Economic opportunity

 

2015 should bring more economic growth to the UK. The banking system is now able to finance more of a recovery. Many individual consumers will get a boost as wages are now on average rising faster than prices. The new year will bring further falls in petrol and diesel prices. This will relieve family budgets directly, as vehicle fuel is  a large cost, and help lower other prices as delivery costs to shops and to customers decline.  The food retail sector remains intensely competitive, with lower prices resulting from that and from some falls in commodity prices.

Voters will naturally wish to see per capita growth, which should happen. They will more importantly wish to see their own living standards rising. The government will have to push on with its p0licy of cutting the rate of inward migration by a variety of means, and make early progress on benefit entitlement issues for recently arrived people. It will be popular if more and more of the new jobs the economy is generating are taken by people already settled here legally, cutting unemployment and related welfare costs.  All this is possible.

The government will also need to do more to tackle the problem of housing. House prices are now very high in some parts of the country, particularly in the areas with the most new jobs available. Limiting new arrivals will help. There will need to be more actions to ensure a decent supply of new housing in locations where people wish to live and where there is employment opportunity. The best place to start is London, where the building rate is rising but more needs to be built within the urban area.  Much of this can be done by redeveloping brownfields and previously developed sites, and by changing uses intelligently.

The mortgage market needs to be sufficiently responsive to give people a decent chance of climbing the property ladder. Of course it is right to avoid excessive lending with no deposits and very high multiples of income that make it difficult to repay. It is important not to lurch too far the other way and  make it too difficult for buyers, especially first time  buyers, to get started.

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74 Comments

  1. Lifelogic
    Posted January 4, 2015 at 6:45 am | Permalink

    The banks are still not much better than they were after the crash, when all that many wanted was an excuse to demand their money back. They are very still far from flexible and helpful – even to their sounder customers. They are very slow & want high margins of circa 2.5% upwards. Often charging sound businesses circa 10% on overdrafts and yet then paying them virtually nothing on their bank deposits when in credit. Hardly a sign of any real competition in banking best to cut them out. The misguided FCA slotting rules are making things far worse.

    “Voters will naturally wish to see per capita growth, which should happen” well perhaps but the UK have very few competitive advantages and huge competitive disadvantages.
    Taxes are far too high, government is bloated and largely incompetent too, employment laws are hugely damaging, energy is far too expensive due to the green nonsense, almost everything is over regulated and badly regulated, bank are still uncompetitive, planning is far too restrictive and we will soon have Miliband and his half witted rent act II, mansion tax and the rest of the lefty politics of envy & lunacy.

    We have surely had quite enough lefty drivel already from this coalition.

    What makes you think that housing will be a “ladder” with stamp duty at 12% and CGT at 28% on non real gains, Labours mansion tax/general incompetence and interest rates set to gently rise?

    Real pay rates are now back to the pay level of fourteen years ago after six years of real terms falls. Productivity is also declining, we have a huge trade deficit too and a huge deficit that has only fallen by 1/3 not 1/2 as claimed.

    Bloated and largely incompetent and misguided government is the main problem, the Coalition has very done little to address this. The misdirection of the private sector with endless daft regulations (such are the green energy drivel), over complex taxation, a poorly structured and inefficient/expensive legal systems, daft grants for electric cars and the likes are also hugely damaging.

    • Lifelogic
      Posted January 4, 2015 at 8:26 am | Permalink

      The governments new enforced pensions will be yet another distraction and cost to employers further reducing productively. Perhaps the biggest problems is the complex & restrictive employment laws that so hugely reduce productivity and competitivity keeping the wrong people in the wrong jobs. That and the poor quality education system and lack of good vocational training.

      It is good to see Lord Baker UTCs – “university technical colleges” which specialise in the so-called Stem subjects (science, technology, engineering and maths). We need hundreds more of them not just three.

      • M Davis
        Posted January 4, 2015 at 10:04 am | Permalink

        A few more than three now, Lifelogic:

        We’ve already launched 30 UTCs around the country.
        Over 20 more will open by 2016.

        http://www.utcolleges.org/

        • Lifelogic
          Posted January 4, 2015 at 12:30 pm | Permalink

          Good. Giving parent vouchers to send their children where ever they thought best and keeping LEA largely out of it would be very good too.

        • forthurst
          Posted January 4, 2015 at 12:34 pm | Permalink

          I’ve just looked up the nearest UTC; I find its statement of intent disappointing on several levels:

          “UTC@harbourside will develop engineers for the future with the specialist skills and environmental awareness needed to support the increasing role of renewable ‘green’ and marine technologies such as wind farms and tidal energy generators. The UTC will take an exciting, innovative, business-led, problem-solving approach so that students achieve relevant work-related qualifications and transferable skills for future training or employment. Students will work independently and collaboratively tackling real life environmental and marine engineering business problems.”

          • fedupsouthener
            Posted January 4, 2015 at 6:44 pm | Permalink

            Really?! I wonder what happened to Cameron’s promise of an end to subsidies for wind? Are his promises blowing in the wind or just wind?? Scotland has too many wind turbines for the grid to take the power now and enormous sums of money are being paid for them to be turned off. Still the SNP insist on erecting more. This will lead to ever increasing prices for energy and this will be reflected in the prices we pay for everything we buy. So much for an up and coming economy!

          • Lifelogic
            Posted January 4, 2015 at 7:21 pm | Permalink

            True the green crap and lefty/PC agenda pervades the whole of the education system, government, exams and academia. Just look at the Geography GCSE for example. Still, more engineers, builders, plumbers and fewer lawyers, PPE graduates and social scientists is clearly the way to go.

      • Bob
        Posted January 4, 2015 at 11:09 am | Permalink

        @LL

        “new enforced pensions will be yet another distraction and cost to employers further reducing productively”

        The new workplace pension scheme is an admission by govt that they couldn’t run a bath. This is the first step to abrogate their responsibility to provide a state pension, and as always it’s the employer who’s left holding the baby. Why at the very least couldn’t the individual be made responsible for setting up their own pension account into which the payroll contributions could be paid, and then when a person moves to another employer, the new employer just takes up where the previous one left off. Anyone who changes jobs frequently is going to have multiple scattered pension accounts and employers are no doubt going to be responsible for people that left their employment decades earlier whenever there is a pension query.

        A missed opportunity to encourage a small degree of individual responsibility.

    • Ralph Musgrave
      Posted January 4, 2015 at 2:47 pm | Permalink

      Re “slotting rules” (i.e. improved capital ratios for banks) it is widely accepted, even by banks themselves, that improved ratios are desirable – or do we want another credit crunch followed by a 5 year long recession?

      The only question is how high those ratios should go, and some (e.g. Martin Wolf, and Anat Admati) advocate ratios far above anything contemplated by the FCA.

      The alternative (at least the one adopted in the UK) is to have banks funded by deposits which themselves are backed by taxpayers. That constitutes a subsidy of banks, and as an advocate of free markets, I don’t approve of subsidies.

      • Lifelogic
        Posted January 4, 2015 at 7:23 pm | Permalink

        The slotting rules are preventing perfectly sound loans, introducing additional costs & delays and forcing pointless expensive valuations to be carried out.

      • lifelogic
        Posted January 5, 2015 at 8:47 am | Permalink

        The banks have no choice but to accept it. It is poorly designed and no thought through. It will damage the recovery.

  2. Ex-expat Colin
    Posted January 4, 2015 at 8:30 am | Permalink

    Old News: (nothing new here)

    The ever expensive bloated corpse we are shackled to – The EU ?

    Ditto the UN and NATO.

    IHT that cripples our childrens/grandchildrens housing prospects (tax on already taxed)

    The monster debt forwarded to our grandchildren (keep borrowing boys)

    VAT that relentlessly tweaks upwards.

    The ever expanding HoL.

    Overseas aid that largely feeds Mercedes Benz & Co.

    Green taxes for a reduction in a minor gas that is…..minor. -5 deg C this am and wind at approx 4% of baseload. Coal and Gas critical.

    Fuel won’t stay down for too long.

    Incompetence and Contempt abounds…business as usual really.

    • Lifelogic
      Posted January 4, 2015 at 10:34 am | Permalink

      In the telegraph today:- wind farms paid over £1m a week to switch off turbines. All adding artificially to out electricity bills no doubt.

      Vote blue get Huhne/Davey types, over expensive energy, freezing pensioners and endless green crap.

      Cameron on Marr (just now), confirmed ministers will not get a free vote in the referendum. Although when pushed he said he would rule nothing out it is surely clear that any Cameron government will be campaigning for in regardless. He clearly will get nothing but a fig leaf. If he ever gets elected in May.

      • Bazman
        Posted January 5, 2015 at 8:19 am | Permalink

        Going to interesting to see the costs of stopping nuclear generation, but that will be OK though won’t it? Massive subsidy to state owned forign companies to build and run these power stations at no risk to them and if you read the full artificial you will see the cost of reducing gas powered stations is four time s the cost of wind. Choosing fact as per to meet your agenda again.

        • Lifelogic
          Posted January 5, 2015 at 11:45 am | Permalink

          Why would we want to stop gas, coal or nuclear at all?

          • Bazman
            Posted January 6, 2015 at 7:38 pm | Permalink

            Why don’t you read the article and find out why it is necessary to stop wind turbines and why it is necessary to reduce output from nuclear coal or any other power generation method? Why are you asking this as an engineer and a scientist?

        • Matt
          Posted January 5, 2015 at 1:15 pm | Permalink

          That’s just a lie. It is you Bazman who I see on here routinely making up facts to suit your agenda.
          Wind is far more expensive than gas or nuclear. Nuclear is expensive compared to fossil, but at least it works.

          Wind farm generation capacity is usually the source of such misleading statistics. Wind farms, unlike proper power stations, do not operate at their rated capacity and in fact often operate at a small fraction of it.

          It really should be obvious if you think about it for more than 10 seconds that as electricity in practise has to be generated and then used immediately, intermittent sources of electricity are almost useless.
          Maybe one day in the distant future, a means will be developed for storing significant amounts of energy and then alternative energy may be useful. That day is not in sight.

          Let’s try something really simple. The French have been generating almost all of their electricity with nuclear for decades. They’ve been operating an electricity surplus for most of that time and doing rather well out of it. Name some country anywhere in the world at any time in history with a comparable experience with wind or solar.

          This is not politics. It’s physics. You can argue with politics, but physics is immutable.

          • Lifelogic
            Posted January 5, 2015 at 7:25 pm | Permalink

            Nature will indeed not be fooled by nonsense from Ed Davey types.

            If you store energy by pumping water up a hill to a reservoir (about the cheapest & best way available) you waste about 20-30% of the energy and need lots of capacity, pumps, engineering and turbines.

            So take wind at say 3 times the cost and store it and then it becomes say 5+ times the cost of coal or gas!

          • Bazman
            Posted January 6, 2015 at 7:49 pm | Permalink

            Massive state subsidy supports French nuclear energy is the short answer. Wind is viable in certain locations in Britain where the wind does not fall below a certain speed over a certain time and the current required is met. You do not want to believe this but unfortunately it is a fact as is solar in other countries and competing with fossil fuels on a level playing field.
            In this country I must admit I’m sceptical about the solar and the amount of subsidy in effect giving free cash to a few lucky people for no reason, but are you telling us it is lie that an island in Scotland has seen massive saving due to wind power lifelogic or charging a phone from a solar charger or small windmill is impossible? Depends on application like all technology not you beliefs and dogma which I’m sure as and engineer you already know..

  3. Brian Tomkinson
    Posted January 4, 2015 at 8:54 am | Permalink

    JR: ” The government will have to push on with its p0licy of cutting the rate of inward migration by a variety of means”
    Please credit us with having more sense than to accept such blatant spin. You know that your election pledge was never possible whilst we remain in the EU and needless to say has been spectacularly broken. It will not be kept in future either by any of the three main Westmister parties. As for housing just like the left wingers you no longer look at the demand side of the equation just the supply. How will we ever build enough houses when you are allowing (and sometimes encouraging) mass immigration every year?

    • Anonymous
      Posted January 4, 2015 at 9:59 am | Permalink

      Brian – And when the economic ‘boom’ ends (as they always do) what then ?

      Many more unemployed and dependent on the welfare state.

      With near zero interest rates how can any serious economic assessment be made as regards success ?

    • Kenneth R Moore
      Posted January 4, 2015 at 10:44 am | Permalink

      It’s a curious policy of ‘cutting the rate of inward migration’ that actually results in an increase. Usual story of wanting to take the credit for sounding tough but actually doing very little. Mr Redwood would be more truthfull if he stated that, at best, the Conservatives policy is at best aimed at limited increases in migration from the present mind boggling levels.
      That is the best that can be hoped for staying within the EU.

      Mr Osborne privately likes high migration as it helps with his GDP growth/employment figures but for many of us it is a disaster.

      • outsider
        Posted January 5, 2015 at 6:21 pm | Permalink

        The EU is the elite-agreed scapegoat for the 260,000 reported net immigration for the year to end-June. But reported NET immigration by non-EU citizens was 168,000. If non-EU migration were balanced at a little over 100,000 each way, net immigration would be under 100,000, which was the Conservatives’ target. The EU is therefore in no way responsible for 2013-14 bringing the fifth highest net immigration figure in history. It has happened because the Government’s policy is the opposite of what it promised before it came into office.

  4. Timaction
    Posted January 4, 2015 at 9:11 am | Permalink

    ……………. The government will have to push on with its p0licy of cutting the rate of inward migration by a variety of means, and make early progress on benefit entitlement issues for recently arrived people. It will be popular if more and more of the new jobs the economy is generating are taken by people already settled here legally, cutting unemployment and related welfare costs. All this is possible…………
    After over 4 and a half years do you think your Government is credible on this? Our true unelected leaders Junker and Merkel have told us there is no negotiation on free movement. There may be some tinkering on the fringe but if we keep voting for the legacy parties we will get over 500,000 people and more coming here as there has been under legacy party rule. Is it:
    1. Incompetence of the highest order by the LibLabCons or
    2. A deliberately hidden policy of the EU, supported by the legacy parties, to reduce peoples belief in a nation state, its culture and history? If you want to get rid of nationalism you have to remove nation states. (FCO 30/1048 of 1971 anyone)
    The irony is they’re doing this to create a larger state with another identity when we want our own.
    There is only one solution. We all know who we need to vote for.

  5. Dame Rita Webb
    Posted January 4, 2015 at 9:48 am | Permalink

    Here is something to contemplate if you think your home is going to keep its present value and you regard it as nest egg for your retirement. Where is the next cohort of first time buyers going to come? You may have a problem with the youngsters, because the cleverest ones who should in theory get the best jobs will have problems in raising a loan sufficient to buy your house at its current value. This is because a substantial chunk of their wages will be going to service their student loans. Remember even if they land a non graduate job, like a van driver, the lenders will still be expecting their pound of flesh. EU immigrants are unlikely to be interested in your house either. Most of them are prepared to live frugally and save their pounds to buy a higher standard of living back home. While the non EU lot tend to hold low status low paying jobs so they are out of contention too.

    So presumably to keep the plates spinning the only alternative is to let the lenders go back to their pre 2008 criteria and offer mortgages to virtually anybody and we know what happened next.

    • Anonymous
      Posted January 4, 2015 at 4:44 pm | Permalink

      Well, Dame Rita,

      We have HTB and near zero interest rates – ‘baby boomers’ providing their children’s deposits and pensioners ditching their pensions to pile into BTL.

      We also have the government celebrating London housing as our greatest ‘export’.

      Yes.

      This is a government stoked boom all designed to keep Labour out at the next GE. What happens thereafter ? I don’t fancy things will be good even if the Tories get back in.

  6. David Murfin
    Posted January 4, 2015 at 9:53 am | Permalink

    “House prices are now very high … … particularly in the areas with the most new jobs available. Limiting new arrivals will help.” It may help housing, but not filling vacancies.
    Building is the only answer to both.

    • forthurst
      Posted January 4, 2015 at 12:24 pm | Permalink

      “Limiting new arrivals will help.” JR

      “It may help housing, but not filling vacancies.”

      So there is a finite number of vacancies which need to be filled from mass immigration which of themselves create no demand? That mass immigration, itself, does not fuel the need for more employment in house building, hospitals, roads, railways, prisons, police, social services, schools etc? A proposition unlikely to gain much acceptance on this blog.

      • Anonymous
        Posted January 4, 2015 at 7:40 pm | Permalink

        It beggars belief that you even have to explain it, Forthurst. Yet this is exactly the sort of insulting tosh that the tri-party politicians are trying to push past us right now.

    • Anonymous
      Posted January 4, 2015 at 4:46 pm | Permalink

      David

      Rubbish.

  7. Mike Stallard
    Posted January 4, 2015 at 9:55 am | Permalink

    Conservatives are depending on the economy to win the election.
    The Labour Party is shackled to the Trades Union movement and it finds the Socialism of the EU attractive as well. They will ruin any bounce very soon. The Conservatives are far more reliable.
    Ukip, I reckon is fading. Like Alex Salmond, they have not faced up to the basic question: how do we leave the EU? They never ask or answer this. Also it is becoming very obvious that they have simply not got the manpower to run a government.
    Add in the SNP taking away seats from Labour and things could be looking rosy.
    After the election, the Battle for Europe is on!

    • Lifelogic
      Posted January 4, 2015 at 10:53 am | Permalink

      The voting system is hugely against UKIP. But UKIP need not only to fade but to totally collapse for the Tories to win outright.

      They will not fade enough I suspect. They will also become the preferred stop Labour/Libdum candidate in many seats. The pesky Tories should clearly stop splitting the vote in these seats and do a deal.

      Alas we have Cameron who prefers to throw another election, he prefers Labour to UKIP, indeed one wonders why he does not cross the floor and join them. He is genetically (and heart & soul) essentially just a pro EU, anti democratic, big tax borrow and waste, open door immigration, fake green, soft socialist.

      Cameron is just the same as Mr Miliband in essence without the mansion tax and Rent act II but just the same really. Then again what is 12% Stamp duty but a mansion tax?

      Reply You are quite wrong about Mr Cameron

      • fedupsouthener
        Posted January 4, 2015 at 6:52 pm | Permalink

        Reply to reply

        Perception is all there is and the perception is that Lifelogic is right in all he is saying. Cameron seriously should consider a deal with UKIP. Please, we don’t want a coalition with Labour/Libdums/Greens and especially not the SNP. There really isn’t much choice as I see it.

        • Hope
          Posted January 5, 2015 at 2:37 pm | Permalink

          LL you are quite right about Cameron. He preferred Labour and Liberal to UKIP at the Rochester by-election making it quite clear there is no difference between them. JR is quite wrong to suggest otherwise based on the facts of Cameron’s actions at that by-election. Look at the fact is the so called economic policy, Osborne has implemented Darling’s plan when he ridiculed it back in 2010! Now we have his con about halving the deficit like the £1.7 billion Cameron claimed he would not pay the EU. If GDP is used as a measure look at debt by this measurement! Shocking truly shocking.

        • Lifelogic
          Posted January 5, 2015 at 7:26 pm | Permalink

          Exactly.

      • Lifelogic
        Posted January 4, 2015 at 7:50 pm | Permalink

        I hope very much that I am quite wrong about Cameron he could still win were he to become a Tory. But everything he has done since he threw the last election (with his lefty green crap agenda and ratting) does nothing to suggest I am remotely wrong. The last thing I want is Miliband’s rent act II but then when you look at Cameron what really is the difference?

        Cameron appointed Lord Patten to the BBC, he ratted on cast iron, he ratted on IHT (still 40% over 325K), he introduced the absurd gender neutral insurance, gave us 12% stamp duty, 20% VAT, 28% CGT without indexation, he mugged private pensions still further, he abolished child benefit and personal allowance for many, made 299+ tax increases, failed to cut the deficit significantly, failed to fire the very many in the state sector who do nothing useful, is hugely pro EU and went into a pointless & damaging war in Libya and would have done so in Syria.

        He also presides over a dreadfully incompetent NHS where you cannot even get to see a doctor for over a week and then often only for 4 minutes and one issue. Casualties departments are often a complete joke, the police are often desperate to avoid any crime reports or any investigations (other then fine revenue “crimes” that is).

        He fires ability like Gove and Patterson and keeps people on like Huhne, Davey, Laws, Morgan, Greening, Truss, Greg Clarke, Cable, Ester McVey, Baroness Anelay of St Johns DBE …… are his views not very clear?

        His agenda in the Telegraph on 1st? failed even to address the major issues.

    • Timaction
      Posted January 4, 2015 at 11:28 am | Permalink

      Mr Stallard, UKIP isn’t fading, the mainstream press and LibLabCon are peddling this propaganda via their contacts in the mainstream press, mainly but not exclusively the Telegraph, Mail and the old faithful, EU funded BBC. Take a look at the growing membership. A bit like the North Korean press agencies at the moment in the UK. The ConLab anti UKIP units are on overtime looking at any non story! Never policy, as it cant be argued. The internet is/are the reliable sources.
      Exit from the EU isn’t as difficult as made out. Either through the passing of legislation in Parliament or invoking Article 50 of the Lisbon Treaty, thereafter two years of negotiating future arrangements. Whilst a challenge, it is not beyond the wit of man although we would need root and branch reform and in many cases removal of many in the FCO and Home Office and the appointing of patriots. There are already off the shelf Brexit plans via other websites. I could post but it is against our hosts policy.
      Manpower to run a Government? That’s why we have all these public servants who are supposed to implement Government Policy! No different under UKIP rule. Who do you want negotiating future Treaties, the current legacy party leadership or a very good set of conviction politicians?

      • fedupsouthener
        Posted January 4, 2015 at 6:54 pm | Permalink

        Well said. It seems to me that people are flocking to UKIP as they have totally lost faith with all the other major parties who are all too busy bickering and not doing enough to please the hard working public who are fed up of being shafted either by governments or banks.

        • Timaction
          Posted January 5, 2015 at 10:21 am | Permalink

          Agreed. All we have to do is tell the truth and leave the rest of the spin and lies to the legacy parties.

    • Bob
      Posted January 4, 2015 at 11:29 am | Permalink

      “how do we leave the EU?”

      You can find an answer by Googling The road to freedom – Gerrard Batten pdf

    • lojolondon
      Posted January 4, 2015 at 11:31 am | Permalink

      I know John will not like this answer, but the answer to leaving the EU is on Monday morning, recall all MEP’s and stop paying EU funds. The rest will follow from there, including repealing all EU legislation in parliament.

      • turbo terrier
        Posted January 4, 2015 at 6:17 pm | Permalink

        Please do not forget the Climate Change Act!!

    • backofanenvelope
      Posted January 4, 2015 at 11:35 am | Permalink

      Surely no one expects UKIP to run the government? They are a protest party and there is plenty to protest about! The Tory party could shoot most of their foxes if they wanted. But they don’t.

      • fedupsouthener
        Posted January 4, 2015 at 6:55 pm | Permalink

        They cannot do any worse than the wimps we have in power at the moment!

    • Denis Cooper
      Posted January 4, 2015 at 2:17 pm | Permalink

      You may be right that UKIP is “fading”, but so far there is no more than a hint of that on the updated charts of average opinion poll results given on the Electoral Calculus website:

      http://www.electoralcalculus.co.uk/polls.html

      The changes during December were small, but while the upward trend of support for UKIP is as yet unbroken there is some indication that it may be weakening and could start to reverse in the coming months.

      However once again I note that this has been to the advantage of Labour, which has gained slightly while UKIP has lost slightly, and not at all to the advantage of the Tory party whose poll rating is unchanged; hence the prediction for the next election has Labour moving back closer to an overall majority, now 5 seats short rather than the 10 seats short predicted at the end of November.

      It is obvious how we leave the EU; we invoke Article 50 TEU on leaving the EU, and if other member states foolishly decide to muck us about during the period of negotiation prescribed by that then we tell them that we are leaving anyway.

      Reply And how do we get a Parliamentary majority to invoke Article 50

      • Lifelogic
        Posted January 4, 2015 at 7:56 pm | Permalink

        how do we get a Parliamentary majority to invoke Article 50

        Well you do not with a leader like Cameron you do not even get a Tory majority and half of them are Ken Clarke types of EUphiles anyway.

        What sound Tory would want to join the Tory party under lefty/fake green EUphile Cameron? Would they even be allowed to stand under Cameron? He has halved party membership too.

      • Denis Cooper
        Posted January 5, 2015 at 12:38 pm | Permalink

        We know that is the real problem, the problem of political will, but I took it that Mike Stallard was alluding more to procedural problems.

    • Anonymous
      Posted January 4, 2015 at 4:51 pm | Permalink

      Mike

      People aren’t asking ‘how do we leave the EU ?’

      The reason that Ukip are fading is the Daily Mail’s relentless campaign against them.

      The British are often called racists by its own establishment but the truth is that the British loathe racism. They are scared of being accused of it and the DM is playing on this.

      Unfair as Ukip are not racists. All they are asking for are sensible – and long overdue – caps on immigration.

      If you are an ordinary person you’re going to have to get used to the fact that resources you have paid for are going to be spread thinner and thinner.

      • Anonymous
        Posted January 4, 2015 at 5:00 pm | Permalink

        As well as the Daily Mail’s campaign against Ukip I have yet to watch a BBC comedy routine or panel show which does not include an dig at Nigel Farage or Ukip followed by – what seems – a concerted ripple of applause from the audience which grows louder and louder (are there plants ?)

        It is as though a dig at Ukip is part of the contract for appearing on the BBC.

        People turning away from Ukip does not mean people turning to the Tories. I’m as conservative as you can get but this time I REFUSE to vote for people who seem to have contempt for me just to keep Labour out.

        I’d sooner stick needles in my eyes.

        • fedupsouthener
          Posted January 4, 2015 at 6:57 pm | Permalink

          Think yourself lucky. I would only vote for Conservative if they came up with something substantially worthwhile or UKIP but because of the situation in Scotland with the SNP I find myself having to put my X next to LABOUR!!!!!!!

          God, what a choice – no choice.

        • Lifelogic
          Posted January 4, 2015 at 8:03 pm | Permalink

          The Bias on BBC “comedy” against UKIP is cleary an outrage. It is the Coalition’s current EU good/anywhere else bad immigration laws that are by very definition racist.

          Not the fair worldwide points system that UKIP suggest.

        • Denis Cooper
          Posted January 5, 2015 at 12:51 pm | Permalink

          It’s perfectly true that “People turning away from Ukip does not mean people turning to the Tories”, and I’ve provided a bit more evidence of that in my comment above about Labour seeming to gain in the opinion polls from a small decline in support for UKIP but the Tories not gaining from it. So logically the Tories should be trying to get people to switch their support from Labour to UKIP, just as they should be trying to get people to switch their support from Labour to the LibDems or to the Greens. Obviously a vote diverted from Labour to any other party is not as good as a vote diverted from Labour to the Tories, it is only half as good in most circumstances where the contest is between Labour and the Tories, but nonetheless from the Tory point of view it is better than the vote staying with Labour. However UKIP is a special case, as those leading the Tory party and the other parties have all transferred their primary allegiance to the EU they have a duty to do whatever they can to smash UKIP irrespective of any disadvantage to their own party vis-à-vis rival pro-EU parties.

  8. JoeSoap
    Posted January 4, 2015 at 10:10 am | Permalink

    This is all a bit like Uncle Sam sitting in the room eating apple pie, ignoring the elephants already there and other waiting to come in.

    What of your “controlled immigration” theme if Greece implodes, Italy and Spain follow, and hundreds of thousands of Southern Europeans arrive here? Any contingency plan in place?
    How about the NHS, the unaffordable behemoth, as we all get older and need more care? Any plans for that?
    Housing, as our youth are stripped of their inheritances under your IHT, then unable to pay back these massive mortgages/student loans?
    Transport system, clogged up due to rubbish railways, low road building and higher numbers on the roads.

    The art of running the country shouldn’t be sitting back saying the fair wind has carried us nicely forward in a few areas, it should be preparing the ground for the future.

  9. alan jutson
    Posted January 4, 2015 at 10:40 am | Permalink

    Yes some things are probably getting better for some people, and yes the economy is growing albeit by population growth, not much per capita, which is real growth.

    The real problem John is after a huge downturn and wage reduction for many, it would be a surprise /disgrace if things had not improved after 6 years, where government borrowing is still in the tens of £ Billions and with Debt continuing to increase.

    The savers of this world have been shafted with low returns, which are still taxed.

    Yes I know that Cameron has been shackled by the LIbDems, but that was his choice !

    Camerons negotiation skills have been proved to be next to useless, he is just giveaway Dave.
    Everywhere he goes he just gives our money away, be Parkistan, the EU, Afghanistan, Scotland, or the so called Foreign aid Budget.

    Nione of this bodes well for our future.

    Yes the Conservatives would be better than Labour, the LibDems, the Greens, The SNP, but not by much.

    Time to make a real effort, and make some sort of sensible agreement with UKIP in some areas I am afraid, as their rise in popularity has been caused by the lack of real sensible Conservative policies in the last 5 years.

    Your/our biggest problem is the EU and Immigration, then we can perhaps have a chance to resolve our own issues, in House so to speak.

  10. Bert Young
    Posted January 4, 2015 at 10:51 am | Permalink

    All sides are now squaring up for the election and the blog this morning puts an encouraging economic outlook to the individual . Personal debt is a huge issue so any improvement in the day to day cost of living and the real increase in wages will , hopefully , be used to decrease this liability .

    The 2 issues at the top of my list are : a) the neutralising of the SNP threat and b) a clear and binding statement on our red lines with the EU . Cameron faces an almost impossible task of convincing voters that he can be trusted – he has “gaffed” too many times in the past , so , anything he does come up with have to be under-pinned by the whole support of his party . Post election he will most certainly be voted out of office .

    I re-iterate what so many responders have said over the past months “Conservatives must do a deal with UKIP”. If UKIP does attack Labour seats in the way it has indicated it sends a clear signal that their support would naturally fit to the right of centre ground .This is a natural link to the Conservatives and should be made use of . If Cameron still stands in the way of this relationship then he has to go sooner .

    If Labour succeed -one way or another in the election , we inevitably face a period of economic decline , however , it would be foolhardy for the Conservatives to think that they can rest their laurels on this threat . The electorate is fed up with “wishy washy” leadership and want change . There are convincing alternatives in the Conservative ranks and room has to be made for them to come out and be counted .

    • Anonymous
      Posted January 5, 2015 at 2:44 pm | Permalink

      UKIP has some pretty unpleasant ideas and people in it, according to Mr Cameron. (What ? Worse than the provably chauvinistic party he formed a coalition with ?)

      There will be no deal.

      Mr Cameron has more affinity with Labour than the people who used to vote for his party.

  11. lojolondon
    Posted January 4, 2015 at 11:29 am | Permalink

    John, as long as we continue to import half a million of the poorest, most desperate people into the UK every year, the standard wage will never increase, and the pressure on our services, including water and electricity, housing, schools, hospitals, welfare, roads, rail, police, etc. etc. will never decrease.

  12. Graham
    Posted January 4, 2015 at 11:38 am | Permalink

    Sorry JR. but the whole article was far too complacent and has been identified above too full of holes to be taken seriously.

    Good enough for electioneering though.

  13. ian
    Posted January 4, 2015 at 11:40 am | Permalink

    I like the bit intelligently, what like the e highway

  14. DaveM
    Posted January 4, 2015 at 11:46 am | Permalink

    Listening to all Labour’s crap on the economy this morning, I’m not an economist but I find it unbelievable that people would vote for them on that issue. They say they will spend debt interest funds on education and……wait for it……the NHS!!!!! So how do they service the debt?!!

    Mr Redwood, if this is the best those fools can come up with this close to a GE, your party should be savaging them like English bull terriers on a slimy little rat!!!

  15. Keith Pearson
    Posted January 4, 2015 at 12:02 pm | Permalink

    I feel so sorry that my children (currently 12 & 16) are unlikely to enjoy the benefits of home-ownership that our generation and many before have enjoyed. Whilst indexing stamp duty is a (long overdue) help, the disparity between earnings and property prices, particularly in the South East means that unless they’re earning at least 20% more than the national average wage, they’ll never be able to secure a mortgage.

    It comes down to buying a house where there’s no work or renting where there is work – what choice is that?

    • Anonymous
      Posted January 5, 2015 at 2:48 pm | Permalink

      There isn’t much chance of renting anywhere of a decent size in such places either, Keith.

      Home ownership (booming prices) was what Nu Labour used to quell the electorate with their mass immigration policy. So long as house prices were going up the baby boomers didn’t give a fig about their children’s futures.

  16. Ian wragg
    Posted January 4, 2015 at 1:04 pm | Permalink

    How is per capita income likely to increase when you continue to import half a million immigrants every year.
    I see your boss is taking a leaf from Millipede and not discussing immigration or Europe. The economic story isn’t very substantial whilst tax receipts are down and benefits are up.
    Is Angela coming to give Dave his instructions.

  17. Bob
    Posted January 4, 2015 at 1:10 pm | Permalink

    Slightly O/T
    “Anti-EU ministers face the sack if they do not back me in referendum
    One Government source said the Prime Minister would risk ‘splitting the party’ unless he suspends the normal convention of collective Cabinet responsibility, to allow ministers to join either the ‘yes’ or ‘no’ campaigns.

    But Mr Cameron today made clear all ministers will have to follow his lead, including supporting continued EU membership if that is what he recommends.”

    Read more: http://www.dailymail.co.uk/news/article-2896077/Anti-EU-ministers-face-sack-not-referendum-Cameron-warns-takes-swipe-appalling-Ukip.html

    Wow!

    • Lifelogic
      Posted January 4, 2015 at 8:06 pm | Permalink

      Indeed a foolish decision yet again.

  18. Denis Cooper
    Posted January 4, 2015 at 1:43 pm | Permalink

    “2015 should bring more economic growth to the UK.”

    2015 will certainly bring more immigrants to the UK, a lot more, in direct defiance of the clear wishes of the great majority of UK citizens even after several million foreigners have been wantonly handed UK citizenship under both the last government and this government; and while that increase in population may contribute to economic growth, an increase in total GDP, it will make little or no difference to per capita GDP, but it will add to the government’s budget deficit, and once again the existing body of citizens would been have been forced to give newcomers, foreign citizens, free shares in their country for no overall economic or social benefit either short term or long term.

  19. CHRISTOPHER HOUSTON
    Posted January 4, 2015 at 1:55 pm | Permalink

    London is a prime example of how human beings can get to tolerate the most adverse conditions imaginable.

    Dr Samuel Johnson commented “Why, Sir, you find no man, at all intellectual, who is willing to leave London. No, Sir, when a man is tired of London, he is tired of life; for there is in London all that life can afford.”

    That was 1777, the estimated population was 543,490 when a mule train would probably outpace today’s most modern London rail operator. Even that was a big jump from the estimated population in 1066 which was a mere 25,000.Less, in fact, after the battle.

    The population is now 8.3 million. That’s quite enough “economic opportunity” and time to stop.

  20. VisitCamberwell
    Posted January 4, 2015 at 2:03 pm | Permalink

    The problem with intelligently building on brownfield to solve the housing crisis, is that anything disused is built on indiscriminately. The net effect is a mass loss of commercial space from the inner cities, where residential density is greatest, creating slum conditions. We do not investigate:

    1) why these uses are empty. Landbanking (e.g. by supermarkets but also investor/church/institutional landlords), and parking rules damaging local business for the sake of only a minority of (motorist) residents, are routine reasons. We regularly convert from commercial uses which are still viable.

    2) whether there are services locally, and jobs within a reasonable catchment, that can support this increased residential density. The thinking is that the City, Shard and central areas will provide. Will this include enough starter jobs to absorb redundancy events like City Link?

    3) whether local councils are in the grip of zeitgeists, e.g. “there should be no alternative retail centres within a two mile radius, else the viability of this one will be threatened”, or “we cannot reassign car space to competing uses because cars are a way to empower the working class”.

    The strength of the economy is definitely the first prerequisite for a strong NHS. However, by building housing on anything brownfield that looks disused in the inner cities, sector diversity, small businesses, starter- and bridge- jobs are lost. This weakens the tax base, which is not good for the NHS.

  21. Denis Cooper
    Posted January 4, 2015 at 3:01 pm | Permalink

    Only somewhat off-topic, just as the closing months of 2014 saw Juncker directly and overtly trying to influence the elections in the Greece so 2015 starts with his patroness Merkel indirectly and covertly sticking her oar in for the same purpose:

    http://www.dw.de/germany-prepared-to-let-greece-leave-eurozone-if-voters-reject-austerity/a-18169442

    “Germany ‘prepared to let Greece leave eurozone’ if voters reject austerity”

    “A German report says Chancellor Angela Merkel is prepared to let Greece quit the eurozone should the people elect a government that abandons austerity. Berlin is increasingly convinced a “Grexit” would be bearable.”

    Of course Merkel has absolutely no desire to see Greece abandon the euro.

    After all, she is on the public record saying that eventually ALL of the EU member states should adopt the euro – and incidentally not excepting the UK and Denmark, which have treaty opt-outs from ever having to do so – and allowing Greece or any other country to leave the euro once it has joined would run counter to that goal.

    Moreover she knows perfectly well that apart from the practical difficulties the current EU treaties deliberately provide no mechanism for a country to abandon the euro and revert to a national currency while staying in the EU, and the last thing she would want is for Greece to make it necessary to rush through treaty changes to allow that to happen, and so set a precedent which others which might then follow.

    So I fully expect that the next stage after allowing it to be known that “Chancellor Angela Merkel is prepared to let Greece quit the eurozone should the people elect a government that abandons austerity” will be “Chancellor Angela Merkel has made it clear that Greece cannot leave the euro without leaving the EU altogether”; and whatever the Greeks may feel about being in the eurozone at the moment it is plain that a great majority would be petrified by the threat of Greece being thrown out of the EU altogether, cast into outer darkness as they see it, and they would vote to avoid that happening.

  22. Terry
    Posted January 4, 2015 at 4:34 pm | Permalink

    2015 UK Economic growth? I beg to differ.
    The original concept of QE was put forward by Professor Warner a German economist working in mid nineties Japan. It was based on the fact that the majority,95% , of money supply was generated by Private Bank lending – not as commonly believed, from cash and reserves. His approach was for Government to actually borrow directly from Commercial Banks and not by issuing Government Debt (money created from nothing) – the ‘QE’ system utilised by the BoE and the FRB of USA, et al.
    He was against any lowering of interest rates or expanding the CB reserves, the very methods now adopted. And the reasons why they have failed for they have not increased credit flow and money supply the calculated purpose of the plan. However, they have increased National debt and beyond belief.
    Recent figures from Italy show that their National debt has increased by 16% in the past four years most all of it down to Interest repayments. Italy is actually showing a monthly Current Account surplus yet its debt rises. And this is with ultra low interest rates. What happens when their Bonds dive?

    I personally doubt the ability of our banks to fund much credit, especially to the SMEs – the very companies that can expand our growth, for these reasons :-
    1. The Banks have a monopoly in this country. Just 5 banks control some 90% of all deposits whereas Germany has 2000 banks controlling 70% !
    2. They earn more from the big boys, FTSE100, so favour them and –
    3. They still carry large debt burdens from suspect loans to the EU Nations and most probably a huge amount of zombie mortgages within the UK just waiting to default.

    I guess we should all know the days of wine and roses are over. It’s time to correct the 80 year Bull market and all the inflation and the huge Government debt burdens that went with it.
    Gold was $35 per Toz in 1932, today it’s shy of $1200 per Toz. That is a 34 fold increase and that is the real currency inflation figure for the period. Or in percentage CPI terms, 5,833%.
    What horrors are around the corner, I do not know but I am sure they are going to be scary.

    • Denis Cooper
      Posted January 5, 2015 at 1:16 pm | Permalink

      I read this and despair.

      How could the government borrow from banks without that being equivalent to issuing government debt, if only to those banks rather than to a wider spectrum of investors, and without that increasing the national debt?

      And how can you describe government debt as “money created from nothing” when it is not even “money” in a system where the money used in everyday transactions is issued by the central bank and not by the government?

      I come back to the same question: have you ever tried using Treasury notes, or gilts, or National Savings certificates, to pay for your groceries at the supermarket checkout? Money, or a reliable promise of money, is what they want, and that is the money issued by the Bank of England.

  23. turbo terrier
    Posted January 4, 2015 at 6:16 pm | Permalink

    The party may have a chance as it seems that the good old BBC on R2 today allowed discussion on the £56 billion paid out to wind farm operators ( nearly all foreign ) by Sir Terry Wogans replacement. Could this be the start of something big?

    • fedupsouthener
      Posted January 4, 2015 at 7:00 pm | Permalink

      Could the country be that lucky?

  24. petermartin2001
    Posted January 4, 2015 at 11:34 pm | Permalink

    “The banking system is now able to finance more of a recovery.”

    The implication is that we’ll get a recovery when the private sector starts to borrow and therefore spend more. Private sector debt peaked at around 200% of GDP in 2010 and has now fallen to about 170% of GDP. Its falling at about 5% per year. This is good, in the sense that 170% is too high, (Government debt is 90% of GDP) but bad in that falling levels of debt indicate that money is being saved rather than spent.

    The implication of all this is that, even though the banks may be willing to lend (we’ll believe that when we see it) borrowers may not wish to borrow. They may prefer to wait until after the election, and see what happens to interest rates. They may take the view that property is overpriced which is probably will be if interest rates do rise.

    So the future isn’t looking that rosy. If governments also wish to reduce their deficits, rather than the deficits of the private sector, we’ll see, if we aren’t already, the kind of stagnation currently seen in the EZ. There could be another crash if interest rates rise too quickly, but governments seem to be aware of that. That’s some good news for the economy but not good news for those on this site who would like an economic return on their savings. They aren’t going to get that any time soon.

  • 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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