should most need cash flow support unless their current assets are not liquid, old unsaleable stock or bad debts. this translates into losses and with other Balance Sheet weaknesses, no sensible Bank is going to help.

    Of course there will be a few that deserve help and so not get it but spotting surefire winners is impossible.

    Maybe Mr Redwood, you would explain how businesses can expand when the turnover in our economy and in Europe (50% of our exports) is flat or declining and has been for 4/5 years with little/no good news on the horizon.

    George Osborne needs to bite the political bullet, lower top rate and company taxes to attract vast new in flows, cut back hard on current expenditure, overseas aid, NHS etc and redistribute through reduced VAT, encourage spending, create a feel good factor.

    Give it back through reduced personal taxation, you take the risk of people paying off more debt.

  51. lojolondon
    Posted February 27, 2013 at 1:10 pm | Permalink

    John, you are 100% right here – unfortunately you should probably say ‘governments’ not government, because the Conservatives are guilty of following all the bad errors that Labour made over the last 13 years, by continuing the bad ideas and bad practices over the last 2 years.

  • 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.
    Published and promoted by Thomas Puddy for John Redwood, both of 30 Rose Street Wokingham RG40 1XU
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