Carry on spending! How will the Chancellor spend the extra £69bn a year by the end of this Parliament?

Next week’s Autumn Statement is about how to divide up the planned overall increases in public spending. Just to remind readers, the Chancellor plans to lift total public spending from £735 bn last year to £804 bn by the end of this Parliament.  That’s a total rise of £69 bn in cash terms. Inflation is currently zero. To ensure this increase gives us a good real increase in spending it is of course important to keep public sector costs down, just as the private sector is having to do in very competitive world markets.

Public spending rose again in cash and real terms last month, and for the year as a whole. When will all the austerity mongers accept that total public spending is rising, and has been rising modestly since 2010?

This time the increase is led by capital spending, but also includes rises in pensions, health, schools, overseas aid and European contributions. Over the Parliament as a whole a number of high spending priority areas will be given extra cash, so the Chancellor needs to find savings elsewhere to stay within the agreed increased totals.

As a result borrowing rose compared with the same month last year, and is leaving the government with a difficult task to keep borrowing down to the limits set in the last budget. As always, the strategy of cutting the deficit rests largely on rising tax revenues. This time corporation tax was not as buoyant as hoped. This is not surprising, given the collapse of revenues in the commodity and energy  areas, the continuing reductions in types of banking activity as the regulators squeeze banks more, and the very competitive conditions in areas like retail.

All this provides the  backdrop for the Spending Review to be announced next week. I am looking for some abatement of the proposed reductions in tax credits, as the cuts in these benefits for the lower paid need to follow wage growth and tax cuts, so people are not worse off as the changes come in. There is considerable comment about how the elderly are better protected with the reforms to the State retirement pension offering a better deal with rising real pensions and all the universal benefits guaranteed by Manifesto promises, compared to younger people in work. Maybe the Chancellor should carry his reform of public sector pensions further, to limit future rights to accrue more entitlements under favourable past provisions. Maybe he needs to look again at the state  retirement age, as on average people are living longer and staying healthier for longer, meaning an unexpected increase in total pension payments as well as great news for us all that on average we will live longer.

There are parts of the public sector which I have highlighted here which could do more for less. The two that spring most readily to mind are Housing Associations, and Network Rail. I trust there will be new proposals on their financing, to provide better  value for taxpayers money.

The reporting of the Spending Review will doubtless follow the usual Labour line of highlighting apparently large cuts in the unprotected programmes, taking a five year percentage decline in real terms or against previous budget. Few commentators will point out the modest  cash and real increase for the period as a whole for total spending , or remember the rises in some of the protected programmes. Most years I have been in Parliament the stories about public spending have been about the “cuts” yet every year total spending has gone up. Industry cuts its costs every year, doing more or the same with less. The possible gains in the public sector from applying modern technology could be substantial.

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69 Comments

  1. Dame Rita Webb
    Posted November 21, 2015 at 6:16 am | Permalink

    “I am looking for some abatement of the proposed reductions in tax credits, as the cuts in these benefits for the lower paid need to follow wage growth and tax cuts, so people are not worse off as the changes come in.’

    JR the Tories have got their fingers caught in a massive wringer here. If you have got four kids and you earn less than around £46k p.a. you are entitled to some free money from the government. £46k p.a. is way in excess of the national average wage so no wonder you are opposed to any cuts here. As any reduction must put off quite a few Tory voters. The free money limits are far too generous.

    The mass immigration story does not measure up either. If we are taking in these hundreds of thousands each year, because we have to, because who is going to pay your pension? Consider the following, why does the age that you hit state pensionable age keep going up? Why are there amendments to it like, no payout if you have less than 10 years NICs? The big money payout figures the government keeps trumpeting also assumes you have not “contracted out” which is a rarity if you have been a member of an employers pension scheme too.
    Reply The pension age needs to rise as longevity increases, as we have not paid in enough for the extra years

    • CdBrux
      Posted November 22, 2015 at 9:33 am | Permalink

      Another way to control pension costs is to revise the triple lock. 2.5% minimum rise when inflation is much lower. How much longer is this sustainable?

      Another area is housing benefits driven by sharply increasing house prices – which is an issue for many many more people than those on benefits. Supply of new housing (encompassing land, planning, skills, etc…) needs to strongly surge to keep a cap on housing costs for all of us. Well all except those who are house owners and in the short term think they benefit!

    • Bazman
      Posted November 22, 2015 at 3:41 pm | Permalink

      If they got no state pension they would get income support would you stop that too?

  2. Dame Rita Webb
    Posted November 21, 2015 at 6:21 am | Permalink

    On the whole following on from yesterday’s topic after having read the above today, ask yourself the following. If you were an investor would you bother lending money to HMG knowing how it is going to be spent? Once you have thought that out, just think how long Dave can keep the plates spinning?

  3. Mike Stallard
    Posted November 21, 2015 at 7:13 am | Permalink

    “When will all the austerity mongers accept that total public spending is rising, and has been rising modestly since 2010?”

    In really corrupt countries, the idea is kleptocracy. You are in it not to serve the people but to steal what you can while it is your turn.
    Recently the Mail has been highlighting the salaries of the people in this country who run the public sector. It is corruption on a major scale. While they are in it for themselves, their underlings get next to nothing. And they do not care. They know how to rob the system.
    I am not going to give examples because the Mail has already done it.

    Meanwhile the underlings in the Public Sector are huddled in very strong Unions bleating about Austerity – and for them, it is. More and more they find themselves working for an uncaring and fussy bureaucracy – Doctors, Teachers, Nurses, Social Workers, Cleaners, Classroom Assistants – and that is why they are leaving in droves.

    We desperately need reform before the whole thing goes bust. Are there any good, humble and unselfish people left? Will they get to the top? Or has the rot spread too far?

    • alan jutson
      Posted November 21, 2015 at 10:11 am | Permalink

      Mike

      Whilst I do agree with the thrust of your comment, about huge pay for those at the top, and not so much for those at the bottom of the public sector organisations.

      There are also another group of people who work for absolutely nothing (indeed it usually costs them money to do so) in a number of local/National charity organisations (who do not get Government handouts)

      The shame is that these people are often not recognised for what they do or the contribution that they make to Society.

      Even the so called honours list seems to fail to recognise them.

      Meanwhile, Government policy often means that such organisations are needed more than ever, as the official sources of help fail those who need help the most through mismanagement or so called lack of resources.

    • Chris
      Posted November 21, 2015 at 10:28 am | Permalink

      Very good post, MS. Yes, what is the government doing about this? It seems to be left to the few investigative journalists left to root out the rot. However, nothing is done, so it is perceived that the government is not bothered.

    • Lifelogic
      Posted November 21, 2015 at 11:34 am | Permalink

      Much truth in that alas.

      The police even in some areas seriously thinking funding themselves by mugging the motorists doing 71 is a good plan!

  4. Antisthenes
    Posted November 21, 2015 at 7:36 am | Permalink

    How much of that 805 billion will be wasted? A considerable amount I would suggest because government and the public sector are not restrained in the manner that the private sector is. So does not make sufficient effort to be efficient or to act competently. Then there are the political uses of taxpayers money where it is not used for sensible economic reasons but to satisfy the demands of powerful vested interests. These vested interests range from big business, politicians and bureaucrats pet projects and pork bellying, feeding the entitlement and dependency demands of the voting public, subsidies for projects and businesses the private sector would never start up or would let fail the list is long. Then there are the provision of services that government undertakes that they should not because it is not capable of giving vale for money but instead should be done by the private sector where that can be achieved.

    You mention Housing Associations who need to do more for less. I can understand that sentiment from my own experience. Although to be honest I have not studied or researched how they operate so can only give a narrow personal view. I live in a Housing Association flat and have done so for about nine months. My impression is that I am living in a tenant’s heaven no tenant I am sure could have a better landlord. To achieve giving me the level of satisfaction that I have must be costly and something a private landlord could afford to to do and stay solvent. As much as I would desire not to lose the level of service I receive I know that it would be in the best interests of the taxpayer to have it reduced to the private landlord level (the better kind of course).

  5. Lifelogic
    Posted November 21, 2015 at 7:47 am | Permalink

    “This time corporation tax was not as buoyant as hoped”. Indeed and this will get worse as we have even more daft & costly regulations heaped onto them, the work place pension, the enforced pay rises, the green crap energy prices and many more of them sensibly moving overseas.

    The one thing Osborne had to do is cut the vast waste in the state sector, he has failed miserably. The state sector are about 50% over paid (relative to the 80% private) and about 50% of them do little of much use, many just actively inconvenience, licence, fine, tax and waste the time of the productive. The scope for savings is huge.

    Some lefty on the BBC described Osborne as “the most right wing chancellor since the war”. She clearly has not bothered to look at the figures, he is tax borrow and waste to his very core. Some one else this week (on BBC radio 4) said Mrs Thatcher “took an axe to the state sector”, unfortunately she did nothing of the kind. The state sector grew in line with inflation over her period of office.

    The state sector is totally out of control and needs very many axes taking to it. Cut the pay down to private sector levels for a start and close all the sections that do nothing useful or just inconvenience the productive. Get out of the EU and save there, reduce payments to the health feckless and tell them of get a job.

    The state sector is out of control, growing like a malignant tumour and killing the economy. Taxpayers pay more and more in tax (and ever more complex taxes) yet get less and less of any real value in return.

    • Lifelogic
      Posted November 21, 2015 at 7:52 am | Permalink

      The NHS is deteriorating from an already poor level by the day, roads are hugely under provided, care for the old is often appalling and schools are largely second rate. The exam syllabus is full of lefty and green crap indoctrination. The Universities, even the good ones, are hot beds of PC lunacies, left wing magic money tree economics and the fake catastrophic exaggeration of/warming religion.

    • Lifelogic
      Posted November 21, 2015 at 8:03 am | Permalink

      Even the sound David Starkey seems to be being black balled by Cambridge. I think I shall have to reconsider ever giving them any more donations. It seems freedom of speech is no longer acceptable there nor indeed in the UK.

      http://www.independent.co.uk/news/people/david-starkey-students-and-staff-demand-cambridge-university-drop-historian-from-promotional-a6739636.html

      Will we get (as in the US) a proliferation of safe spaces at Universities and have “posters advertising that a “safe space” would be available for anyone who found any debate too upsetting”?

      • Atlas
        Posted November 21, 2015 at 11:20 am | Permalink

        … so much for free academic thought …

      • Richard1
        Posted November 21, 2015 at 10:08 pm | Permalink

        The Government should inform any university which connives in or caves into attempts by extremists to shut down debate that it will not receive further public funding. If institutions want to behave like this – and if students want to attempt to force them to – let them survive by funding themselves in the market. Taxpayers should not subsidise the suppression of free speech.

        • Lifelogic
          Posted November 22, 2015 at 1:16 pm | Permalink

          Indeed and taxpayers should not really be funding at least half of the half baked, hobby and joke courses currently available at most UK Universities.

    • acorn
      Posted November 22, 2015 at 9:26 am | Permalink

      Let’s put some numbers to lifefers commandments. “The public sector are about 50% over paid”, that would be about £85 billion. “… about 50% of them do little of much use”. So assume that what they do is unwanted / unneeded by society; hence, would not have to be privatised. That saves another £42.5 billion. That’s£127.5 billion saved in wages, you will have to pay redundancy and out of work benefits mind you.

      That’s about £90 billion of household spending power you have taken out of the private sector economy; equivalent to Osbo’s buget deficit! Congratulations, you have solved the deficit and are on your way to a surplus.

      Have you spotted the snag yet!!!???

      • Lifelogic
        Posted November 22, 2015 at 6:51 pm | Permalink

        No snag at all just the lack of any decent politicians with a back bone.

        These redundant people would be released to get real & productive jobs instead. You should also, at the same time, reduce taxation, taxation complexity and over regulation on the private sector and the private sector will more than take up all the slack. There is also huge amounts of pointless activity in the private sector due to over regulation, over complex taxation, the green crap religion, daft employments laws ….. these worker too could be released.

        The state sector are on average 50% over remunerated. Most of the 50% is in the over generous state pensions, the pay is only part of the imbalance.

        They also take more sick days, work more sociable hours, get higher redundancy pay and retire earlier.

      • Lifelogic
        Posted November 22, 2015 at 6:53 pm | Permalink

        Many also do positive harm in inconveniencing and distracting the productive so worse than nothing.

  6. Lifelogic
    Posted November 21, 2015 at 8:09 am | Permalink

    Perhaps the best ways to save money are to give some real tax incentives for people to use private medical insurance or vouchers for private schools, thus reducing demand for the state sector ones. Then control immigration so that only those who will not be a net liability are allowed to remain.

  7. Ian wragg
    Posted November 21, 2015 at 8:22 am | Permalink

    What about the deficit. I suppose that’s been abandoned. Another broken pledge alongside immigration. We are well aware that Cameron is a closet socialist and the way things are going it looks like his mission is to well and truly destroy the Tory party which may not be a bad thing.
    I see Ironbridge power station shut down yesterday. This was biomass supposedly renewable energy but uneconomic.
    We really are heading for a fall after the rank stupidity of successive government energy non policy.
    It’s 2 degrees outside and a layer of snow. Good job its Saturday

    • Bob
      Posted November 21, 2015 at 11:37 am | Permalink

      @Ian W

      “We are well aware that Cameron is a closet socialist”

      He came out of the closet years ago when he learned from Labour that the easy short term route to electoral success is achieved by giving away other peoples money to feckless layabouts (for their votes) and wealthy businessmen (see cashback).

    • Iain Gill
      Posted November 21, 2015 at 11:47 am | Permalink

      Problem being other likely candidates to lead the conservative party are all supporters of high levels of immigration in reality, although they often pretend otherwise at election time.

  8. JoeSoap
    Posted November 21, 2015 at 8:34 am | Permalink

    So you’re proposing throwing away the implied contractual entitlements to state pension at 65 which most of the present working age population have, “changing past entitlements” i.e. throwing away contracts signed by public sector employees (and I’m not usually on their side)?

    To put money where?

    Lavish contracts for network rail staff who don’t seem to be able to keep to their contracts to lay a line of wire along a track? Bringing in another million benefit-suckers who have no contract with our state at all? Selling yet another bailed-out bank (which we didn’t have any contract with) at a loss (but of course honouring the pension contracts of the management)?

    Your ideas about the state not honouring existing contracts while throwing confetti money at new takers are a bit muddled.

    • Lifelogic
      Posted November 21, 2015 at 11:40 am | Permalink

      No keep the state sector pension contract but just tax them at say 90% over a certain level. After all Brown and Osborne have mugged the private ones. The state sector have pensions above 5 times the average in the private sector.

      • hefner
        Posted November 21, 2015 at 6:47 pm | Permalink

        Even the Daily Mail (9 October 2014) reported the average public sector pension to be 17 ( seventeen) percent higher than the average private sector pension.
        Where do you take your figures from?

        • Lifelogic
          Posted November 22, 2015 at 7:04 pm | Permalink

          Many in private sector have no pension at all, so you are not including those in your comparison. Also the state sector ones tend to be index linked.

          The last figures I read gave the average (equivalent state sector pension pot) as being nearly five times the private sector pot per head. This did include those with no private pension at all which is a large number in the private sector.

          • hefner
            Posted November 23, 2015 at 7:33 pm | Permalink

            You are right: according to Daily Telegraph (30/01/2013), up to 7 out of 10 in the private sector do not pay into a pension plan. What does this say?
            – people cannot be bothered
            – people only are able to get a miserly income out of their activity
            – people think that they’ll get enough from state pension

            Do these explanations justify your ire against the public sector?
            My feeling is that you start from a valid point but get to ideologically-biased conclusion.
            Do you think your wished-for ever decreasing state will protect you (and family) from illness? from terrorism?

            I also found rather disturbing that you, as a non-dom with what I guess is a nice pension pot and seemingly very worried by IHT plays the defender of the small self-employed people. Hypocrisy does not know limits.

  9. JoeSoap
    Posted November 21, 2015 at 8:39 am | Permalink

    “corporation tax was not as buoyant as hoped”
    Yes but look on the bright side-low grade employees will be earning more, business rates ratchet up and property costs likewise, as business gets squeezed out by the need for more “hysebuilding”…
    For Corporation Tax, to coin a phrase “things can only get worse”.

  10. petermartin2001
    Posted November 21, 2015 at 8:40 am | Permalink

    When will all the austerity mongers accept that total public spending is rising, and has been rising modestly since 2010?

    I’m not sure about all the other “austerity mongers” but this “austerity monger” does accept that public spending has risen but makes the point that “austerity” isn’t simply defined by the level of public spending.

    Public spending is certainly one factor to be considered. This defines the amount of money going INTO the economy from government spending. Export revenue is the amount of money coming INTO the economy from the sales of goods and services overseas. We also have taxation revenue which is the amount taken OUT of the economy by government. Then we have import costs which is the amount of money going OUT of the economy to pay our bill for goods and services we buy from abroad.

    Taking all four factors into account the economy is LOSING about 0.5% of GDP annually.
    That’s why the economy is in difficulties right now and why have austerity. A healthy economy like Germany is GAINING 7% of GDP from these money flows.

    The outlook for the next year or so isn’t good and the chances of another crash are high.

    • Edward2
      Posted November 21, 2015 at 10:49 am | Permalink

      As usual you incorrectly assume the Government is responsible for paying for the imports which businesses and individuals decide to purchase.

      • petermartin2001
        Posted November 21, 2015 at 8:21 pm | Permalink

        Edward2,

        As usual I am, hopefully correctly, assuming that the Government is aware of its somewhat wider economic responsibility to the country, and the economy, than just setting the level of public spending. It’s not good enough to say there is no austerity simply because that is rising.

        Government has to set its spending taking into account how long that spending stays in the economy. If it leaves too quickly to pay our net imports bill then it needs to do at least one of the following:
        a) spend even more
        b) tax less or
        c) do something to bring trade into balance

        But you could be right and I’m assuming too much. If government is not aware of its wider responsibility and/or it considers other factors such as the trade position to be beyond its remit, then it should tell us that. Preferably sooner than later.

        • Edward2
          Posted November 22, 2015 at 9:18 am | Permalink

          You also forget our currency floats, (unlike those poor struggling nations fixed to Germanys economic performance) and by doing so largely adjusts the problems you mention.

          • petermartin2001
            Posted November 22, 2015 at 8:24 pm | Permalink

            Edward2,

            Thank you for reminding us all that the £ does indeed float.

            But a floating £ is not the same thing as a pound which might be ideally valued so as to equalise our trade. If there are lots of rich people, and rich central banks, in the world who have ££ in their possession but would rather keep them in govt bonds (gilts) than spend them on RR jet engines, bottles of whisky or whatever else we might produce then we end up with a £ which can be viewed as overvalued.

            An overvalued pound means that imports are cheaper than domestically produced stuff. It means that our exports are dearer than they might be. So we have, as we do, a trade imbalance.

            The Govt has two options.
            1) Deficit spend that money back into the economy which these overseas holders wish to bank with us to keep it functioning properly .
            2) Do something to bring trade into balance.

          • Edward2
            Posted November 22, 2015 at 11:25 pm | Permalink

            I’m glad you accept the pound floats
            We are getting somewhere at last.
            However you refuse to accept that in the past when other nations and their markets feel the UK is over stretching itself or is importing too much the currency will fall making imports more expensive.
            But no matter, I expect your preferred economic guru will have a good answer.

  11. David Murfin
    Posted November 21, 2015 at 8:41 am | Permalink

    Significant cuts in public spending (allowing lower taxes) will not be achieved by economising and “doing more with less”, but only by the state deciding that whole areas of expenditure are none of its business, and better done (if done at all) by private enterprise or genuine charity. But that’s like asking an alcoholic to give up drinking.

    • petermartin2001
      Posted November 22, 2015 at 8:42 pm | Permalink

      We don’t need to have cuts in public spending to have lower taxes. We should have lower taxes now!

      The Government isn’t constrained in its spending by its taxation revenue. It hardly ever is is surplus, it hardly ever repays any ‘debts’! That’s not the case for you and I. But we aren’t currency issuers like the government. The Government has to issue currency and it has to be in debt. Otherwise it hasn’t issued anything.

      So, yes, if it taxes less and spends the same or more it will have to issue more currency. That will largely come back as taxes anyway so the deficit probably won’t end up any bigger. It could even be smaller if there’s a multiplier effect.

      Sounds too good to be true? Possibly. But, if the Govt overdoes it we could end up with too much inflation. That’s the time to back off.

  12. Brian Tomkinson
    Posted November 21, 2015 at 9:08 am | Permalink

    What could we expect from Osborne, who spent 5 years increasing overall government spending whilst encouraging talk about how tough he was being? He is merely continuing what he thinks is a tried and tested routine. A ridiculous aspect of this is that the government, supported by MPs, has only one area of its spending enshrined in law and that is the commitment to spend 0.7% of GDP annually on foreign aid.

  13. alan jutson
    Posted November 21, 2015 at 9:11 am | Permalink

    So you are labelled the Austerity Party, but spending has risen.

    You have raised many taxes, you have cut some Benefits (and some other taxes to be fair) but you are still spending more than you get in and the National debt is rising.

    We have Armed forces which are now at a lower manpower than has been the case for decades/ generations

    We have fewer servicable aircraft than we have had for generations.

    We have/will have a couple of aircraft carriers which will be used by helicopters, but we are an Island Nation.

    People are still pouring into our Country and putting the NHS, Schools, Housing, water supplies, and sewerage under huge stress.

    Most of our Laws are made in another Country, and we pay heavily large sums of money for that to be the case.

    No wonder you have a Communication/Management problem.

    John “you” means the Conservative Party, not yourself personally.

  14. Lifelogic
    Posted November 21, 2015 at 9:29 am | Permalink

    Osborne’s Northern Power House plans seem to be rather misguided too. What the North needs is far cheaper energy, far fewer regulations, functional banks, relaxed planning and employments laws, far more road space and far lower taxes. Leave the productive alone and they will produce.

    But Osborne just seems to want to give them yet more politicians (probably lefty tax borrow and waste ones) in the form of a Mayoral structure, far more taxes and tax complexity, a few better tax payer funded museums and art galleries and perhaps a few better trains in many years time.

    • Lifelogic
      Posted November 21, 2015 at 9:36 am | Permalink

      Perhaps most damaging of all his national minimum wage on top of his work place pension scheme and the insane PC employment laws.

      This central command wage control will be far more damaging in the North where wages are rather lower. Understandably as housing costs are so much lower too.

  15. oldtimer
    Posted November 21, 2015 at 9:33 am | Permalink

    All we hear on the broadcast media is talk and complaints about “cuts”. We hear little about the burden of taxation. Does the Treasury provide a current estimate of tax as a % of GDP? We hear little about the destructive consequences of the UK tax regime on UK businesses – for high energy users and for the banking industry to name but two obvious examples. Even more insidious are the myriad of tax increases slipped into successive budgets and financial statements which chip away at margins and profitability.

    Reply. Yes, HMT publishes tax figures. From memory it is currently at a high of 38% of National Income.

    • oldtimer
      Posted November 21, 2015 at 1:17 pm | Permalink

      Thank you for that reply.

      I read from the IFS briefing that “Total public spending is forecast to be cut from 39.6% of national income in 2015–16 to 36.3% by 2019–20, the lowest share of national income spent since 2000–01.” That would be good news if he can actually achieve it. Unfortunately, like just about every Chancellor I can think of, he fails to deliver his forecasts.

    • matthu
      Posted November 21, 2015 at 8:53 pm | Permalink

      Taxation at a high of 38% of National Income simply ignores the innumerable other indirect methods of taxation: the living wage, maternity benefits, creation of non-jobs by increasing the burden of corporate responsibility using e.g. health and safety and climate change legislation, mandated higher energy costs by conniving with the energy companies, three days volunteering paid at corporate expense. the list goes on and on.

      The government has simply run out of money and as a result has taken to commandeering other people’s money by statute.

      Taxation by another name, except that taxation should be transparent.

      So more like theft.

      • Lifelogic
        Posted November 22, 2015 at 1:20 pm | Permalink

        Exactly, plus of course the government borrowing which is just deferred taxation too. All of which kills productivity, deters investment and destroys the tax base it feeds off.

        • petermartin2001
          Posted November 23, 2015 at 9:08 pm | Permalink

          Borrowing isn’t “deferred taxation”. If you or I or the People’s Bank of China want to save money that we’ve earned in the UK economy then the Govt HAS to be the borrower of that money and spend it into the economy to keep it functioning.

          The Govt doesn’t need to borrow the money. It’s we who need to save. Or at least we say we do!

          There is only a need to raise taxation if inflation is an issue. As we need just a bit more demand in the economy now it should be lowered not increased.

  16. bigneil
    Posted November 21, 2015 at 9:42 am | Permalink

    What can we spend it on? How about inviting the other half of the world to come for free everything. The first half is already here. How about wasting it on a high-speed train so the elite can save 10 seconds on a trip, a trip which will be so expensive that the elite won’t have to suffer and mix with the lower classes. How about buying loads of generators for people’s homes – -for when the wind doesn’t blow the turbines and we get power cuts ( power cuts will only apply to non govt people).

    • Lifelogic
      Posted November 21, 2015 at 11:43 am | Permalink

      Exactly the loons are in charge just a tiny bit less loony that Corbyn.

  17. Iain Gill
    Posted November 21, 2015 at 9:45 am | Permalink

    Let me guess he will inflate asset and house prices, he will pump more money the way of his mates, he will throw more away at foreign countries which are actively out to ruin us, he will waste more money on rationing and non delivery in the nhs, he will throw more money at sink schools that have been shown repeatedly to be beyond saving, he will prop up the over borrowed and vast swathes of subsidised people including public sector workers who wouldn’t last a week in the real world, more money wasted on vanity projects like big train sets, actively discriminate against anyone with a regional or working class accent while offering positive discrimination in favour of females and ethinic no so minorities, will ensure there is no choice of health or school provision and the people are force fed the idea that the state provides, destroy saving and the lives of decent prudent hard working people. Prop up failing bankers while destroying viable manufacturing. That’s his track record, that’s what he will continue to do.

  18. Iain Gill
    Posted November 21, 2015 at 9:52 am | Permalink

    Oh and he will let the likes of Oliver “heres another 3 million quid to waste Camila Batmanghelidjh” Letwin determine defence policy in line with his boss Dave “being in the combined cadet force does not make you an expert in military strategy” Cameron, slashing the important and propping up their mates, and Francis “keep big jerry cans of petrol in your garage” Maude continue to prop up ever more failed experiments in how to make the public sector more efficient while funnily enough spending more and delivering less while lots of his public school mates sit in nice cushy highly paid and pensioned jobs with little clue.

    • Lifelogic
      Posted November 21, 2015 at 11:42 am | Permalink

      Indeed.

  19. agricola
    Posted November 21, 2015 at 9:59 am | Permalink

    You say that Corporation Tax is not as buoyant as hoped. Hardly surprising when all the big players are allowed to incorporate in tax havens while trading in the UK. This would appear to be yet another downside of membership of the EU. Just as Parliament no longer acts as the centre for law creation it has now surrendered fiscal policy.

    • hefner
      Posted November 25, 2015 at 7:06 pm | Permalink

      Are you joking or what? Didn’t you hear last week’s story about the Pfizer- Allergan merger and their financial relocation to Ireland? Do you think it is a EU story?
      What about all the companies registered in the Virgin Islands, Belize, Aruba, … A EU story again? And the unit trusts and investments based in the Channel Islands, another EU story?

  20. CHRISTOPHER HOUSTON
    Posted November 21, 2015 at 10:17 am | Permalink

    Politicians probably squirm and silently sneer when someone says “Politicians live on a different world”
    Mr Osborne intends to confirm a raise to the state pension to £119.30 a week from April 2016 in next week’s Spending Review.
    Where can you find a privately rented home, including Council Tax, and Heating Payment for £119.30p per week?
    Should we assume Mr Osborne is thinking of providing an additional amount of pension to pay for food, lighting, clothes, travel, and the money required to buy and send him a Christmas card each year?
    Of course not, he lives on a different world. The cost of postage to Mars would be cosmic. Squirm/Sneer.

  21. CHRISTOPHER HOUSTON
    Posted November 21, 2015 at 10:43 am | Permalink

    Will Mr Osborne get the same quality stuff he got a few years ago for each Pound of spending?

    1. In the 1970s I bought some cheese from a shop in an Eastern Bloc Communist Country. It was processed and with additives to the point of hardly resembling cheese at all. UK Cheddar was supreme..REAL cheese.

    2.Just after the year 2000 I bought some cheese in Russia . I was amazed and immediately told my Russian friends “This tastes EXACTLY like English Cheddar cheese. ” Actually it tasted better. But Russians will not believe anything they produce can be better than anything,…so I lied.

    3. Due to Ukraine intervention and EU economic sanctions, we learned Russia now bans the import of…our Cheddar cheese. So!!!!

    4. The Cheddar cheese now in the UK, is not as good as the English Cheddar cheese I used to eat in England in the 1970s. It is not as good as the English Cheddar cheese which I ate in Russia 15 years ago. It closely resembles the cheese I ate in the 1970s in a small Eastern Communist Bloc country which I repeat was processed with additives to the point of hardly resembling cheese.

    If Mr Osborne could see to it our best cheese is not exported to Russia, EU countries and China, we may just get a taste of it now and again… when we can afford it. Similarly the quality of our beef, chicken and lamb has deteriorated markedly.No wonder Chinese food is starting to taste even better.

  22. Bert Young
    Posted November 21, 2015 at 11:02 am | Permalink

    How many Quangos are still out there ? Why allocate so much for Overseas Aid when we see so little in return ? Why continue the outrageous contributions to the EU ? Why the wastage of staff costs in the NHS ?Why continue the disproportionate allocation to Scotland ? Why is HS2 still seen to be viable ?. These areas are but a few targets that ought to be tackled seriously and vigorously ; Osborne seems to allow priorities to slip out of his vision – he is not performing like any low grade Chief Executive who has to answer to shareholders .

    • Iain Gill
      Posted November 21, 2015 at 7:46 pm | Permalink

      Bigger questions are why spend millions funding the people living on those social housing estates which are now far beyond travelling distance of a modern jobs market able to support that number of people? Why keep those estates going? Why import massive immigrant workforces with skills already in oversupply displacing Brits out of the workforce? Why spend big money hyping house prices? Whats the point of paying for Ofsted ratings if parents have no choice of school? Whats the point of rating medical providers if patients have no choice? Why are we stealing houses from families to pay for their old folks care when the feckless and Scottish are getting the same care for free?

  23. acorn
    Posted November 21, 2015 at 11:21 am | Permalink

    Osbo’ is moving from a 1% a year cash increase in TME, (it was £707b in 10/11) in his first five year session, to circa 1.9% a year for this parliament. At 1% we know the economy flatlined. It is touch and go if 1.9% will keep the economy above stall speed. Will it enduce enough confidence in the private sector households to spend and borrow to spend more, knowing their pay packets are safe?

    There is one very big snag. Tax receipts are going up by 5.1% a year for this parliament. From £646b last year to £814b in 2019/20. Now, exactly how the UK economy is going to generate all that taxable GNI, isn’t quite clear. Or, is Osbo’ planning to tax the economy to a standstill to get his budget surplus?

    This isn’t just any old austerity, this is colonic irrigation austerity!

    • petermartin2001
      Posted November 23, 2015 at 9:23 pm | Permalink

      “Now, exactly how the UK economy is going to generate all that taxable GNI, isn’t quite clear.”

      There’s just two possibilities:

      1) UK business will find new and ultra profitable export markets which it has somehow previously overlooked to bring in all that extra revenue we need to pay the extra tax.

      2) We’ll all be squeezed progressively harder to cough up those taxes! It will be like Greece. We’ll have to pay next years taxes before we’ve earned them this year! Except we won’t be able to earn much as our employers and customers will be cash strapped having to pay their taxes too!

      Call me a pessimist but…..

      • Edward2
        Posted November 24, 2015 at 10:51 pm | Permalink

        You are a pessimist.

        1. Over 80% of trade is internal and with a rapidly rising populationthere are many more customers to sell to.

        2. If GDP rises it is probable tax revenues will rise even if tax rates remain constant.

  24. Chris S
    Posted November 21, 2015 at 11:25 am | Permalink

    Of course he shouldn’t actually have any extra money to spend, other than maybe to bolster the Royal Navy’s fleet of submarines and frigates and maritime patrol aircraft to enable us to properly defend our new aircraft carriers. The Navy should never have been deliberately weakened in the first place.

    There is a real problem with the current strategy : despite the so-called “Austerity,” spending has risen in every year since 2010 rather than be cut back. That’s why government debt has spiralled upwards leaving a bill for our children and grandchildren that they will be burdened with for the next 50 years.

    As for the NHS : the government really does need to get a grip of the whole system.

    I would suggest an alternative strategy :

    The Head of the NHS produced a plan that he said was properly funded to 2020, or so everyone, including the opposition, thought. The Government responded by accepting the plan in full and agreed to fund it in full to the tune of an extra £8bn. They then had a right to expect that this would take NHS spending out of the political equation for the whole of the parliament. How wrong they were : Trusts are deliberately allowing their budgets to overrun knowing that for political reasons the Government will be forced to find the money and won’t allow them to go bust.

    Let’s stick with that plan and tell the trusts that if they wish to increase expenditure over and above the planned figure they can do so : just as long as they fund the difference by making charges for some services. That will call their bluff and concentrate minds, forcing them to properly re-organise and genuinely cut costs.

    They should also be allowed to keep all the money they raise from charging foreigners for treatment in addition to their normal budget. They will pretty quickly make sure that they do collect the millions owed by health tourists and other visitors to the UK – many of whom come here with holiday insurance yet are still not charged for their treatment.

  25. MikeP
    Posted November 21, 2015 at 11:36 am | Permalink

    John you can’t simplistically ridicule commentary on “cuts” because total spend has increased. It’s increasing because of huge population growth and inflation on some items the State must buy, like energy, medical equipment and drugs.
    Some striking junior doctors will feel they are getting a net pay cut even after a 11% pay rise because they can’t continue to work 90-odd hours a week and will be limited to 72.
    The tax credit debacle clearly affects a great swathe of lower paid households who would see a cut, so rightly this own-goal policy is being reviewed.

    The real difference between the private sector and the State is the speed and frequency with which the former applies technology and re-organisation to make productivity gains. It has to, to remain competitive. Meanwhile the State continues to over-pay thousands of fat-cat mandarins and ‘top executives’ in our schools, hospital trusts, Whitehall departments and Councils, and top brass in the military. Private companies would have had a clear-out years ago and it beggars belief that Chancellors over the years have failed to scratch the surface of top pay and inflated management numbers in the public sector, particularly given the still relatively generous pension and redundancy provisions. But then it’s no surprise as that would be unfair to your mates!

  26. CHRISTOPHER HOUSTON
    Posted November 21, 2015 at 12:26 pm | Permalink

    Now Dave has volunteered to go and fight in Syria, he’ll be bringing out into full view his piggy bank where no doubt month by month he has been sliding in a missile or two. We should grab it and sell it off to the Russians who have progressed more in a couple of weeks militarily than the combined NATO allies progressed in the whole of the Middle East for the past 30 years.

    Lacking hard currency US dollars they may wish to pay us barter-style in Russian chocolate which is far superior to anything on sale here since etc ed

  27. graham1946
    Posted November 21, 2015 at 12:40 pm | Permalink

    When will people realise there is no austerity but actual increases in spending?

    Maybe when the cuts he does make, and and the spending he makes actually make some sort of sense? Is it sensible to cut our own low paid peoples’ wages before ensuring employers pay a proper wage, whilst at the same time sending 13 billion abroad in foreign aid to rich foreigners (it never seems to get where it is supposed to go) and similar to the EU. There’s plenty of scope for cuts, but the PC brigade in government won’t countenance anything approaching sense or standing up to the EU. We are the second biggest EU paymasters. and should be calling the shots. Why are we going to build a new railway at public cost, when we have privatised the railways? Is that sensible?

    It is also not only about government cuts. Allowing the utilities to make higher and higher profits on the backs of the consumer, whilst providing nothing in the way of improvements to service (complaints are at an all time high) and not even putting anything away to supply new generators, which should their business, hurts just as much as government cuts. That’s why people feel badly off. Why are we going to build generators at public expense just so they can rake in more at high fixed prices? Tail wags the dog. Government should just say ‘do it if you want to trade here. If you don’t, just hand it all back to us and we’ll do the building and take the profits so we can lower bills or lower the deficit.’

    The list is endless. but I’ve used enough space already. The public see whats wrong but the politicians don’t. That’s the place to start. Don’t shoot the messenger – change the message in a meaningful way.

  28. ian
    Posted November 21, 2015 at 12:42 pm | Permalink

    Yes more quangos and 150,000 to 1 million wages and pension for jobs you do not need and corporate jolly, charging over the top for everything they touch by 3 to 10 times and paying little tax, all on asset sales and borrowed money but no money for housing and spending on people in need, just food bank to separate people and make them feel worthless so they commit suicide and replace them with oversees people, instead of paying out for food coupon so they can shop with everyone else.
    The government was elected to get the debt down as quick as possible and to build 250.000 houses a year and to look after the poor but dose everything but that, the debt should of been paid in the last parliament instead of spend on rubbish.
    The people do not see any of this money and do not know where it go.

  29. behindthefrogs
    Posted November 21, 2015 at 1:08 pm | Permalink

    Any spare money should be spent on raising the lower limit at which employers and employees start to pay national insurance. We need to make work more profitable particularly for the low paid. At the same time we need to encourage employers to take on more staff. However a major priority should be increasing the competitiveness of our exports and of our home production against imports. Reducing employers NI contributions help towards both of these objectives.

  30. Ken Moore
    Posted November 21, 2015 at 4:47 pm | Permalink

    Carry on spending indeed!…I’m grateful that our kind host highlights the almost farcical manner in which our finances are being run. No doubt when the wheels do come off Osbornes cart it will exclusively be attributed to the condition of the ‘global economy’.

    A very thinly disguised broadside aimed at our spendthrift chancellor Gideon Osborne .
    Excellent work Dr Redwood more of this please!

  31. Roy Grainger
    Posted November 21, 2015 at 5:25 pm | Permalink

    The biggest “austerity monger” of them all is the Chancellor himself.

  32. petermartin2001
    Posted November 21, 2015 at 8:51 pm | Permalink

    Leaving aside, for moment, the economic arguments of us “austerity mongers” , the government needs to consider why the public might think we’re in a period of austerity.

    http://www.theguardian.com/society/2015/nov/21/george-osborne-considers-axeing-student-nurse-bursaries?CMP=share_btn_tw

    Is it really possible that Britain ‘cannot afford’ to train its own nurses any longer? That was possible when GDP was a fraction of what it is now. Wasn’t the argument that the ‘bigger economic cake’ was supposed to pay for all this?

    If there is an economic cost to be considered in this respect, will the Government pay, a possibly much poorer country, for a doctor or nurse’s training every time it recruits from overseas?

    Reply There are many scare stories about public spending but the fact remains it keeps going up

  33. Bazman
    Posted November 22, 2015 at 4:10 pm | Permalink

    I don’t think anyone with eyes in their head will believe this tosh John. There are realities of a state forecast to account of just over 36% of GDP by 2019. The lowest since 200o when leaking classrooms were the norm and people died waiting months for treatment, the lowest of any country in the G7.
    Planned tax rises of £1300+ for the lowest paid, benefit cuts for all in particular the invisible ones, cuts to policing of up to 25%. Hospitals 2.2 billion in debt at the end of the financial year and massive cuts to local government has seen forecasts of monthly bin collections no libraries, no free school meals and so on.
    Tax cuts for the wealthy and corporations will not hide this as Dave wrote in his letter about them to his local council which beggars belief. The Tories will be in political trouble if the cuts go to far, the British public like the NHS, their council services and police protection. Tories and their supporters often fail to understand anything outside their often deluded world view like cuts to wages and strike action, but should there be any Paris style attack you will be out on your ear. You understand that don’t you?

  • 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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