The economic recovery

 

You know there is a recovery underway when the critics of the economic strategy change their tune from saying “austerity cannot work” and “there will not be a recovery in growth or jobs” . Instead the critics now argue the government is complacent for daring to say a recovery has started, complain that living standards are not yet rising after a long period beginning with Labour’s Great Recession when they have been falling, and suggest at the same time there is a housing asset bubble.

So what is happening?  There is a decent recovery led by new private sector jobs. There are 1.4 million  extra jobs in the private sector since 2010. Unemployment has fallen, though by much less than the number of new jobs owing to continued net inward migration, which has itself come down. Output is now expanding, probably at the fastest rate of the major economies. The government has been careful in how it has described this, and is far from complacent about the state of the UK economy. They stress the need to do more to raise living standards, to curb the debt and spread the growth more widely.

The best news for living standards recently has been the rise of the pound against the dollar and some other leading currencies. As we import so much, a stronger pound cuts import costs and helps control inflation. The recent rises still leaves the pound much more competitive for our exports than prior to the Great Recession and credit crunch. The move to a negotiated settlement in Syria rather than a military escalation has also helped by lowering the oil price. More needs to be done to make energy cheaper, to control public sector costs and charges, to lower  tax on working families and to stimulate more competition and cheaper prices in other areas.

The government’s freezing of Council Tax, raising of Tax Threasholds for Income Tax, removing  Labour’s planned Fuel Duty increases and creating a climate for more jobs are all helping with living standards. Higher VAT and the continuation of the  Miliband/EU dear energy policies have been less helpful.

It is difficult to accept the claim that we already have a housing bubble in the UK. The housing market in many parts of the country  still shows prices well below the 2007 peak. Transaction volume has been much lower than during the 2005-7 bubble.

It is true the Uk has a new good export business, building very expensive luxury flats in a few parts of central London and selling them to foreigners. This does not signify that the rest of the country or the UK mortgage financed market is in the same state of rapid turnover and rising prices – far from it in most cases. Higher house prices from modest rises elsewhere will stimulate more turnover and activity, make it more worthwhile for developers and builders to build some new homes, and create more jobs and better incomes for a wide variety of people in housing related activity. The market generally is far from overheated and does not yet need a dose of cold water all over it.

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134 Comments

  1. lifelogic
    Posted September 17, 2013 at 5:32 am | Permalink

    Indeed outside certain part of Central London, with many rich foreign buyers, there is little over heating to worry about as yet. But a more wide ranging recovery would be welcome. It is there for the taking if Cameron just cut taxes, set a positive vision, cut regulation, sorted out the banks, went for cheap non religious energy and stopped pissing money down the drain on the PIGIS, HS2, the EU, “green” energy subsidies a dis-functional NHS and hugely inefficient state sector and a 50% relatively overpaid state sector to boot.

    Of topic can it really be true that on in seven murders and two rapes a week are a committed by criminals on bail, as the Mail claimed yesterday. I assume the government thinks this is just a price worth paying to save on prison costs.

    • Bob
      Posted September 17, 2013 at 10:11 am | Permalink

      @lifelogic
      “one in seven murders and two rapes a week are a committed by criminals on bail”

      The Parole Board members and judges making decisions that lead to these events should be subjected to performance reviews, and should receive penalty points and fines.

      Twelve points and you’re out.

      • Iain Gill
        Posted September 17, 2013 at 10:32 am | Permalink

        indeed victims should be on the parole boards and compensated like jurys are

      • uanime5
        Posted September 17, 2013 at 4:00 pm | Permalink

        Why would a Parole Board be consulted on a bail hearing? You do realise that bail is granted to people who have been charged with a crime but haven’t yet been tried for this crime. A parole board only considered whether to release people who have been convicted of a crime.

        All your idiotic plan to discourage anyone from releasing those accused or convicted of crimes will do is make the prison system worse not better; mainly because it will lead to more criminals being kept in prison even when they pose no danger to the public (very expensive for the taxpayer) and removes any incentive for criminals to be compliant because they won’t have their sentence reduce for good behaviour.

        • Bob
          Posted September 17, 2013 at 8:53 pm | Permalink

          @uanime5
          I didn’t say that Parole Boards sit on bail hearings.
          I expanded the response to include Parole Boards who have also similarly released dangerous criminals back into the community to inflict harm on the innocent. Point stands.

          ” it will lead to more criminals being kept in prison”
          where they belong. If you can’t do the time, then don’t do the crime.

          • uanime5
            Posted September 18, 2013 at 2:50 pm | Permalink

            If you can’t do the time, then don’t do the crime.

            Care to explain why people who have been charged with a crime but not convicted of it should remain in prison rather than be released on bail? After all they haven’t been convicted of this crime so why should they do the time.

          • Bob
            Posted September 20, 2013 at 1:37 pm | Permalink

            @uanime5
            “Care to explain… blah blah blah”

            A criminal is someone who has committed a crime.
            If you have a defendant before a judge on a murder or assault charge you must consider the evidence and the defendants previous record.
            Any judge or Parole Board members that have a track record of decisions which result in subsequent avoidable violent crimes should be struck off.
            It’s called accountability, and it the lack of it which is causing so many of the problems that we are facing in the UK.

    • uanime5
      Posted September 17, 2013 at 3:56 pm | Permalink

      Through simple maths it’s possible to work out that this equates to 364 murders and 104 rapes per year. As long as the annual number of rapes and murders is above this amount then it may be correct.

      According to this article was it criminals on bail (implying they had prior convictions) who committed these crimes or was it mainly referring to everyone on bail (including those with no prior convictions).

  2. Brian Taylor
    Posted September 17, 2013 at 5:42 am | Permalink

    Danny Alexander at the LD conference said that 58% of tax support for pensions go to the highest paid 10% this is another case of the poor subsidising the wealthy,all pensions should only be subsidised at the basic tax rate,to stop the gap between rich and poor.
    Also now is the time to cut even further the subsidies to renewables especially wind and solar,if government do not have the guts to cancel the targets attached to the 2008 Climate Change Act then perhaps the markets will!

    Reply A tax break is not the same as a subsidy! Allowing people to keep more of their income is different from taxing you to pay me.

    • Denis Cooper
      Posted September 17, 2013 at 9:47 am | Permalink

      A tax break is not the same as a subsidy, and equally the withdrawal of a subsidy is not a tax.

      However at the same time I do question whether there should be any tax relief at all on pension contributions.

      • Roy Grainger
        Posted September 17, 2013 at 10:28 am | Permalink

        If there were only tax relief at the basic level (or no relief at all) on pension contributions there would be no point at all saving money into a pension given the severe restrictions on when you can access the money and what you can do with it given annuity rates which are laughably low. As you pay basic rate tax when the money comes out of a pension giving basic rate relief when it goes in means the net effect is near zero compared with investing the same money outside a pension. Low-earners should pay into a tax-free ISA instead and forget about paying into a pension.

        • Denis Cooper
          Posted September 17, 2013 at 3:13 pm | Permalink

          There’s little advantage now for a basic rate taxpayer, because most of the tax relief gets eaten up in management charges. If you’re a basic rate taxpayer and your employer is not running a scheme and putting in an additional contribution – increasingly the case in the private sector – then the tax relief is not really enough to justify getting entangled in the costs and restrictions of a pension fund.

          My view is that there should be a great simplification in this area, and a central element of that simplification would be separation of “earned” and “unearned” income for tax purposes, with each of us having an entirely separate personal allowance for income from savings and investments. There is no logic to the longstanding practice of aggregating “earned” and “unearned” income, which means that those who are earning enough to save are automatically taxed on their savings income unless they make use of some complex and restrictive and of course costly scheme.

          However not only do the government and HMRC like these special schemes to shelter savings and investments income from irrational taxation, so too does the financial services industry.

      • Iain Gill
        Posted September 17, 2013 at 10:35 am | Permalink

        I question whether there should be state subsidy on wastelands of housing association houses in sink estates in areas where there has been no jobs market for more than 10 years and a ready jobs market is unlikely to return.

        I question whether there should be a state subsidy to the worst hosptials and worst schools AND THIS IS NO EXAGERATION in the whole of the developed world.

        Tax is far too high and public waste if far too high too.

        Revise your thoughts I suggest.

        • Denis Cooper
          Posted September 17, 2013 at 3:15 pm | Permalink

          My thoughts are OK, thanks.

        • uanime5
          Posted September 17, 2013 at 4:04 pm | Permalink

          Would you rather move these people into a more expensive area in the hope that they will somehow be able to get a job?

          You do realise that when you ranks schools and hospital from best to worst there will always be schools and hospitals at the bottom of the rankings. Next you’ll be claiming that the half of the schools where pupils receive below average A-level results should be closed to somehow raise standards.

          • Iain Gill
            Posted September 17, 2013 at 6:45 pm | Permalink

            I would rather the subsidy was given to needy people to spend on housing anywhere they want, to allow them to self optimise the location and many will over time migrate to areas with better job prospects. This would also prevent rich people living in heavily subsidised houses as happens currently. There is quite a lot of housing subsidised in locations where nobody would choose to live if they were not basically pressured into it by the way the system works.

        • lifelogic
          Posted September 17, 2013 at 5:52 pm | Permalink

          Indeed very high taxes and very poor services, as we see yet again with the tragic case of Daniel Pelka.

          Police were called to 26 separate incidents at the family home, many involving domestic violence and alcohol abuse, yet nothing substantive was done as usual. Countless other warning signs yet the same pathetic lame excuses being reeled out yet again. Lesson will be learned, no one member of staff had the full picture ………………..We are criticised when we over react and also when we don’t act – well yes, you are supposed to use some B****Y judgement and react appropriately.

          Now if there had been a speeding/cash cow fine involved and cash raising to pay the bloated state sector wages it would have been quite another storey on enforcement.

          Reply The story, however, was not one of cuts or too few people. It was a group of professionals – teachers, nurses, doctors, social workers, who simply misjudged it despite the evidence, as they tended to see it through the mother’s eyes instead of questioning that view.

          • lifelogic
            Posted September 17, 2013 at 6:24 pm | Permalink

            Lots of over paid, state sector people, going through the motions, filling forms, not communicating with each other, nor even with the child, and doing nothing much of any real use at all as usual.

      • JoeSoap
        Posted September 17, 2013 at 11:12 am | Permalink

        In the past, governments wanted people to save for pensions in order to avoid the state having to fork out.
        I suppose you could stop any tax relief, and everyone could lay back on the state in retirement, until it goes bust. It’s just not what the original idea was.

        • Iain Gill
          Posted September 17, 2013 at 3:06 pm | Permalink

          Its not taxed on the way into the pension fund, but it sure is taxed within the pension fund, and when you come to take it out its taxed. How many times do people want to tax the same money?

        • Denis Cooper
          Posted September 17, 2013 at 3:17 pm | Permalink

          That’s still a good idea, and one that I fully support, but not by the present unnecessarily complex and cumbersome system.

    • lifelogic
      Posted September 17, 2013 at 10:29 am | Permalink

      Pension relief is not really a “tax break” it is just a deferral in the main until the pension is drawn. If you only give relief at 20% then tax the pension later at up to 45% (then 40% IHT on death to boot) it then makes little sense to put money in the pension at all. So you would just kill most pension in the private sector dead.

      As most pensions in the state are already huge compared to the those of the worker bees who pay for them this would not be a good or very fair plan. Reducing state sector pensions or taxing them more would be very fair though. They are often worth 10 times more than averages in the private sector -many have none at all.

      • uanime5
        Posted September 17, 2013 at 4:06 pm | Permalink

        Perhaps if the bosses in the private sector didn’t give themselves such massive pensions they’d have more money to give their staff a decent pension.

        It’s not the fault of the public sector that the private sector doesn’t care about their employees.

        • Bob
          Posted September 17, 2013 at 9:06 pm | Permalink

          @uanime5
          “It’s not the fault of the public sector that the private sector doesn’t care about their employees.”

          This isn’t true. Many private firms operated very generous pension schemes until Gordon Brown destroyed them with his pension fund raid.

        • Nash Point
          Posted September 17, 2013 at 9:25 pm | Permalink

          Dead right, and actually, why should anybody earn any more than anybody else? Equal pay for all, and let’s all drive around in Trabants.

        • lifelogic
          Posted September 18, 2013 at 4:42 am | Permalink

          Private sector pensions pots are now largely limited to £1.25M pot reduced by the ratter Osborne from £1.5M which might be a pension of only about £35K PA (or £21K net at 40% tax) given the current, government suppressed, annuity rates.

          Better of at the BBC or in the state sector where you might get 5+ times that without even having to contribute very much.

      • Bazman
        Posted September 18, 2013 at 5:52 am | Permalink

        A council worker has a pension 10 times larger than a private sector employee? Your constant worry or envy for those at the top is not normal. They could not care less about you. No money for wages but no problem for pensions for themselves.

  3. Bazman
    Posted September 17, 2013 at 5:51 am | Permalink

    Part time low paid jobs have been created whilst real jobs have been lost. Desperation cannot fuel an economic recovery made worse by Tory policies. Interesting to see the lack of comments on the bedroom eerr…? Tax! A tax on the taxpayer. Come out wherever you are. Lojo? Lifgoic? Edward Too? Strangely silent on this one aren’t we? Ashamed of your views. For John it would be political suicide.

    • Denis Cooper
      Posted September 17, 2013 at 9:44 am | Permalink

      There is no bedroom tax, and those who keep saying that there is a bedroom tax know perfectly well that there is no bedroom tax; and somebody who knowingly makes a false statement is not just wrong, he is a liar.

      • uanime5
        Posted September 17, 2013 at 4:07 pm | Permalink

        There is a bedroom tax, it’s a tax on those who claim housing benefit and happen to have more rooms than the Government approves of.

      • Bazman
        Posted September 17, 2013 at 5:43 pm | Permalink

        No alternative accommodation with less bedrooms makes the additional charge into a tax. Funny how you are so angry about the terms but make no other mention of the tax and why it is or is not justified. What does this tell us?

        • Denis Cooper
          Posted September 17, 2013 at 6:26 pm | Permalink

          How do you know that I am angry?

          Can you see my face contorted with rage?

          There is no bedroom tax, that’s all; and there will still be no bedroom tax how ever many times you and uanime5 and your ilk repeat the lie that there is.

          • lifelogic
            Posted September 18, 2013 at 4:45 am | Permalink

            Indeed, but the BBC & Labour will ensure that those are the words that are used to refer to this benefit restriction.

          • Bazman
            Posted September 18, 2013 at 5:34 am | Permalink

            You seem very agitated of this term ‘tax’. Do enlighten us on what it is then Dennis as again you have failed to tell us. Why is this?

    • Edward2
      Posted September 17, 2013 at 10:15 am | Permalink

      No I’m here Baz and happy to discuss and debate as always.
      On the economy you constantly criticise the Coalition, yet offer no solutions other than ever more State spending and ever more taxation.
      How would you create all those well paid “real jobs” in the private sector you require?
      How would you stop the competition from other nations in the world undercutting the prices of our products and services?
      How would you stop ambitious people coming here competing for jobs especially at the lower end of the labour market?
      Start your own business, employ some people, decide what you can afford to pay them and see how you get on.
      You seem to feel running a company is easy money for the bosses so give it a try.

      Despite your claim, there have been many posts on here about the “bedroom tax” as you call it.
      You presumably feel happy that taxpayers should foot the rental bill for people to live in houses on benefits which have empty bedrooms and that they should be able to refuse to either take a lodger, or move to a smaller, cheaper, more suitable home and allow a family on the waiting list to move in, or pay a little more from their own pocket and stay where they are.
      In the real world where people earn their own living and also have to make painful decisions, down sizing to an affordable property in a cheaper area is a regular event.

      • uanime5
        Posted September 18, 2013 at 3:04 pm | Permalink

        You seem to have ignored that Germany has managed to create real jobs, has been unaffected by being undercut by other car makers, and doesn’t have a problem with foreigners taking all the jobs. They’re mainly able to do this because companies are looking for an effective workforce, rather than hiring whoever will work for the least amount of money.

        You’ve ignored that there aren’t any smaller houses for people to downsize into and that the law doesn’t allow someone on housing benefit to sublet their property. You’ve also ignored that many people who are working are being harmed by the bedroom tax because it doesn’t fit with your delusions that it only effects the unemployed.

      • Bazman
        Posted September 19, 2013 at 5:45 am | Permalink

        Well you will have to point out the posts justifying the bedroom tax and even Nick Clegg could not defend pushing needy families into debt when half the household covered by this tax are struggling to pay, including a quarter of housing association tenants who previously paid rent on time and in full were no in arrears. Are they deliberately not paying? In the real world as where they must live they cannot afford the extra money and when asked to be moved to a smaller house are told there are none available. Maybe they could move to more expensive smaller private accommodation in order to ‘live in the real world’? Which they will, paid for by the state after eviction for rent arrears incurred by the tax.Your idea that we can comment with the third world on wages, conditions and as we have seen from you weasel words on the deaths of British construction workers safety. All this will presumable create enough desperation to enable British middle aged people to compete with young fleet footed intelligent East Europeans living five to a room/car on minimum wage and the third world. No doubt the real world? Ram it.

        • Edward2
          Posted September 20, 2013 at 5:08 pm | Permalink

          Thanks Uni and Baz.
          Sorry, I forgot, you are always right and everyone else is wrong.
          If only everybody agreed with you what a wonderful world it would be.

          • Bazman
            Posted September 21, 2013 at 12:42 pm | Permalink

            Thats that one settled then.

    • Roy Grainger
      Posted September 17, 2013 at 10:31 am | Permalink

      The “real” jobs that have been lost have been in the public sector according to the figures so they weren’t helping the economy grow at all.

      • Bazman
        Posted September 17, 2013 at 5:44 pm | Permalink

        That would be the redundancy of soldiers at great cost and then a recruitment drive at another great cost?

    • libertarian
      Posted September 19, 2013 at 10:32 pm | Permalink

      Bazman

      I’m not ashamed for the simple reason you are talking complete utter and total nonsense. I’m an expert in the field of employment and I can tell you there IS NOT a shortage of well paid full time jobs in every area of the UK. True the numbers vary region by region. however last year 7.1 million jobs were advertised in the Uk less than 3% of them were part time and less than 5% were at minimum wage level.

      So you can continue to peddle your deluded political myths meanwhile growth is held back in the UK by a severe shortage of skilled and experienced workers. Ram it

      • Bazman
        Posted September 20, 2013 at 3:27 pm | Permalink

        Exactly. Most of the jobs require specific skills and experience if they are available in that part of the country and any jobs that do not require skills are low paid and not available to a person living outside the area due to commuting/living costs. A middle aged person with skills and a family just move to another part of the country? Not easily and not on their own paying for two sets of a accommodation. Much employment in general seems to be in certain areas and if you do not live there. Than what? This all somehow justifies the bedroom tax? Be ashamed and ram it.

  4. Richard1
    Posted September 17, 2013 at 6:23 am | Permalink

    The likes of Messrs Miliband / Balls / Cable just can’t take it. Their Plan B has been rejected and Plan A (sort of) is being shown to work. We also hear much less from Keynesian economists these days – where are Messrs Sitglitz and Blanchflower on the airwaves to admit they were wrong?

    • Iain Gill
      Posted September 17, 2013 at 10:37 am | Permalink

      its not working quantative easing is fools gold and will just end up with the country bankrupt and unable to borrow, like Greece on steroids because by the time we need a Greek bailout the appetite to continue supporting countries like that will have gone.

    • uanime5
      Posted September 17, 2013 at 4:09 pm | Permalink

      Given that Plan A delayed growth for about 3 years I wouldn’t say it worked.

      • wab
        Posted September 17, 2013 at 9:32 pm | Permalink

        Indeed. And Mr Redwood has spent the last few years telling anyone and everyone that there was no austerity, so now he wants to imply with his misleading phrasing that there was austerity and it “worked”. Wrong, the government policy (however you care to label it) did not work. If you look at the recovery then it is way behind where it would have been if the Government had not made up economic policy on the hoof and instead listened to sensible economists (there are a few). And a lot of the recovery is down to the government purposefully encouraging the housing market to inflate once again (as if house prices were not ridiculously high enough already, even post financial crisis), and it will be worse next year when the idiotic Help to Buy scheme, Part 2, arrives. And living standards have decreased for the vast majority of households. Mr Redwood might like to pretend otherwise, but reality is not on his side.

        Reply I have always described it in the same way – redcing the rate of growth in public spending, which is what has happened.

      • Richard1
        Posted September 18, 2013 at 6:08 am | Permalink

        That is speculation on your part with no evidence. Had Labour been elected and pursued Plan B – which they probably wouldn’t have done – the evidence from the markets at the time is we would have had a sterling crisis and potentially a meltdown in the bond market, necessitating Greek-style austerity.

        • uanime5
          Posted September 18, 2013 at 3:07 pm | Permalink

          Given that in 2010 before the election the economy was growing at 2% and after Osborne became chancellor this fell to 0.2% per year it’s clear that if Labour had remained in power the UK would have recovered much more quickly.

  5. Andyvan
    Posted September 17, 2013 at 6:56 am | Permalink

    Yes it’s good that the pound has risen but seeing as it was this governments policies that caused it to fall in the first place and that the rise is despite those same policies not because of them I wouldn’t claim too much credit Mr Redwood. Perhaps you’d also like to discuss how much money printing it has taken to manufacture this “recovery”. The only real positive things on your list that are down to the government are freezing some taxes (whilst raising a whole lot more). It’s a pity they don’t cut some, or most, taxes and we might see a genuine recovery and a smaller government.

  6. margaret brandreth-j
    Posted September 17, 2013 at 7:01 am | Permalink

    The stabilisation of house prices at their present rates has allowed people to think about putting deposits on the house thereby taking out a smaller mortgage loan than they would have done 10 years ago when 100% mortgages were more acceptable. For those who have had to prioritise by not having holidays, cutting down on their social lives and budgeting hard, they will at last be seeing the benefit of their personal austerity.
    When we can get the tax man and NI insurance to be accurate and collate all the information accurately we will have a better idea of where we stand. I have personally paid NI for 46 years and am treated as though have only paid for the last few years and the same goes for tax. It means that the old Brits have done all the work for those that can only remember life as far back as 10 years. Getting the balance right between those who have put in the effort and those who expect to have everything all at once by loans and credit have ruined our finances.
    I visited an HBSC who were advertising one year fixed terms of a savers scheme at 6% for graduates which I thought was a good deal putting in £250/month by internet or 4% for non graduates. When actually discussing it with the assistant and manager I would only be allowed 1.3% despite meeting the criteria and amounts to be invested. This sort of conning must stop.
    The private sector hasn’t done very well with only an increase of 1.4 jobs.!!

    • Denis Cooper
      Posted September 17, 2013 at 9:49 am | Permalink

      Why would you only be allowed 1.3%?

      • margaret brandreth-j
        Posted September 17, 2013 at 5:48 pm | Permalink

        ???? Needless to say I won’t be putting my life savings into HSBC.

        • Denis Cooper
          Posted September 17, 2013 at 6:27 pm | Permalink

          But why would you only be allowed 1.3%, when the ad said 4%?

          • margaret brandreth-j
            Posted September 18, 2013 at 2:01 pm | Permalink

            The add said 6 % for me…….

  7. Mike Wilson
    Posted September 17, 2013 at 7:18 am | Permalink

    I’m puzzled. We have, I think, shed about half a million jobs in the public sector.

    Apparently, ‘we’ have created 1.4 million new jobs. Unemployment is roughly the same as it has been for years.

    Why isn’t the deficit fixed? Why are we still borrowing 120, thousand, million pounds a year?

    Mr. Redwood – I wonder if you would mind providing a rough explanation in terms of government income / expenditure and why expenditure (presumably) has not gone down despite shedding half a million jobs and why income has not gone up despite an additional (net) 900,000 jobs.
    I am baffled.

    Reply I have often provided analysis of public spending. PE has gone up to finance increased spending on health, education, overseas aid, EU etc. There was a substantial incease in the cash payments to benefit recipients to match RPI inflation. Many of the new jobs have been taken by new migrants rather than by unemployed people.

    • Mike Wilson
      Posted September 17, 2013 at 10:11 am | Permalink

      Reply to reply:

      Why have we increased spending on health, education, overseas aid, EU etc.? We clearly can’t afford it.

      So, if we hadn’t allowed ‘new migrants’ to take ‘many of the new jobs’, and we had not increased cash payments to benefit recipients – perhaps the new jobs would have been taken by the unemployed? Allowing the benefits bill to go down and tax receipts to go up.

      It seems the ‘austerity’ serves little purpose if you still keep spending more and more and allowing new immigrants to take the new jobs. I mean, what is the point?

    • Credible
      Posted September 17, 2013 at 3:53 pm | Permalink

      What has the actual change in PE been on these things John?

  8. Mike Stallard
    Posted September 17, 2013 at 7:31 am | Permalink

    There is, it is true, a small revival. And that says so much about us Germanic British people: we too can do the Economic Miracle.

    Even when our hands are tied behind our backs.

    • lifelogic
      Posted September 17, 2013 at 10:32 am | Permalink

      Even when our hands are tied behind our backs, our head are being kicked in and our pockets being emptied by Cameron and Osborne to waste on nonsense expensive energy, HS2 and similar drivel.

      • Bazman
        Posted September 18, 2013 at 5:54 am | Permalink

        Indeed! Nuclear is nonsense!

  9. A.Sedgwick
    Posted September 17, 2013 at 7:47 am | Permalink

    This is headline stuff. The reality for most people is falling living standards exacerbated by real inflation e.g. fuel, food of 10+%. Many of the new jobs in the private sector are not full time and the public sector and Government remains bloated and costly. Council Tax needs replacing (together with Business Rates) with an income base not freezing . Local government needs to be self financing largely with a sales tax, if we can ever get rid of VAT.

    The economic self congratulatory nonsense from the Coalition Partners has been aired ad nauseam in Glasgow, the reality is had Labour been elected in 2010 they would have done much the same as this Government. By 2015 our declared national debt will have doubled from 2010 and be in excess of £1500 billion and rising. Our economic model is unsustainable.

  10. frank salmon
    Posted September 17, 2013 at 8:03 am | Permalink

    A very good article. I would suggest though, that the housing market is in a perilous state. We should not be measuring prices against the artificial peak created by Labour, and nor should we aspire to them. All in all, with lower living standards, tighter financial regulation and less self certification, house prices should stay lower than their peak. Osbourne’s stimulous could backfire. Just as some of us knew there was going to be an economic collapse but could not say when or by what mechanism, the same is true of the housing market. My guess is that interest rates will have to rise dramatically in the next few years – and prices will tumble……..

    • Leslie Singleton
      Posted September 17, 2013 at 5:46 pm | Permalink

      frank–That might have been true but for the still huge and not about to reduce immigration–sorry net inward migration. John–Have you ever commented on why you continue to insist on using this deceitful term? Yes, I fully understand why the Government uses it but you do not usually resort to such baloney.

      Reply I refer to it because the government pledged to cut net inward migration, so that is the target we need to examine. I have never disguised the fact that it can fall either because fewer new people come or because more people leave. There is no target to control inward migration on its own, though the government is in practice only trying measures to reduce inflows. It is not pursuing measures to try to encourage outflows.

      • Anonymous
        Posted September 17, 2013 at 6:29 pm | Permalink

        Mr Redwood said of Govt policy on controlling immigration “It is not pursuing measures to try to encourage outflows.”

        Oh yes it is.

        What young person with the right skill set is going to hang around in this dump just to be over-taxed and live as a renter serf in a shoe box because of chronic overcrowding ?

        • Anonymous
          Posted September 17, 2013 at 6:30 pm | Permalink

          The policy of controlling ‘net’ immigration was a deceit from the outset.

        • Rob
          Posted September 17, 2013 at 9:21 pm | Permalink

          “What young person with the right skill set is going to hang around in this dump just to be over-taxed and live as a renter serf in a shoe box…”

          Two of my nephews are already looking at moving abroad when they leave university. One is studying mathematics and he finishes next year. The other is studying engineering and he leaves in two years time. They both now see the future of the UK as one of “debt slavery” just lining the pockets of BTL landlords’ property portfolios and they both want none of it.

      • Leslie Singleton
        Posted September 17, 2013 at 11:43 pm | Permalink

        Thanks for Reply but the “net” bit is only after the half of it. I for one strongly deprecate the use of and the reasons for the use of the ghastly “inward migration” which is clearly being used as a euphemistic replacement for the plain English “immigration”. For a start one word instead of two. The targets have obviously been set in this way to obfuscate and deny the level of immigration, that’s if immigration as such is measured at all these days. Besides, targets, even good ones, unlike this one, are by no means everything. Not given to man to see what lies dimply at a distance, must do what lies clearly at hand, and all that and what lies clearly at hand is to reduce immigration and only immigration.

  11. Hope
    Posted September 17, 2013 at 8:08 am | Permalink

    JR you have pointed out many times what is wrong with the economy. Perhaps the most overriding aspect of this failure by the Tory party is its energy policy led by Davey at DECC. James Delingpole adequately demonstrates the failings in his latest article in the DT. He is spot as usual. And when you want leadership to be shown for the national interest and improvement in economy, Cameron is no where to be seen. Utt failure.

    • brian
      Posted September 17, 2013 at 9:27 am | Permalink

      “Tory party energy policy led by Davey”. He is a Lib Dem.

      • Mark
        Posted September 17, 2013 at 10:01 am | Permalink

        Unfortunately, there are many Conservative MPs (including Energy Ministers current and recent past), who consider Davey to be in tune with their thinking. Out of 396 MPs who supported Davey’s Energy Bill, 219 were Conservative. Only 7 Conservatives actually voted against it, along with 2 Labour and 1 DUP.

    • peter davies
      Posted September 17, 2013 at 9:39 am | Permalink

      It’s not Tory party energy policy – its EU energy policy. Our energy policy is pretty much the same as Germany’s – Davey is just a gullible LiB Dem mouthpiece for the EU

      • Roy Grainger
        Posted September 17, 2013 at 10:36 am | Permalink

        Our energy policy is nothing at all like Germany’s and it is bizarre you would claim it is. Just to give two examples: Germany is committed to a total phase-out of nuclear power plants (UK policy is to build more) and Germany are building 5 new coal-fired power stations (UK policy is to build none).

        • peter davies
          Posted September 18, 2013 at 8:56 am | Permalink

          Agreed there are differences in implementation but the overall approach is target driven from the EU

  12. David Hope
    Posted September 17, 2013 at 8:08 am | Permalink

    It strikes me that the recovery is unlikely to be sustainable. House prices outside London may have fallen, but they never fell by as much as they should, due to the heavy intervention by the BoE. The same goes for many businesses that have limped on instead of being liquidated.

    We lack savings pool to fund a revival in industry and fund startups with many people having survived on cheap credit or exhausting savings. Taxes remain high and business rates make many small enterprises impossible except for large chains.

    Energy is getting more expensive and although the rise in the pound vs the dollar is welcome it is nothing compared to the dramatic drop in the pound’s value in 2008. (And that is against a currency itself falling in value)

    Red tape is worse than 2010 (e.g. Harriet Harman’s bill was passed through in the coalition’s first weeks, and recently new pensions legislation).

    Banking still lacks competition. Immigration is still high and keep wages down. The deficit is not even close to being eliminated.

    I’m not saying the record would be better under labour, it wouldn’t. But, there’s one hell of a lot more that the coalition needs to do. I’d say the new jobs created are despite government, not because. Whether it is the coalition or Osborne I don’t know, but the strategy lacks imagination.

    As an aside the London property boom is not just a “good export” because we have severely constrained supply preventing British people from finding a half decent place to live. It is not just Mayfair, places like Stratford, Shoreditch, Croydon, Dalston Junction now require 350k+ (often more like 400k) for a large 1bedroom or tiny 2 bedroom. Last time I checked I think the average wage in London was about 36k. Many new blocks are bought by foreigners before even being advertised here. You can’t live outside London because commuting is thousands a year. This is a serious problem, politicians ignore it at their peril!

    • behindthefrogs
      Posted September 17, 2013 at 11:40 am | Permalink

      We also need to ensure that these properties purchased by foreigners are subject to capital gains tax in the same way as those purchase byBritish people.

      • stred
        Posted September 17, 2013 at 8:10 pm | Permalink

        They don’t and this is why there is a boom. HMRC reneges on UK citizens so why not on foreigners?

  13. Bert Young
    Posted September 17, 2013 at 8:22 am | Permalink

    If the government were able to pursue a “Redwood” economy , much of our problems would not exist . Truth is we have benefited most from the US decision not to withdraw its QE programme than anything else . The government is strangled by the coalition and a leadership lacking in the support of the people .

  14. Brian Tomkinson
    Posted September 17, 2013 at 8:55 am | Permalink

    JR: “The government’s freezing of Council Tax”
    My I remind you that this is not an accurate statement. My council tax rose by 3.5% this year.
    As for economic recovery, you seem to have embarked along the same road that got us into the mess in the first place – stimulating a house price bubble and continuing to spend far more than you take in taxation. Before the last election Osborne promised to eliminate the structural defict by 2015 and Darling promised to reduce it by 50% by that date. As things stand it looks as though Osborne will have done less to reduce the deficit than Darling promised. Sadly for us, we have three main parties in Westminster who want to tax, borrow, spend and waste.

    • Bob
      Posted September 17, 2013 at 10:27 am | Permalink

      @Brian Tomkinson
      “Sadly for us, we have three main parties in Westminster who want to tax, borrow, spend and waste.”

      And people still vote for them, it’s quite astonishing.

  15. stred
    Posted September 17, 2013 at 9:03 am | Permalink

    I live 12 miles from the flat export area in central London and on the south coast in a good residential area. In both areas house prices have remained about the same over 4 years but have fallen in real terms after inflation of 17%? compound.

    • Mike Wilson
      Posted September 17, 2013 at 10:15 am | Permalink

      How have they fallen after inflation of 17%? Compared to the price of a tin of beans and a loaf of bread. Or compared to wages?

      Compared to wages – house prices have not fallen and it is extremely misleading to keep wittering on about house prices falling ‘in real terms’. In ‘real terms’, most people need to earn money to put a roof over their head. If the money they earn stays the same and the house price stays the same – then, in whatever terms you choose to use – the reality is the house is the same price.

      • stred
        Posted September 17, 2013 at 8:14 pm | Permalink

        My earnings , especially after tax, have also fallen. However, are you suggesting that general inflation should be abondoned as a measure of real prices and incomes?

  16. Iain Gill
    Posted September 17, 2013 at 9:19 am | Permalink

    New private sector jobs? 100,000 new estate agents posts, to service the chancellors over inflated housing bubble. At least several thousand civil service jobs that have been TUPE’d across to outsourcers. Those working on the DCNS fiasco billion quid bid into government and subcontracted on the government side to run the bid. Those working on the DWP Universal Credit failing programme? (overseas workers doing contract work in UK etc)

    Of yea plenty of private sector jobs.

    And what austerity exactly? As you keep telling us public spending keeps going up, as does the national debt and the deficit.

    Come on John talk to us like grown ups.

    • Mike Wilson
      Posted September 17, 2013 at 10:17 am | Permalink

      100,000 new estate agent jobs? Where did you get that from? That would mean about 7 new jobs in every estate agency branch in the country. Probably more as my figures for estate agency branches do not take into account the many closures since 2007.

      Used to be 7 estate agents in my local High Street before the credit crunch. There are 4 now.

      • Iain Gill
        Posted September 17, 2013 at 10:39 am | Permalink

        It was on Radio 4 it must be true 🙂

  17. Ralph Musgrave
    Posted September 17, 2013 at 9:26 am | Permalink

    Re “austerity cannot work”, the phrase has two quite distinct meanings, and JR fails to distinguish between them (as does 99% of the rest of the population).

    First, there is austerity in the sense of deficient aggregate demand. Several countries have implemented insufficient AD because they think, mistakenly, that the debt and deficit are some sort of constraint on AD.

    The idea that anything is gained from deficient AD is clearly nonsense. So in that sense it’s correct to say that “austerity doesn’t work”.

    The second sense, widely employed by lefties, is the idea that public spending cuts equal austerity. That of course is nonsense where an £Xbn cut in public spending is matched by an £Xbn INCREASE in household and other private sector spending.

    • Denis Cooper
      Posted September 17, 2013 at 10:37 am | Permalink

      “Several countries have implemented insufficient AD because they think, mistakenly, that the debt and deficit are some sort of constraint on AD.”

      I don’t think the Greek government was mistaken when it found that it was running out of money to pay all its bills in full and on time.

      Because of its accumulated debt the government of Greece could no longer borrow to fund its deficit, and nor could it get the Greek central bank to create new money and use it to rig the market in its bonds, and so it stopped paying the salaries of public sector workers, including hospital staff, and it stopped paying the invoices from its suppliers, including pharmaceutical companies.

      So in the end to avert state bankruptcy it had to plead for external assistance in the form of an illegal bailout from the EU, despite all previous assurances that the EU treaties meant that there could never be any such bailout, and as part of that it had to arrange to default on its debts, despite false claims to the media that default had been avoided.

      As I’ve said on previous occasions, compared to Greece, and Ireland, and also some other countries, we have had it easy in this country, with nothing that properly deserves to be described as “austerity”, overall; and the reason for that is the £375 billion of new money created by the Bank of England and indirectly lent to the Treasury via the gilts market.

      Unfortunately much of the population doesn’t fully understand this, because none of the main political parties have wanted to explain it, which has opened the door to complacency both about the chronic bad practice of the government in running budget deficits and the new, even worse, practice of printing new money to fund those deficits.

      A practice which some are now attempting to justify theoretically, when the reality is exactly as described by Osborne on the one(?) occasion when he objected before falling forever silent on the matter:

      “Printing money is the last resort of desperate governments”.

      • Denis Cooper
        Posted September 20, 2013 at 9:13 am | Permalink

        Missed for moderation.

  18. peter davies
    Posted September 17, 2013 at 9:35 am | Permalink

    Its funny how arguments are modified to suit an agenda. We hear from the EU Climate Change Commissioner (who I’ve never heard of who happens to be Danish who happen to manufacture and sell these huge windmills no one wants) in an article in the Telegraph explaining that the EU is following the right energy policy even if the climate change science is proved wrong (which I guess means that she has seen an advanced copy of the IPCC report telling us the science is miles away from reality) because of global population growth.

    I’m not entirely sure how one small part of the planet is going to change the habits of other countries by making ourselves uncompetitive and energy poor – I don’t know the true costs of energy policy but if some of these eye watering figures banded around are even close, we would not be talking about budget deficits in no time if these policies were abandoned.

    I’m all for cleaning up our act – we need to clean up what is pumped into the air but technology advances in energy production and putting a halt to slashing rain forests in developing countries are the way to go – not high energy tariffs imposed on us all so we can pay for unreliable intermittent power which we can’t store for when we need it.

  19. Acorn
    Posted September 17, 2013 at 10:00 am | Permalink

    I could argue the toss all day on how much permanent damage “Austerity” has done to the UK economy, but it would be pointless. There is now, a train load of data showing the Osborne economic outcome. The slowest recovery from any UK recession in 170 years. (IEA).

    Politicians get very myopic at times like these; you get the “we have saved the nation” bit, when you get a delivery of a five foot ladder to the bottom of a fifty foot deep Well. If we had stayed on our pre recession GDP growth line, about 2.7% yoy, our GDP would now be £1700 billion. The A Darling plan would now have us at £1540 b. Osborne has us circa £1440 b.

    So you see what happens when the government cuts the budget deficit and the expected private sector recovery doesn’t happen because the “buyer of last resort” (fiscal stimulus for the little people; not monetary stimulus (QE) for banksters), the government, didn’t do what it is supposed to do, in a sovereign fiat currency economy, buy stuff.

    The national debt will not stop our childrens’ children from buying the future IPads. Just like the nations’ massive debt after world war two hasn’t stopped you buying one. The debt we are actually leaving them is unemployment. Seventeen percent of our under seventeens live in workless households. http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=lfsi_jhh_a&lang=en .

    Reply The growth rate prior to 2007 was unsustainable, based on too rapid a build up of private sector and banking debts. The Coalition continued the Labour build up of public sector debts, whilst bringing the deficit down in a similar manner to the Darling plan as it turned out once they used the fiscal stabilisers.

    • Denis Cooper
      Posted September 17, 2013 at 10:43 am | Permalink

      As it was the Labour party that visited economic disaster on the country a period of silence on their part would have been very welcome. However they are shameless, and Osborne has been too weak to shut them up.

    • Brian Tomkinson
      Posted September 17, 2013 at 12:46 pm | Permalink

      At last, you have actually admitted that Osborne has handled the deficit in the same way as Darling planned whilst pretending to be so different. Do you wonder why politicians are held in such low esteem and why we don’t believe a word the political leaders say?

      reply I have shown you the figures on many occasions. Darling’s plan assumed much more growth than was likely or possible. When growth fell short Osborne allowed more borrowing than his original plan, based on Treasury/Darling type growth forecasts.

      • Brian Tomkinson
        Posted September 17, 2013 at 6:36 pm | Permalink

        Reply to reply,
        In other words Osborne did what Darling would have done>

      • peter davies
        Posted September 18, 2013 at 9:03 am | Permalink

        The figures are there to see in the public domain, anyone can look them up – I have pointed many a leftie to them to show that spending has risen during a time of “austerity”

        The political arguments in the PMs debates prior to the 2010 election between G Brown and Cameron were a total sham because both intended to do the same give or take a few million – and the stuff that has come out of Labour’s mouths on cuts to satisfy the media and their core vote are an absolute joke.

    • Ralph Musgrave
      Posted September 17, 2013 at 8:45 pm | Permalink

      Bit of technical quibble this, but this statement (JR’s presumably) doesn’t make sense: “The growth rate prior to 2007 was unsustainable, based on too rapid a build up of private sector and banking debts.”

      If it proved physically possible to engineer a given growth rate based on private debt build up, then that growth rate WAS SUSTAINABLE: though clearly the GROWTH OF DEBTS might not have been sustainable. In other words had a different way of funding the growth been implemented, the growth might easily have been “sustainable”.

      • peter davies
        Posted September 18, 2013 at 9:07 am | Permalink

        It probably would have been sustainable has it not been built on debt – but the debt had an international dimension to it so even if our banks had not exposed themselves as they did we would have still had a recession though no where near as bad

  20. Neil craig
    Posted September 17, 2013 at 10:19 am | Permalink

    “It is difficult to accept the claim that we already have a housing bubble in the UK.”

    Which is, carefully, not denying that we are rebuilding a housing bubble, but merely that we have not yet completed it.

    The “out of recession” growth of 0.7% is not something which any7 remotely successful government would boast of – when the non-EU world is growing at an average of 6% annually. I don’t thin k anybody seriously disputes that we could be doing that if our political class was not actively preventing it.

    This is supported by the very good employment figures. What this shows is that, if basic per capita productivity were not flatlining, or worse. we would indeed be in good growth. The reason productivity is flatling or worse is because the political class have decreed that energy be made much scarcer and more expensive and the underlying rate of growth (ie when you take out artificial house price and other stimuli) is identical to the underlying rise, or in this case fall, in energy use.

    It is clear John knows this perfectly well but because his own party is almost as committed to Luddism as the other state/BBC approved parties, he cannot say so.

    (incidentally Brian Taylor who commented above is a Scottish BBC spokesman who has publicly admitted that the BBC censors in party interests – to be fair to the BBC the censorship in Scotland is even more extreme than in the rest of the UK)

    • peter davies
      Posted September 18, 2013 at 9:12 am | Permalink

      Its called the EU and their small print directives which govts comply with but few of us are made aware of. Energy costs cascade to everything we buy and sell including inflation – removing these costs based on almost discredited research would probably be the one thing that could sort out the UK economy not to mention increasing our manufacturing base which is badly needed

  21. Denis Cooper
    Posted September 17, 2013 at 11:06 am | Permalink

    “The best news for living standards recently has been the rise of the pound against the dollar and some other leading currencies.”

    Checking the recent values of the sterling trade weighted index here:

    http://www.bankofengland.co.uk/boeapps/iadb/fromshowcolumns.asp?Travel=NIxIRxSUx&FromSeries=1&ToSeries=50&DAT=RNG&FD=1&FM=Jan&FY=1963&TD=17&TM=Sep&TY=2013&VFD=Y&CSVF=TT&C=IIN&Filter=N&html.x=17&html.y=20

    I find that it still fluctuating in roughly the same range around the 80’sh level that it has occupied since early 2009, after the big drops during 2007 and 2008.

    15 Sep 06 103.0078
    17 Sep 07 102.567
    16 Sep 08 89.82
    16 Sep 09 81.5799
    16 Sep 10 81.5346
    16 Sep 11 79.0986
    17 Sep 12 83.8914
    16 Sep 13 82.9586

    It would be a mistake to make too much of small, probably temporary, variations either up or down.

    Reply My point is that a move from around $1.5 to around $1.6 which we have seen in recent weeks will have a favourable impact omn inflation, unless reversed.

  22. behindthefrogs
    Posted September 17, 2013 at 11:44 am | Permalink

    We need a lot more goverment action to encourage import replacement. It is not sufficient to leave this just to exchange rates. It is a lot simpler to replace imports than create exports but I am not aware of any grants etc. devoted to this activity.

    • Kenneth
      Posted September 17, 2013 at 5:09 pm | Permalink

      Why subsidies?

      Why not allow companies in the UK to legally make lower cost products instead of enforcing high costs for wages, fuel, taxes and other overheads?

      If someone is willing to make widgets at low cost why not let them?

      We could have full employment in the UK if we wanted to.

      • Bazman
        Posted September 20, 2013 at 3:36 pm | Permalink

        Working for pennies how would they live? Like East Europeans five to a room/car? You can.

  23. ferdinand
    Posted September 17, 2013 at 12:58 pm | Permalink

    Yes, but house prices are still not included in the inflation index. Why not?

  24. Gary Gimson
    Posted September 17, 2013 at 1:05 pm | Permalink

    I believe that net migration has in fact gone up again.
    In any case, net migration is a false statistic and a euphemism. Let’s just discuss immigration so that we can get the problem in perspective.
    500,000 immigrants versus the departure of 400,000 indigenous Brits makes for a net migration figure of only 100,000 and neatly masks the fact that half a million mostly ghastly immigrants came to this country.
    Please let’s be honest here.

    • Anonymous
      Posted September 17, 2013 at 6:42 pm | Permalink

      And it’s to be assumed that those people leaving took the means to support themselves with them – be it in funds and/or skills. This must have a devastating impact on our ability to function if it carries on.

      How do we know this ?

      Because no country in the world is mad enough to offer our emigrants free housing and welfare support and not expect them to contribute to their economies.

  25. Gary
    Posted September 17, 2013 at 1:38 pm | Permalink

    Being one of those who expected no growth, I must admit this is good news.

    I will firmly admit I was wrong and this is sustainable when :

    1. we cease to be the largest debtor nation in the OECD(total debt to GDP)
    2. the govt/central bank withdraws stimulus. £130bn on HTB alone.

  26. Simonro
    Posted September 17, 2013 at 2:00 pm | Permalink

    The statement “austerity cannot work” only really makes sense in the context of this government’s ludicrous claims back in 2010 that fiscal contraction would promote growth (I can just see the factory owner “Great, the government are going to spend less and raise taxes, that means my order books will be full, I’d better invest in some new machinery and hire more people”.)

    Now that you have mostly stopped saying that and we finally have some weak growth, it makes sense for your opponents to attack you with a different simple message. “recovery for the rich”, “another housing boom”, “lowered living standards for the 90%”, “high youth unemployment”, etc, etc.

    I don’t see how we could expect any other course, now politics on all sides consists almost entirely of sound bites and *ahem* ideological interpretation of the data.

    Reply: Controlling the deficit was designed to lift confidence by reassuring people interest rates would not rise. Large deficits are also bad for confidence because people rightly assume they will be followed by higher taxes to pay for them.

    • Simonro
      Posted September 18, 2013 at 7:18 pm | Permalink

      “…people rightly assume they will be followed by higher taxes…”

      I have a degree in Economics with Politics; all the research shows that this doesn’t really happen, people discount the future much too rapidly to care. Perhaps the Conservative Party could club together and send the Chancellor on a course – maybe the OU has something useful.

      In any case, as long as you borrow in your own currency, then the future taxation should be offset by future income from guilts.

  27. Rods
    Posted September 17, 2013 at 2:03 pm | Permalink

    It is excellent news that the economy is at last recovering, but there is still more that needs to be done to boost this further with lower taxes, energy prices and much, much better value for money from our public services, where we seem to have first class prices (tax) and third class services.

    Unfortunately, real wages are still dropping where rises are around 1% and inflation about 3% depending upon which measure most accurately reflects reality. I can’t see wages rising anytime soon for the majority, only in areas of skill shortages. This is due to the Euro crisis and a ready pool of cheap labour in Greece, Spain, Portugal and Italy and the UK, particularly London, being the destination of choice for young migrants. This can only get worse from January, where the minimum wage is under £1 in Bulgaria and Romania. (etc ed) The best way to raise wages is through labour shortages and this is not going to happen anytime soon.

    Personally, I don’t think there is currently a housing bubble even though prices are above long term trends. Society in the last 10 years has changed where it is normal for a woman to only take 6 months off after the birth of a child. This means that there are two wages within a household. With a small end of terrace house costing about £200k in the Bracknell / Wokingham area. Allowing for 25% deposit meaning a £150k mortgage for two people at x3.5 salaries, means that they need to be earning £21.5k each, which is below averages wages. This doesn’t look very unaffordable to me, what is does suggest is that prices will go up until they are about x7 average wages, due to housing shortages. The biggest obstacle is the 25% deposit and stamp duty and of course x7 average prices will make it much more difficult for single people to buy a house of flat.

  28. uanime5
    Posted September 17, 2013 at 4:23 pm | Permalink

    There is a decent recovery led by new private sector jobs. There are 1.4 million extra jobs in the private sector since 2010. Unemployment has fallen, though by much less than the number of new jobs owing to continued net inward migration, which has itself come down.

    I wouldn’t say unemployment has fallen by much given that unemployment levels are much the same as they were this time last year (the seasonal nature of some jobs mean that extra work is available from July to September). Given that youth unemployment and long term unemployment have also been rising it seems that not enough help has been given to those who the most help.

    The 600,000 jobs lost in the public sector also hasn’t helped.

    The best news for living standards recently has been the rise of the pound against the dollar and some other leading currencies.

    I wouldn’t say there’s been a rise in the exchange rate with the dollar. At the start of 2010 and the 2013 you got $1.60 to the pound, now it’s $1.59. Both of which are still below the 2008 level ($1.98 per pound). You also got more dollars to the pound during much of Labour’s term.

    http://www.xe.com/currencycharts/?from=GBP&to=USD&view=10Y

    While at the start of 2013 you got more euros to the pound than at the start of 2010 (€1.18 vs €1.11) it’s still below the 2008 level (€1.38 per pound).

    The government’s freezing of Council Tax

    The Government also required many people who were exempt from council tax to start paying it. So some people did get a large rise in council tax.

    There were also some circumstances in which the council could increase council tax, such as if the cost of a service increased. For example if the bin men charged the council a higher fee for rubbish collection this year the council were allowed to raise the cost of council tax to cover this.

    creating a climate for more jobs are all helping with living standards

    Given that unemployment remained pretty much the same and living standards fell (along with wages in real terms) I’d have to say this climate wasn’t that successful.

    • libertarian
      Posted September 19, 2013 at 10:44 pm | Permalink

      In the last quarter the number of people claiming unemployment benefit fell by 24,000 however the number of people in full time employment ROSE by 80,000.

      The number of jobs available, the number of people in work bare no relationship to the number of people unemployed.

      There are many reasons for this but until we stop pretending that unemployment is due to a shortage of jobs ( it isn’t) we wont make any progress.

      Here are some reason why some people are unemployed. They aren’t able to work. They lack the necessary skills for work, they choose not to work, some don’t need to work, some are looking but aren’t very good at job seeking, some have a history that makes employment very difficult to obtain.

      Until we recognize the different groups and treat them differently in our approach then just macro level numbers will always lead us to the wrong analysis of the problem and therefore an inability to solve it

      • Bazman
        Posted September 20, 2013 at 3:41 pm | Permalink

        They cannot compete with low cost labour or find jobs within a commutable distance requiring the skill they have would be a some of the reasons. Some of the young ones have no experience of work and are unable to find any would be a major one too. Factors are aslo overlapped , so your fantasy of dividing the undeserving claimants and deserving ones is just that.

  29. Kenneth
    Posted September 17, 2013 at 4:59 pm | Permalink

    So-called zero hours contracts are not ideal but they have at least allowed the unemployed a route back into work and helped us, to some extent, to stay competitive.

    These new jobs are now being threatened by Labour and the Lib Dems who are looking into new ways of stopping these contracts.

    So called socialism has been a blight on our country and has wrecked many lives. I know these politicians don’t mean to be cruel but the result is cruelty all the same.

    I would plead with voters not to let them in again only for them to force millions out of work.

    Look at France.

    • uanime5
      Posted September 18, 2013 at 3:24 pm | Permalink

      It’s a somewhat flawed assumption to believe that because companies hire people on zero hours contracts that if zero hours contracts were ever made illegal then these jobs would disappear. (named company ed), which has 90% of its staff on zero hours contracts, isn’t going to reduce it’s staff count by 90% simply because they can’t abuse their staff in this way any more.

  30. terry
    Posted September 17, 2013 at 6:10 pm | Permalink

    Surely, I cannot be alone in believing property prices are being maintained solely because of the ridiculously low interest rates and the reluctance of lenders to foreclose on existing serial defaulters.
    The house price crash of 2007 was an uncompleted event. It was not able to reset average house values to the long term norm of 3.5 times the average salary. Now it is more like 5.5 times. Until that is allowed to happen, there will be problems with a lack of buyers and of increasing debt burdens. UK Governments are obsessed with pumping up house prices because they believe it produces the feel-good factor that gets them re-elected.
    All it does it put more people into debt either by mortgage, re-mortgage or borrowing and spending against the new equity. Which is precisely the reason for the collapse in 2007. This latest farce will be a disaster. H2B is nothing less than the USA sub-prime mortgage scam that bankrupted Lehman Brothers bank. And as AL Einstein famously said, it is the definition of insanity to repeat the same mistakes but expect a different result. This will not end well, for anyone. It’s 1930s deja vu all over again.

  31. Bazman
    Posted September 17, 2013 at 6:56 pm | Permalink

    Less than a mile where I once lived. Imagine if this was central London? Probably no danger, but how many phone calls would Boris have to take. This is the difference.
    Now ram it fantasists.
    http://www.nwemail.co.uk/news/full-probe-call-after-nuclear-train-derails-in-barrow-1.1085092

    • Edward2
      Posted September 18, 2013 at 3:51 pm | Permalink

      Read your article Baz, which says no injuries and no danger to the public from the empty flasks.
      So I don’t see what you are worried about
      More danger from petrol being moved about by rail and road.

      • Bazman
        Posted September 20, 2013 at 3:47 pm | Permalink

        The mentality says that it is less dangerous than in a nuclear power stations, but thats like saying kestrels above motorways show motorways are good for wildlife. What would have happened as the story says some nearby streets were sealed off and rail services were disrupted? In London and rich famous people were unable to get to the theatre or god forbid had to stop at an expensive hotel for the night.

        • Edward2
          Posted September 21, 2013 at 11:39 am | Permalink

          But they weren’t were they Baz, so stop overreacting to a minor derailment which created no danger to anyone.
          Its just your fantasy scenario.

          • Bazman
            Posted September 21, 2013 at 10:13 pm | Permalink

            My parents, if they so wished, were deprived of going to a shop that they liked at at a time they wanted and I demand to know what this government is doing about it!? I am shocked and sickened at the lack of response to this? It will be pursued make no mistake and Redwood as an MP. Will be held personally responsible. Ram it.

          • Edward2
            Posted September 22, 2013 at 8:35 am | Permalink

            Just repeat after me Baz… “I agree with you”
            It will make you feel better.

    • libertarian
      Posted September 19, 2013 at 11:07 pm | Permalink

      bazzy

      Your point about how dangerous railways are is supposed to prove what?

      I’m assuming that you think that radiation leaks from nuclear plants is somehow dangerous? As someone ( albeit many years ago) who actually worked briefly at a nuclear plant I can tell you that this 1950’s scare tactic myth about nuclear radiation is laughable. In ALL the nuclear accidents, disasters, tsunamis and earthquakes that have ever happened in the 65 years of nuclear power a grand total of 58 people have lost their lives as a direct result of nuclear. More people have been killed by wind turbines in the last 10 years. There has been 1045 wind turbine accidents resulting in the death of 102 people in the last 10 years alone

      In the same 10 year period 598 workers died in oilfield accidents

      More than 6500 coal miners die per annum ( mostly in China)

      In the last year alone 2012 1,230,000 people died in road traffic accidents in the world

      Nuclear is the safest, greenest, most cost effective form of power generation currently known.

      France produces 75% of their power from nuclear
      Slovakia 55%
      Belguim 51%
      Ukraine 46%
      Hungry 46%
      CZech Rep 35%
      Switzerland 35%

      The UK produces 17% from our 8 reactor sites

      • Bazman
        Posted September 20, 2013 at 4:11 pm | Permalink

        Nuclear is the safest, greenest, most cost effective form of power generation currently known? Massive state subsides with a potential to ruin large parts of the country, the cost being met by the state. Maybe you could explain why the Irish sea is the most radioactive in the world too. How many have died or will die from nuclear related cancers? In Belarus when you look in the crown it is obvious many have some sort of nuclear ailment. I am no doctor, but stand by this as observation. You are a nuclear apologist and fantasist thousands have died directly and indirectly due to Chernobal alone. Because it is less than oil/gas does not make it safe. It makes oil/gas more dangerous than thought.

        • Edward2
          Posted September 21, 2013 at 11:35 am | Permalink

          Rubbish Baz
          Thousands did not die due to Chernobyl.

          Look up the total number of deaths from Nuclear power accidents and come back to us and apologise.

          • Bazman
            Posted September 21, 2013 at 10:17 pm | Permalink

            UN estimates at least 4000 deaths. Remind us again how many die in Britain according to the HSA of industrial accidents. Hundreds? You have already rammed it, but do so again.

          • Edward2
            Posted September 22, 2013 at 8:29 am | Permalink

            Total nonsense Baz
            That report is a weird future prediction of what might happen one day in the future if..if..if

            Less than 100 is your answer, in the history of nuclear power generation.
            Now compare that to other energy industries that you have no worries about.
            Consider how many have died through illnesses caused by by mining for coal.
            Hundreds of thousands.
            I realise nuclear frightens you but its just ignorance of the technology rather than the reality of the risk.

  32. Mike Wilson
    Posted September 18, 2013 at 8:37 am | Permalink

    ‘… The market generally is far from overheated and does not yet need a dose of cold water all over it.

    I sometimes wonder if we live on the same planet – let alone the same country and area.

    A 27 year old, professional, friend of my son has just got a new job in your area (Mr. Redwood’s area). He is, by any standards, extremely highly paid. His new job has a salary of £48k. His girlfriend, also a professional, is a couple of years older. She earns £42k.

    They want to settle down and, in fairly short order, have a couple of children. At which point they will be dependent – primarily – on his salary for a while. Unless, of course, they are prepared to do what many people do these days – take a few month’s maternity leave and then start dumping a baby in a nursery for 12 hours a day.

    Bearing in mind they are both professionals (which, once upon a time, would have meant a 4 bed detached house), let’s say they aspire to a bog standard 3 bed semi on one of the many estates around Wokingham. They will be asked to pay in the region of £275k.

    So, young professional man on a very good salary, needs a 5.7 times salary mortgage to buy a house that a generation ago could have been owned by almost anyone who had a job.

    And yet you say ‘the market is generally far from overheated’. I don’t know which planet you are on – it is not Earth.

    Reply Overheating means excessive transactions at ever higher prices. National house prices outside London and the SE have risen just 0.8% over the last year, and transactions are still way below the 2007 peak. Is the young man going to buy soon anyway? When I first started out with a well paid job in the City the nearest to London I could afford then was a small bungalow in Didcot, so high house prices in London and the immediate area around it are not new.

    • Mike Wilson
      Posted September 18, 2013 at 8:39 am | Permalink

      Oh, forgot to include …

      young professional man on a very good salary, needs a 5.7 times salary mortgage at the lowest interest rates for generations

      • Edward2
        Posted September 18, 2013 at 3:44 pm | Permalink

        Houses are very expensive but so is renting Mike.
        Here in the Midlands there are still areas where properties can be bought for under £100,000 so on average wages of approx £25, 000 a person would be paying 4 times wages.
        Most are two wage homes now so the real multiple would be even less.

    • Credible
      Posted September 19, 2013 at 4:03 pm | Permalink

      John, we’ve been there already with the Didcot story. If you were in the same position today, I very much doubt you would be able to buy the bungalow in Didcot and afford the travel to London. Does it not bother you that well paid people in your constituency are in this position, it doesn’t seem to.

    • Bazman
      Posted September 20, 2013 at 6:23 pm | Permalink

      They need to get on their bikes as Edward says to the Midlands or the north west where the houses are. Being middle class is no excuse.

  33. Lindsay McDougall
    Posted September 18, 2013 at 12:34 pm | Permalink

    I will believe that this recovery is soundly based when the fiscal deficit starts coming down again and it is robust enough to survive interest rate rises and the slow withdrawal of QE.

    Economics is not the only consideration. How many wealthy foreigners do we want living in London?

    • Bazman
      Posted September 21, 2013 at 12:46 pm | Permalink

      More specifically how many do we want owning property and not living there?

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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