Spending £4 trillion

Listening to some people about the Autumn Statement, it appears you don’t get much for £4 trillion these days. That’s the amount the government plans to spend in the five years of this current Parliament. They aim to increase total spending by 8.7%, comparing 2019-20 with 2015-16. That’s why we hear endless arguments about cuts and the drive to a smaller state! We heard all the same arguments  between 2010 and 2015. At the end of the last Parliament public spending was higher in cash terms and in real terms than in 2010.

 

We need to remember that the government’s strategy has always been to sustain public spending, and to get the deficit down with a huge increase in tax revenue. The aim this Parliament is to get the tax revenue increase from growth in the economy. This will also have the effect of lowering state spending as a total of the economy as a whole, and leads to all those siren cries that this means the state sector is being cut, when instead it is just growing more slowly than the rest. there were also tax rises, with a new tax on buying Buy to let homes and the apprenticeship levy on business.

The Chancellor was right to abate the severity of his proposed cuts to tax credits. I agree with the strategy of boosting pay through working smarter and paying more for more output. I agree with the policy of cutting income tax on working earnings. As real incomes rise so it is possible to withdraw benefit  support to incomes. It makes little sense to tax people on modest incomes, only to recycle the money to them through a tax credit. The Chancellor was right to remove his severe cuts to tax credits before people have the benefit of the wage rise and the tax cut.

The boost to home ownership for sale is just what the economy needs. We are short of homes, and especially short of affordable homes for sale. This policy should help boost housebuilding and construction materials output. Brick kilns are coming out of mothballs, and new ones are being put in. There will be investment opportunities for  a wide range of building related manufactured items.

 

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105 Comments

  1. Margaret
    Posted November 26, 2015 at 5:47 am | Permalink

    Just looking at the BBC world news and the melt waters in Switzerland as the glaciers retract. Much more natural stone will be exposed then and if the land is not covered with water at least the Swiss won’t need brick kilns. The sirens won’t need to sing though as the Swiss control their finances more accurately and their levels of immigration strictly.
    Public and private spending collectively is the sum of the money in circulation collectively and providing the hoards of animals don’t blow us out of existence there are enough natural resources for everyone. Fiat money is merely for bartering, all but in a more fixed way . Is there any nation not in debt? Perhaps globally the base line should be remade ,made uniform and wipe out many debts so we could all start from scratch and from where we are in terms of effort to reduce overall deficits and debt. Relatively we would still be staged as before but the mountains would not be as high to climb.

    • Lifelogic
      Posted November 26, 2015 at 8:19 am | Permalink

      In the run up to the Paris conference the BBC is in total overdrive on the man made global warming (catastrophic exaggeration of) agenda. Even finding some flash flooding in Saudi Arabia to report.

      Variable weather has been the norm on Earth for Billions of Years but this seems to be a big surprise to the BBC.

      We should just adapt if and when the climate changes be it hotter, colder, wetter or dryer.

      • Bazman
        Posted November 26, 2015 at 7:25 pm | Permalink

        Unscientific religious nonsense without basis other than dogma.
        Did you re-read your NASA link to melting ice caps? It is not just the BBC who are reporting about global warming and the Paris conference and you will be disappointed to learn the BBC are not responsible for it either.

        • Lifelogic
          Posted November 26, 2015 at 9:56 pm | Permalink

          No indeed there is lots and lots of “group think” unscientific exaggerations coming from all sorts of government funded universities, quangos, media and other organisations. Odd then that with all this vast funding they could not predict the lack of warming from the last 17 years. They still think they can for the next 100+ years though. My criticism of the BBC is that they never question it intelligently. They just pump it out as pathetic, juvenile propaganda aimed (I assume by the tone) mainly at the dimmer, young children or Green/Libdim types.

          Just as they failed to question the ERM, the EU, the bloated size of the state, magic money tree economics or the EURO.

          I see the loons in Bristol have got some poo powered buses money to burn it seems.

          http://www.bbc.co.uk/news/technology-30125792

        • Ted Monbiot
          Posted November 26, 2015 at 9:59 pm | Permalink

          Is that the re calibrated NASA stats?

          Still less than one degree rise since 1900
          And no rise since 2000
          Unless you measure in tenths of one degree globally.
          Which is outside even the IPCCs own measures of accuracy.

        • libertarian
          Posted November 26, 2015 at 11:05 pm | Permalink

          Bazman

          Did you read the last link I sent you with a report by bona fide scientists disputing what you assert? No thought not. Maybe theres a chapter on climate change in Mao’s Little Red Book?

      • Richard1
        Posted November 26, 2015 at 10:39 pm | Permalink

        Not much focus though on 2 interesting recent peer reviewed scientific papers: one shows that far from decreasing, the volume of Antarctic ice is increasing (it is therefore no surprise annual sea level rise is c. 2-3mm, approx where it’s averaged since the end of the last glaciation); and the other showing a very welcome greening of the biosphere – a happy positive consequence of increased atmospheric carbon dioxide. Readers of the FT might also have noticed correspondence between Lords Stern and Ridley and Bjorn Lomberg, from which it is quite clear that another piece of climate alarmism (“7m deaths pa due to fossil fuels”) is in fact complete nonsense.

        • Lifelogic
          Posted November 28, 2015 at 7:12 am | Permalink

          Indeed

          • Bazman
            Posted November 28, 2015 at 1:58 pm | Permalink

            Have you read the NASA report on the melting of ice properly yet indeedy? It does not say is in total increasing does it? Lets start with an easy one…

          • Edward2
            Posted November 28, 2015 at 6:07 pm | Permalink

            There was a recent NASA report which showed an unexpected increase in ice.
            Is this the one you mean?

      • Iain Gill
        Posted November 27, 2015 at 1:31 am | Permalink

        BBC has been tweeting fake statistics about how great the NHS is, a propaganda arm of the state in all but name.

        The NHS is crap as any casual look demonstrates.

        • Lifelogic
          Posted November 27, 2015 at 8:53 pm | Permalink

          Indeed and it seems often you cannot even book an appointment with your GP (according to the Telegraph today).

          Well if it is free you then have to ration it by rationing or some other way.

          All this fuss about ISIL and the horrible pointless murders in Paris yet the NHS (it seems) quietly kills thousands every month through rationing and general incompetence.

          • Bazman
            Posted November 28, 2015 at 6:26 pm | Permalink

            Or those close to death being declared capable for work? Rationing health by running the NHS into the ground to make it easy to privatise and then rationed by higher costs in order to make profits for shareholders presumably not on your radar? Many areas of the NHS are very efficient and the areas that are expensive to run will not be privatised as there is no profit without massive additional expense and even then maybe not.
            No mention of privatisation of the army and police to prevent the deaths by terrorists due to their bloated inefficiency as a state run and funded service by you especially and on this site. Would private private military company and security consulting firm not be much more efficient?
            Have a think why you have not mentioned this and then think of the NHS. Toll roads? No way, as you again dodge as the best solution. Right wing dream worlds.

        • Lifelogic
          Posted November 28, 2015 at 7:10 am | Permalink

          Indeed.

    • Leslie Singleton
      Posted November 26, 2015 at 10:38 am | Permalink

      “…..the strategy of boosting pay through working smarter and paying more for more output”

      Eh? More like ordering employers to pay more by diktat irrespective of result if any.

      • Lifelogic
        Posted November 26, 2015 at 6:21 pm | Permalink

        Exactly, if the government stopped taxing and regulating businesses at every turn then they might well feel they can invest, expand and pay higher wages. With the current Osborne approach the reverse will tend to happen.

    • Anonymous
      Posted November 26, 2015 at 11:02 am | Permalink

      Margaret – What if you were one of those owed money ?

      In anycase. The debt reduction brought by your proposals would be relative and in the same proportion between countries as is is now. The debt owed would be of the same magnitude.

      You can’t just disappear it.

  2. Richard1
    Posted November 26, 2015 at 6:53 am | Permalink

    If Mr Osborne succeeds in getting a small surplus by the end of the Parliament with tax receipts = spending at c. 37% of GDP he should be reckoned a success, given where the UK is coming from. Of course it would be better if he would do a radical simplification of the tax system, which we had hoped was his intention. It would also be better to get the state to GDP level down to c. 30% where prosperous nations with excellent public services such as Switzerland have it. (Singapore manages with c. 20%). I guess with a loud leftist-egalitarian voice in the UK, amplified by the BBC, that will not be possible politically. Let’s hope the government does not let up on essential reforms to the welfare and education systems. It seems we will have to go on putting up with a bottom quartile health system though, as there is no public support for opening up the state’s effective monopoly and introducing the kind of mixed healthcare provision we see in countries with the best healthcare outcomes. It’s a 7/10 performance, but look at the alternative with absurd Marxists Messrs Corbyn and McDonnell and the egregious Tom Watson!

  3. DaveM
    Posted November 26, 2015 at 6:55 am | Permalink

    Any chance the govt could spend a bit on sorting out and clearing out Calais? Or do we have to wait for one of our truck drivers to be killed?

    • Lifelogic
      Posted November 27, 2015 at 8:54 pm | Permalink

      None whatsoever I suspect.

  4. Mike Stallard
    Posted November 26, 2015 at 7:09 am | Permalink

    I had the privilege of spending time with a senior doctor recently.
    He told me of the sheer contempt for public money that existed in his part of the NHS. To do operations, he said, all you needed was patients and a decent team of people. In addition, you needed a proper operating theatre and beds for recovery. Originally, you had one manager with whom you were on friendly terms.
    He went on to say that management has increased enormously and it is very inefficient, arrogant, unaccountable and destructive indeed and he explained in detail how this is the case. Committees have replaced the friendly manager and they do not care. They are also milking the system.
    I had the same experience with a farmer recently too. He owns his own farm which is a real family business. He also told me of the vast management structures that beset him. He singled out badgers which make his woodlands look “like the Somme”. A wall is actually falling over as they scramble into his property. If he shoots them – no grant.

    Touch these managers and the cries of “AUSTERITY” can be heard all over the country.

    • Lifelogic
      Posted November 27, 2015 at 7:39 am | Permalink

      Exactly what I hear from the NHS.

    • Paul
      Posted November 27, 2015 at 6:25 pm | Permalink

      For NHS read education, police and pretty much everything in the public sector. I have memory of an article by Mr Redwood here describing just the sort of behaviour you relate here.

      As a school governor, I’m infuriated by the amount of time wasted generated statistics for Central Government, OFSTED and the LEA that are utterly meaningless.

  5. JoeSoap
    Posted November 26, 2015 at 7:24 am | Permalink

    Nobody here is accusing your party in government of under-spending. Quite the reverse infact. You can of course get away with this because Labour would never complain about the over taxing and over spending which is happening. We need a strong right wing party in Parliament to counter all these tax and spend arguments which you seem to have been persuaded by.

    • Lifelogic
      Posted November 27, 2015 at 9:24 am | Permalink

      Indeed spending far too much, very incompetently on totally the wrong things.

  6. Antisthenes
    Posted November 26, 2015 at 7:25 am | Permalink

    The one liner about the comic Labour front bench was a cracker. It made me laugh. However mocking the afflicted is never a good idea and certainly in bad taste. Osborne it appears has staked everything on a forecast that economic growth and therefore tax revenues will rise considerably and do so far into the future. If this does not turn out to be the case as it may not then he may end up emulating Brown who spent like a man with no arms when he should have been more prudent. Brown did not eliminate boom and bust as he boasted and Osborne should take heed of that. A recession could be just around the corner. Global growth is falling which may impact on the UK economy and we all know there are unseen and unknowable factors at work that can tip a nation into recession. Just the fact that boom and bust go in cycles means that despite all efforts a recession is always inevitable.

    I hope Osborne has born this in mind and has a fall back plan to mitigate this event if it happens. If not and one comes along just before the next election the UK will be bereft of the fiscal means to reverse it and the Conservative’s popularity will plummet. This could mean that the country becomes insolvent and Jeremy Corbyn or someone not much better as Labour does not have any will be prime minister.

    Who will the UK turn to for help the EU if still a member and/or the IMF? The EU have their own problems and will only gloat at our misfortune despite their insistence that the UK help bail out the Euro-zone. The IMF this time does not have the financial muscle the UK economy is now too big.

    • oldtimer
      Posted November 26, 2015 at 9:30 pm | Permalink

      The IFC has pointed out that the largesse the Chancellor is now dispensing amounts to a paltry £4 billion a year – not much more than a rounding error vs £4 trillion. It apparently rests on a small recalculation of the yield achieved on taxes and an assumption of low interests for a longer period. Is the Governor of the Bank of England in the Chancellor`s pocket? He certainly owes him his job. It could easily all be reversed when the next OBR forecast is made. And then what? Osborne is little better than Brown as Chancellor – for no more boom or bust read running a surplus in four years time.

  7. JoeSoap
    Posted November 26, 2015 at 7:30 am | Permalink

    Yes and new taxes are nothing to celebrate. Yet another 0.5% tax on employment-for large companies at the moment but it will surely percolate down, just like the NEST, NI and all the other anti-employment taxes and laws. Business rates in the hands of local authorities so they can charge what they like to boost their pensions. Great.

    Why do we have to keep being put at a disadvantage to our competitors?

    • Lifelogic
      Posted November 26, 2015 at 6:24 pm | Permalink

      Exactly it will be a disaster to let local authorities loose to mug all their council tax payers and use it to fund their over pay & pensions.

  8. Roy Grainger
    Posted November 26, 2015 at 7:34 am | Permalink

    The OBR is rubbish at forecasting aren’t they, their current forecasts totally at odds with what they said just 4 months ago.

    • Leslie Singleton
      Posted November 26, 2015 at 6:38 pm | Permalink

      Roy–It’s not just the OBR–All forecasting is wrong (of course) especially five years out–For a so-calling-themselves Conservative Party to reverse policy on such flimsy and silly grounds is hard to believe. Would have thought it a given not to rely on interest rates staying so exceptionally low for much longer.

    • Vanessa
      Posted November 26, 2015 at 10:57 pm | Permalink

      The Met Office has got itself into a tangle. It reported that these HUGE storms were going to get so fierce as to cause HUGE damage. They didn’t.

      The Met Office is also keen on naming these HUGE storms even when they are just wind and rain !!!!!!

  9. Dame Rita Webb
    Posted November 26, 2015 at 7:55 am | Permalink

    Was it not one of the Marx Bros who said “Who are you going to believe me or your own eyes?”. In the last parliament Osborne failed to eliminate the deficit and at the sametime doubled the national debt. At the moment there are signs of deflation all over the place, the gap between state spending and revenue was the worst in October for six years and there is the potential for a rerun of the Crimean War (think what happens if Turkey bottles up Russia’s Black Sea fleet). JR are you supporting some sort of millenerian cult so is the Chancellor’s grip on reality?

  10. Denis Cooper
    Posted November 26, 2015 at 8:22 am | Permalink

    That figure of £4 trillion does put the minor tinkerings into perspective.

    However I think there’s a good chance we won’t get through the next four years without the onset of another global recession, and if that happens the public finances will still not be in a very good shape to withstand its damaging effects.

    I certainly think we’re unlikely to see the national debt significantly reduced in nominal terms, as by the time there’s any budget surplus available to pay down the debt we’ll at least be heading towards the next recession and back to deficits.

    I suppose it’s a matter of fingers crossed

  11. Lifelogic
    Posted November 26, 2015 at 8:27 am | Permalink

    Why the huge discrimination against people who rent their homes with the absurd extra stamp duty and other recent changes?

    More tax now likely from local authorities too and the poorly structured apprentice taxes, work place pensions all inflicting damage on industry.

    Yet more tax borrow and piss down the drain from Osborne. The man is a complete menace, his policies are the exact opposite of what is needed for higher wages and efficiency. Higher and higher taxes, higher minimum wages by law, more and more regulation, expensive religious energy, a bloated largely inept state sector, endless daft regulations and interference all damage industry and destroy jobs. Rendering them uncompetitive in World markets.

    He says he want a high wage economy, but his actions are for the complete opposite.

    • Bazman
      Posted November 26, 2015 at 7:31 pm | Permalink

      Explain how your free market no minimum wage nonsense will boast wages for cleaners? The largely inept state sector is very well used by the private sector to produce their profits and I see no mention in your posts about the fantastic amount pissed down the drain on rents to private landlords via the housing benefit system. A big reason for higher taxes.

      • Lifelogic
        Posted November 26, 2015 at 10:00 pm | Permalink

        It is not “pissed down the drain” it provided homes for them would you rather they slept on the streets? None of my tenants are on benefits anyway.

        • Bazman
          Posted November 26, 2015 at 10:26 pm | Permalink

          I would rather they are housed at minimum costs to the state and though your tenants are not on benefits they are paying through the nose due to the governments housing policy of massive subsidy to the private sector. The main reason that your business is so profitable.

          • Lifelogic
            Posted November 27, 2015 at 8:56 pm | Permalink

            Not at all they are paying the market rate. If they can find better they can and often do go.

          • Bazman
            Posted November 28, 2015 at 6:32 pm | Permalink

            The market rate is so high and climbing due to massive subsidy of the housing market. Rent never fall do they and any pressure made to landlords leads to threats of higher rents. ie passing the cost onto the customer. Try that in any other non captured business. £20 quid a pint as a pub landlord would see you being told to “drink it yourself” If you cannot understand this then there is no helping you.

        • Narrow Shoulders
          Posted November 27, 2015 at 8:31 am | Permalink

          @ll

          No doubt your rents reflect market rates which are distorted by those in receipt of housing benefit. You are profiting from taxpayer largesse albeit indirectly

          • Bazman
            Posted November 28, 2015 at 6:34 pm | Permalink

            Well lifelogic how do you answer this ‘sensible’ and logical point. You do not as if you try the game will be up. Fantasy dingbat nonsense.

        • Narrow Shoulders
          Posted November 27, 2015 at 8:35 am | Permalink

          @ll

          No doubt your rents reflect market rates which are distorted by those in receipt of housing benefit so you are profiting from taxpayer largesse albeit indirectly

      • libertarian
        Posted November 26, 2015 at 11:09 pm | Permalink

        Bazman

        “Explain how your free market no minimum wage nonsense will boast wages for cleaners?”

        Oh thats easy let me tell you. Before minimum wage households had to compete in an open market for cleaners who are in short supply. I know of families paying £9 per hour in home counties and £14 per hour in London and this was 6 or 7 years ago. Now we have a benchmark NMW. So everyone gets paid that instead, its called price fixing.

        I’ve told you so many times that the NMW is a disaster for low paid workers and a benefit to unscrupulous employers. You are just too dumb to work it out

        • Bazman
          Posted November 27, 2015 at 5:18 pm | Permalink

          If cleaners were in such short supply the NMW would be irrelevant and the employers would have to pay more, but the NMW has in some cases become the national maximum wage as you say. However without it you would have market of the poor undercutting each other in poverty areas. With newly arrived East Europeans working for next to nothing.The locals should compete, I presume, with this in your world? They would just not work and quite rightly so. This idea that the wages would rise due to competition at the bottom is for the birds and like most of your right wing drivel conveniently forgets why it was needed and implemented.

  12. Lifelogic
    Posted November 26, 2015 at 8:38 am | Permalink

    Why do the BBC constantly think that people like the great Guardian “thinker” Polly Toynbee and worse still the lefty, fake Tory Mathew Parris are a good choices to discuss Economic policy? Never any real criticism from the right of this left wing chancellor. Polly even thinks he is the most right wind one since the war!

    Almost never do the BBC find anyone to point out the truth that Osborne is an over Tax, over Borrow, over regulate and piss down the drain person to his very core. His main actions have been to increase taxes and burden on companies and individuals at every turn. Each tax increase on the private sector make higher wages less likely and destroys jobs and job availability. Then there is his blatant IHT promise ratting ratting and his continued pension mugging too.

    • Bazman
      Posted November 26, 2015 at 8:21 pm | Permalink

      If you went on any political forum or any forum for that matter your ding bat political and anti BBC views would be quite rightly ripped to shreds.
      The mainstay of your views and many Tories that if the markets are allowed to run rip then this will somehow increase the living standards and wages of the rest of us allow a massive scale back of the state and its services and in doing so allow everyone to pay less tax. As we have seen the wealth is not going to be shared, far from it causing the state to in fact have to expand to pay..Yes you have guessed it! Housing benefits and wages having to be topped up as millions would not be able to afford a place to live which is the most basic necessity. Accommodation always the main problem. A point I and many East Europeans recognise as a number one priority. I own my home outright. No Landlord or employer threats thanks. A problem for them not me. This shortage has then to be addressed by massive bills for the average person paying state sponsored Rigsby style landlords and short-term low wage employers for the pleasure. No mention of any of this in your repetitive ranting posts though. Why is this? What is your agenda. It is right wing religious extremist view of the world. That as long as these views have no effect on them personally are correct.
      No housing benefit, no tax credits, no NHS, tolls on everything, no minimum wage. No direct taxation and so on. You seriously think thsi would work. The UK would accept this. Nothing less would satisfy you. However you could not live under this regime could you. Bandit capitalism lime Russia as I have said none of you would last a day. Stop daydreaming whilst bleeding the state. It just wrong to hold such views.
      My point is how does you free market nonsense of tax cuts for the rich and their children help anyone other than themselves to further expand their wealth via tax and company laws that the rest have no chance of taking advantage of. That takeover just meant more work for less pay to the employee and jackpot capitalism for the banks and their private equity chums. Job stability? Get real!The poor use the state and so should pay continently forgetting that the rich use the state more but in general pay as a percentage of income less tax and often none. Some believe they should not have too. This too is just wrong.

  13. A.Sedgwick
    Posted November 26, 2015 at 8:42 am | Permalink

    Gordon Osborne strikes again – more complexity and the most unfair personal tax i.e Council Tax going up by probably 25% by 2020. Instead of correcting the nonsense of tax credits over the last five years he has now endorsed it.

  14. Iain gill
    Posted November 26, 2015 at 8:44 am | Permalink

    John, you are a blairite labour mp in all but name now. Borrow, spend, devaluation of the currency, making ever more people dependant on state rationed service and funds.

    Immigration out of control, spending out of control small clique with no real world experience running things.

    Absolutely pointless saving, house prices hyping, lots of manipulation to give handouts to chosen demographics while those earning a few quid more are shafted.

    I’m surprised you can keep a straight face.

  15. Ajay Gajree
    Posted November 26, 2015 at 8:48 am | Permalink

    I am finally switching to UKIP having voted Conservative my whole life. This year alone I have been battered by this Government by the Buy to Let Mortgage Relief withdrawal, the Dividend Tax and now a penal 3% hike in Stamp Duty on second homes. Mr Osborne stated no new taxes? Any comment on that Mr Redwood? Mr Osborne has killed Aspiration.

    • Chris
      Posted November 26, 2015 at 7:21 pm | Permalink

      Well done, AG. Your sentiments are mine. There comes a time when action has to be taken. I always was a Conservative supporter, but David Cameron is no Conservative.

    • Jon
      Posted November 26, 2015 at 7:29 pm | Permalink

      Hi Ajay I’m not sure he has killed aspiration as you say as aspiration depends where you start.

      For instance for many young people an aspiration would be to own a home which this could help.

      Much of the older generation saw easy money with property price increases due to population rises. A large number are sitting on properties with large asset values. I’m not sure that there is a lot of aspirational desire there, it was just a generational easy money opportunity.

      I think aspiration is for the young Ajay. I see clever young ones earning more than me not able to live where I live, not able to sometimes even to buy, just rent and see that money each month go.

      I still have maybe 10 to 15 years of work in London before I retire, aspiration is for the young. The Chancellor didn’t kill it he gave the next generation hope. If you are not satisfied with your lot then maybe its not something a chancellor can solve?

    • JoeSoap
      Posted November 26, 2015 at 9:03 pm | Permalink

      What? You don’t think £9 an hour is a reasonable pay rate for just turning up with no qualifications and doing a pick and place job?
      + NEST+Ni ers+Apprentice levy + Business rates for working space of course
      Tough to justify against any competition let alone Far Eastern

  16. Ian wragg
    Posted November 26, 2015 at 8:54 am | Permalink

    Why is the taxpayer giving money to private developers to build houses for sale at a discount.
    Who’s going to buy these houses. etc ed
    How are we going to be a high wage economy when you import 600,000 foreigners annually to depress wages.
    Tax revenues are down and another million people in work.
    Policies of the mad house

    Is this the Tories last hurrah.

  17. Iain Moore
    Posted November 26, 2015 at 9:05 am | Permalink

    “I agree with the strategy of boosting pay through working smarter and paying more for more output.”

    Why should employers invest in productivity while they have unlimited immigration?

  18. Brian Tomkinson
    Posted November 26, 2015 at 9:10 am | Permalink

    JR: “We need to remember that the government’s strategy has always been to sustain public spending, and to get the deficit down with a huge increase in tax revenue.”
    To your credit you are the only Conservative MP I have heard stating this stark fact. All the others, led by your leader and Chancellor, continue to play the austerity pretence game. The mendacity of politicians and therby treating us as fools is a most annoying trait.
    Tax, borrow and spend should be your party’s mantra. No wonder Labour has veered to the hard left with Corbyn and McDonnell, they see that your party has moved so far in their direction.
    As I commented yesterday, it will be revealing to see what figures the OBR conjure up for the next budget and how accurate their present forecasts prove to be.

  19. Pete
    Posted November 26, 2015 at 9:13 am | Permalink

    The ever increasing budget is necessary because the amount needed to bribe the electorate into accepting the declining standard of living and decreasing freedom goes up exponentially. Add to that the cost of financing the terror networs required to frighten the sheeple and you get a bad situation for the elites. The costs of a police state are very high.

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

    There are economist that reckon the OBR should become a fiscal watchdog rather than just a forecaster. Yesterday the Chancellor turned it into his whipping boy. A very dodgy forecast from nineteen guys, ex Treasury civil servants, came up with a forecast that the other 5,000 civil servants at the Treasury and the BoE didn’t see.

    If you get a chance, have a read of the “Economic and fiscal outlook November 2015” from the OBR. Particularly “the current account balance”, page 80; and, “sectoral net lending” on page 81. Osborne’s surplus is dependant on “unprecedented” levels of private debt. The March-of-the-Makers all having fell in a ditch just outside the northern powerhouse.

    The OBR uses the word “unprecedented” twice in the document at; “3.106 Available historical data suggest that this persistent and relatively large household deficit would be unprecedented. This may be consistent with the unprecedented scale of the ongoing fiscal consolidation [that means AUSTERITY to you and me JR] and market expectations for monetary policy to remain extremely accommodative over the next five years.”

    Naturally, if the forecast goes mammaries up, the OBR gets the blame, not the politicians.
    http://budgetresponsibility.org.uk/economic-fiscal-outlook-november-2015/

  21. Alan Wheatley
    Posted November 26, 2015 at 9:31 am | Permalink

    I have never liked the term “affordable homes”. It has the outer veneer of something of merit and the inner truth of a meaningless slogan. Everything that is for sale will be affordable to some and unaffordable to others.

    While I agree with the principle that home ownership is an inherently good thing, at least for most if not all, the accompanying measures taken to make a cheaper house are not inherently good.

    As I understand it from what I have read elsewhere, energy efficiency standards have been relaxed. So at one and the same time there is environmental pressure to improve the energy efficiency of our existing housing stock and creating new houses that will need revisiting to bring them up to the desired standards.

    There is a similar situation with broadband. I believe it is universally agreed that the best broadband technology is Fibre to the Premises (FTTP) and that policy was to be that this would be required in all new builds. But I do not think this sensible policy has been carried through.

    So, cheap in the short term, and someone else problem the long term.

    • stred
      Posted November 27, 2015 at 7:37 am | Permalink

      The energy regulations for new housing are already require high standards of insulation and draught control. The latest standards would have required a step further which would have been very difficult and expensive, the big housebuilders are heard by government.

      However, the real problem is the very poor standards of insulation and draught control in existing older housing, which makes up the largest part of the housing stock. Here the Green Deal was set with standards too high to fit the thickness of insulation inside already small rooms and the fitting had to be done under government control limited to specialists who had paid to be licensed. As a result it would cost a householder around £10k to do a job which at lower but effective standards might be a quarter of the price. The Green Deal would not provide an economical payback and so only households qualifying for a very large grant could afford it.

      I have just finished insulating a my house, started before the new regs came in, using a multifoil which LAs will not accept, and improved insulation by a factor of 4.4. The house is warm, there is no condensation and bills are low. It cost under £500 as a DIY job but would not comply with current regulations. Government policy is preventing us from taking measures to stop us suffering from fuel poverty and hypothermia.

  22. bigneil
    Posted November 26, 2015 at 9:34 am | Permalink

    Having read that the NHS is going to be given more money can we assume that is to be used for the treatment of SOME of the flood of people who have come here and contributed NOTHING – but are apparently entitled to everything that the taxpayer provides? how long does the elite think we can carry on taking in what can only be a drain – and nothing else? The d0-gooders claim these people are coming to work – why should they when everything is provided – for free.
    Keep spending/throwing millions at something that does no good whatsoever. You may as well spend it on ashtrays for motorcycles.

  23. alan Wheatley
    Posted November 26, 2015 at 9:36 am | Permalink

    Is the “apprenticeship levy on business” a rise in Corporation Tax by another name?

    • Leslie Singleton
      Posted November 26, 2015 at 6:45 pm | Permalink

      alan–I’m with you on not understanding–I had (vaguely) thought that the Government was paying employers to take on apprentices–Or is the levy what employers who do not take on apprentices have to pay to fund (via the Government) those that do? Education welcome as so often.

      • JoeSoap
        Posted November 26, 2015 at 9:10 pm | Permalink

        No, it is a subset of the University Academics racket-you create a conspiracy between teachers being paid from taxes, “apprentices” who for their first year learn “Functional skills” (look up what that means; it is depressing to think anyone above 5 years of age doesn’t already have those), and the government who has a lower unemployment rate as a consequence.

    • JoeSoap
      Posted November 26, 2015 at 7:39 pm | Permalink

      Not at all, it is a tax on employment not profit.
      The logical answer for larger companies is to make 1 in 200 employees redundant and tell the remainder they need to train and up their game an extra 0.5% to make up for the 1 lost.

  24. Graham
    Posted November 26, 2015 at 10:18 am | Permalink

    Hope all those new houses will be cheap enough for all those economic migrants to afford (after tax credits of course)

    Joined up thinking – forget it

  25. Tad Davison
    Posted November 26, 2015 at 10:19 am | Permalink

    Foreign aid budgets need to be looked at. I wonder who it is that promises to give away our money to all and sundry, when there are so many needy people and good causes right here at home?

    Tad Davison

    Cambridge

    • Know-Dice
      Posted November 26, 2015 at 7:03 pm | Permalink

      Especially when WE have to borrow the money in the first place….

  26. Vanessa
    Posted November 26, 2015 at 10:29 am | Permalink

    I thought I was listening to a Labour government yesterday: this is NOT a tory budget.

    Our debt is 500% of GDP (nearing the Weimar Republic!) and Osborne is spending trillions on “give-aways” which he does not have. The man is mad, or stupid, or without any understanding of history and where we are headed. When the banks collapse and we have a sterling crisis and the whole of our society comes crashing down (oh, and no electricity) he will be to blame as the man without any courage to put this country on the road to repair.

    Who does he listen to for his advice? Gordon Brown?

    • Lifelogic
      Posted November 26, 2015 at 8:06 pm | Permalink

      A huge wasted opportunity, just as bad as it was under the dreadful coalition or even Brown. Tax borrow, waste and over regulate everything . This while driving the rich away and letting anyone in regardless of merit.

  27. Anonymous
    Posted November 26, 2015 at 10:58 am | Permalink

    Unless we’re selling bricks abroad those kilns will be paid for out of ever increasing welfare.

    The national debt is increasing.

    Politicians lie about the danger of policy but the maths don’t.

    • Vanessa
      Posted November 26, 2015 at 11:00 pm | Permalink

      Whatever happened to the boast that they would “mend the roof while the sun shone” ? Something which was missing from the last labour lot and now also missing from these “tories”.

  28. English Pensioner
    Posted November 26, 2015 at 11:00 am | Permalink

    Surely if it was right for the Chancellor to cut tax credits last March, it is right to cut them now; what has happened in that time other than Labour making a fuss?
    We are told that this can be afforded because we will be paying less interest on our debts. Years ago when interest rates were cut for my mortgage, I continued to pay the same amount each month as so reduced my loan, which was then paid off over a far shorter period. But it seems that the Chancellor is only not paying of our debts, but spending the money which might have contributed to their reduction and actually still borrowing more. And this is regarded as a success!

  29. Denis Cooper
    Posted November 26, 2015 at 11:03 am | Permalink

    Yesterday afternoon Ian Wragg pointed out that the government’s economic and financial forecasts appear to be contingent upon the unabated continuation of mass immigration, to which I submitted a reply earlier this morning starting:

    “For more than two decades successive governments have been running a kind of demographic Ponzi scheme to try to get themselves out of financial difficulties of their own making.”

    Now the ONS have published a very useful interactive graphic:

    http://www.neighbourhood.statistics.gov.uk/HTMLDocs/dvc123/index.html

    which inter alia shows that this was accurate, it has been “for more than two decades”.

    Despite constant attempts to lay the blame entirely at the door of Blair and the Labour government in fact immigration started to lift off under the Major government.

    It’s worth moving the line back to 1993, unless otherwise stated all numbers being in thousands of people:

    Immigration 266
    Emigration 266
    Net migration -1

    Population 57.7 million.

    IN Top countries of last residence:

    Germany 24
    Australia 22
    USA 22

    OUT Top countries of next residence:

    USA 35
    Australia 32
    Germany 16

    Then move it back to 2014 and see where we are now.

    This is our national birthright being shared out to millions of foreigners not only without asking us but quite deliberately in direct opposition to what the great majority of the citizens are well known to want; and our government thinks it would be a good idea to use armed force try to establish democracy in other countries when its own conduct at home is so blatantly undemocratic?

    • oldtimer
      Posted November 27, 2015 at 10:44 am | Permalink

      Thanks for the link. That is a brilliant chart.

  30. Kenneth
    Posted November 26, 2015 at 11:04 am | Permalink

    The coalition had a golden opportunity to drastically reduce spending when it came into power. It bottled it. The next chance was when the Conservatives won a majority this year. Once again the Autumn Statement confirms that the government bottled it.

    Instead of early and severe cuts followed by strong growth we have had no cuts and lacklustre growth.

    Instead of BBC outrage being concentrated on one event, there will now be the slow attrition of popularity as each attempt to reign back spending will bring anti-Conservative BBC propaganda.

    The Chancellor could have been the hero who put the rabbit in the hat and then pulled it out again. Instead, the bad news stories that will flow over the coming years will mean he is unlikely to be PM

  31. Bert Young
    Posted November 26, 2015 at 11:08 am | Permalink

    There may be some benefits from the Autumn Statement – but if there are I , frankly , don’t see them . Osborne is playing the ” I am the nice guy game ” and has turned his back on what were his objectives a couple of months ago of getting this country out of a financial straight jacket . I am not hot stuff on economic maths but whichever way I look at the sums , we still end up spending more than we receive . So , why the “U” turn other than to enhance his goal of getting into No. 10 ?

    The view that Osborne is playing the popularity stakes is not just mine , today Peter Oborne and Max Hastings both read his approach this way . Up to now I have admired the way Osborne was tackling the economy – focussing on the National Debt and a determination to make sure costs were controlled and income outweighed expenditure ; this has suddenly all gone for a Burton for what can be no more than cheap ambition . Thank goodness there is still Theresa May .

  32. CdBrux
    Posted November 26, 2015 at 11:11 am | Permalink

    Rather suprisingly, given the housing shoertage and, what you would think should be decent money available to housebuilders and their employees, one of the contraints mentioned by housebuilding firms at the moment is a lack of suitably skilled people to actually build these things!

    So it’s all very well creating conditions, boosting demand etc… (and I still don’t get how giving away assets at less than market price is right) but if we cannot actually build the things because of a labour shortage then this should be a golden opportunity to tackle the unemployment figures by incentivising people to get trained. The jobs are there!

  33. adams
    Posted November 26, 2015 at 11:17 am | Permalink

    Have you seen the latest immigration figures John ? Mr “no ifs no buts” still enjoying your support I assume ? Please enlighten me and tell me what actually an affordable home is in Britain 2015 .

  34. ian
    Posted November 26, 2015 at 11:52 am | Permalink

    As you john have a big say on what go into the government budget as you have told us on this blog over the years I am withdrawing all complaints that I have ever made on this site.

  35. Lifelogic
    Posted November 26, 2015 at 12:29 pm | Permalink

    I see that the sound Alastair Heath has said:

    “Mr Osborne is a formidable politician. But he is being too cautious: instead of giving up on austerity, he should have used the Labour Party’s implosion to go further and faster in shrinking and remodelling the British state. I fear that a once-in-a-generation opportunity is being squandered.”

    It is indeed being squandered the country will regret it. But Osborne is certainly not “a formidable politician”. In the end it is not childish political gimmicks that count but sensible & sound policies. He is delivering over taxation, over borrowing and endless waste, he is chasing the rich abroad and importing many people who will be liabilities to the state. On top of that he is delivering over complex taxation, over regulation, IHT ratting, pension mugging and other entirely misguided policies such as the Nation Minimum Wage, the apprentice scheme, the absurdly structured work place pensions, HS2/3, daft employment laws, expensive energy, dysfunctional banks ….. the lunacy and misguided intervention is endless.

    Could you please tell him that taxes on landlords just give increased rents for tenants (and decreased supply of property to rent), taxes on banks end up as taxes on bank customers and businesses. The minimum wage give businesses less to pay others or to invest in productivity and new jobs. As he seems to be too dim to understand this. The Tories would be very foolish to elect Osborne as the next leader, even in the absence on any opposition. He will be far too unpopular. He is banking on no return to bust we shall see.

  36. CHRISTOPHER HOUSTON
    Posted November 26, 2015 at 12:51 pm | Permalink

    Off topic : Rt Hon David Cameron PM Syria Statement:

    Mr Cameron’s Conservative Party domestic economic policy as an ideology is getting in the way of thought.

    He says Raqqah is the Headquarters of Islamic State and feels bombing should drive them out.

    Although Islamic terrorists may indeed have followed the Conservative leadership and taken out mortgages to buy their own homes resulting in their still unpaid-for properties being in negative equity, it is nevertheless unlikely they will not flit to a few miles down the road in advance of RAF bombing minus of course the support of our allies of Canada and Australia and, through a third agent rent out their homes to the Syrian Free Army who Mr Cameron has created in their thousands at the click of his fingers.

    Unfortunately Mr Cameron did not answer an MPs question as to NAMES: the leader (s ) of this fantastical Syrian Free Army.
    It is essential , in my view, that Mr Cameron thinks up some names so they can be contacted through the aforementioned third party housing estate agent to warn those Free Syrian Army potential renters and their families that the properties being offered could very well be subject to Acts of God. which will not be covered by their normal household insurance.

    • Gary
      Posted November 27, 2015 at 9:50 am | Permalink

      It’s obvious from Hammond’s reply to Skinner that this govts support of bombing ISIS will be nothing of the sort, more like an attempt to run interference on Russia’s bombing of ISIS. When Skinner accused Hammond of supporting ISIS due to the govts support of (one of) ISIS enablers Turkey, Hammond replied by not answering the question and accusing Skinner of being a Russia appeaser. Ie. the clear msg was that Turkey is good and the bombers of ISIS are bad, IOW the govt supports ISIS ! And watch the Westminster ignoramuses vote for the bombing of Syria. What a desperate tangle this govt is in. From bitter experience, you cannot believe a word they(or their predecessors) say. How’s that deficit going ?

  37. graham1946
    Posted November 26, 2015 at 1:10 pm | Permalink

    I don’t like the idea of spending taxes that have not yet been raised. Is there a difference between that and running a credit card you can’t pay back, hoping for a better job or that the boss will give you a raise? What happens if the economy doesn’t perform as expected, or indeed if there is another recession which is quite possible with the state of world trade? The government will be forced to increase taxes far higher than necessary to cover the new debt as well as the old and I can foresee a time when they start to confiscate money.

    Far better to have a budget that spends within the current tax take and can increase if the economy does better. The current way seems to be the wrong way round. I have heard it said that government budgets are not the same as household ones and can be run differently, but I have my doubts that the geniuses in the Treasury can avoid the laws of mathematics, even if they do fiddle the figures and print money.

    I wonder why the Chancellor takes the risk now, early in the parliament, when if it all goes wrong, the pain will be greater and at the end. Does he think CMD is going soon and he can step in? Maybe he sees Corbyn as unelectable, but that’s dangerous too – he will be got rid of, probably within a year and even though there are no decent successors, if George crashes the economy again, that won’t matter.

    Lets hope that George gets his books balanced before the next crash, but I doubt even that will do any good – the debt is so vast that it is unpayable. We are skating on very thin ice.

  38. petermartin2001
    Posted November 26, 2015 at 2:09 pm | Permalink

    We need to remember that the government’s strategy has always been to sustain public spending, and to get the deficit down with a huge increase in tax revenue…… ……..from growth in the economy.

    This is the problem. You can’t take money (you mentioned a figure of over £100 billion pa in extra taxes in your last blog) from the economy and expect it to grow. We’ll end up with the most enormous slump.

    Austerity economics isn’t just about the level of government spending. If government spending is too low, sure, we can have austerity. But, if taxes are too high, we can also have austerity. Those high taxes take money from the economy slowing it down and lead to high levels of unemployment and underemployment.

    The word deficit sounds bad. But in the context of a government deficit it means there is a net inflow of money from the government into the economy. There is also a current account deficit, which you think I’m confused about, but that is a net outflow of money into the coffers of the big exporters.

    There has to be at least one inflow. At the moment there is. From government. But under government plans there will be two outflows! Trying to achieve the impossible is dangerous. It will just lead to a crash and a very depressed economy.

    • Edward2
      Posted November 26, 2015 at 10:02 pm | Permalink

      How did the economy recently grow and at the same time reduce unemployment if your theory is correct?

      • petermartin2001
        Posted November 27, 2015 at 3:00 am | Permalink

        Edward2,

        An economy can grow when there is a demand for products produced in the economy backed up by an ability and willingness to pay for them. This can occur in three ways:

        1) Through the sale of exports. If exports are greater than imports there is a supply of overseas money to create growth. The disadvantages are that there is a real cost to being a net exporter. The net real wealth produced is consumed by others. Not all countries can be net exporters. Exports and Imports do have to balance worldwide. Penny for penny.

        2) Through direct government spending into the economy. This works spectacularly well in wartime! In peacetime, governments tend to fret more about their deficits. These deficits can of course cause inflation if they are overdone .

        3) By encouraging additional borrowing in the economy. This way the government doesn’t have to assume any additional debt and there doesn’t have to be any extra exports sales. The disadvantages are that the stimulus only works for a short period. The level of private debt accumulates in the economy and is deflationary. This can be fixed by encouraging yet more private debt , usually by reducing interest rates.
        The disadvantage is that interest rates end up at close to zero, asset prices (stocks and property) become way overvalued, and a sharp correction can bring about a economic crash as we saw in 2008. And probably will see again in the next couple of years.

        So, to answer your question, I would say a mixture of 2 and 3,

        • Edward2
          Posted November 27, 2015 at 6:57 pm | Permalink

          You concentrate only on Government spending but ignore the hundreds of billions of individuals all going about in the world working,buying, selling, investing and saving.
          Even the most controlling dictatorships cannot account for every penny their citizens use and exchange.

          Wealth can created by individuals and that is how the world has become better off over the last century despite rather than because of State involvement.
          And what of bartering in your penny for penny balancing world?
          Its a novel theory but its defeated by human behaviour which cannot be watched and counted as you claim.
          I still think you confuse money creation like QE and printing with the central banks just issuing sufficient notes and coins into circulation for people to use.

  39. ian
    Posted November 26, 2015 at 2:29 pm | Permalink

    Good to see the government is going to bring in small modular nuclear reactors maybe a bit late but better late than never, in fact they are ready to go now and have been for the last 2 years, What they are is small nuclear reactors that are left underground and generate electric for 60 to 70 years with no maintenance and when finished with they stay in the ground forever.
    They say there is a problem with them but the only problem with them is other companies don’t want them.

    • Leslie Singleton
      Posted November 26, 2015 at 6:49 pm | Permalink

      ian–They have always seemed a jolly good idea to me–No doubt there are differences but are there not small reactors on nuclear submarines?

    • Mark
      Posted November 27, 2015 at 10:26 am | Permalink

      The problem is that they are still rather expensive. It’s one thing when you have no real choice, such as in powering a nuclear submarine, but quite another when there are much cheaper sources of power available, such as coal and gas fired power stations. When Rolls Royce were quizzed by the Energy and Climate Change Select Committee they could offer no guarantee that costs would come down sufficiently to make them fully competitive, even under volume production.

  40. Know-Dice
    Posted November 26, 2015 at 2:35 pm | Permalink

    What about reducing the National debt, especially the interest payments this attracts – may be spend that on some thing useful…

    400,000 new houses by 2020 how does that deal with net inwards migration of over 300,000 every year?

    • Leslie Singleton
      Posted November 26, 2015 at 6:51 pm | Permalink

      They have decided that the Debt doesn’t matter because the OBR reckons interest rates will stay low.

  41. A different Simon
    Posted November 26, 2015 at 3:33 pm | Permalink

    What is all this about the introduction of digital tax accounts and compulsion for the self employed to update them at least quarterly ?

    This looks like yet another intrusive imposition by big brother .

    There is nothing even remotely Conservative about this Govt .

    Sooner Cameron and Osborne are out the way the better and I’m past caring how that happens .

  42. Iain Gill
    Posted November 26, 2015 at 5:42 pm | Permalink

    Now we have so many cliff faces in the tax, benefits, and various social perks available (from free school meals to subsidised housing and so much more). Why should someone on 79 K income be entitled to a subsidised “part buy part rent” house, but someone on 81 K is earning too much? As in so many other parts of the system you are incentivising people to work less and earn less. Its madness sheer madness. If you are going to throw state largess around like confetti I don’t see why someone on 81 K who has, for instance, been forced to move frequently for work and been unable to buy, or has to pay a large amount of his money in divorce payments, should be excluded from access. But it just shows the ridiculous arbitrary nature of the way we have top down mandarin selected favoured people given favours.
    The whole economy is turning into a corrupt system where favours and services are given out on the say so of public servants and no control or buying power at all in the citizens hands. Just like social housing allocation, school allocation, just like access to NHS treatments. Is this really where we are aiming the country?
    The tax and benefits, and associated perks, need a radical simplification to reduce admin costs and incentivise people to work hard, and we need to hand power over to citizens so that they have buying power and the mandarins dance to their buying decisions and not the other way around.
    No news on the obvious issues like the sink estates left behind when old large employers shut, why are we continuing to subsidise such estates instead of helping people move closer to the modern jobs market? Making people turn up more often to sign on is a joke in areas where there are simply no jobs and folk are tied to their social housing.

  43. Bob
    Posted November 26, 2015 at 8:07 pm | Permalink

    Am I right in thinking that Mr Cameron wants to bomb both sides in the Syrian civil war?

    Why is he suggesting that doing nothing is the only alternative to dropping bombs?
    It has to be said that the EU’s problem with terrorism was completely self inflicted, and perhaps the troops would be better employed patrolling the EU’s external borders than adding to the confusion, death and destruction which already abounds in Syria.

    There must be a better way than blowing up ageing pick-up trucks with Tornado jets and Brimstone missiles at £100,000 a pop (and that doesn’t even include the maintenance and running costs of the planes)!

    • Vanessa
      Posted November 26, 2015 at 11:10 pm | Permalink

      With so many sides joining in – Turkey, Russia, USA, etc. – you can just imagine the disasters with “friendly fire”. How on earth are they all supposed to recognise which side they are all on?

      • A different Simon
        Posted November 27, 2015 at 12:34 pm | Permalink

        Cameron and Osborne are doing more damage to Britain than Islamic State could ever dream of .

        This is turning out to be just like Blair’s second term .

        Is there any way they could be impeached ?

    • Denis Cooper
      Posted November 27, 2015 at 8:54 am | Permalink

      That rather depends on who is in the truck, doesn’t it?

    • The Prangwizard
      Posted November 27, 2015 at 10:12 am | Permalink

      No-one should imagine that the UK’s forces will make much difference, Cameron is trying to plays soldiers with the big boys. We only have about half a dozen old planes out there. He likes to talk big but having severely weakened us, the stick he carries is only made of balsa wood.

      Weakness has been his policy – wasting billions on overseas aid is what he prefers, he’s a rich boy and needs us to think he cares about all those poor people out there.

    • stred
      Posted November 27, 2015 at 1:44 pm | Permalink

      The Russians seem to be doing a lot more than the RAF to knacker ISOIL. Perhaps we coud get more bang for the £ buy paying for some of their raids using the foreign aid budget. Even if we use the £100k jobs in Syria they are still flogging oil out of Iraq, wher not much has been done. Maybe charter a few Russian planeloads over there too?

  44. Chris S
    Posted November 27, 2015 at 5:23 pm | Permalink

    Interests rates have got to be kept low as many home owners and BTL landlords have mortgages with very high variable rates when their discount or fixed rate ends after 2-5 years.

    Since interest rates fell to their current level, lenders have cynically offered very low fixed and discounted rates on terms of 2 – 10 years but on the expiry of the initial period the “standard variable rate” is now typically 3 % or even 4 % over bank rate.

    Before the recession, The SVR was normally between 0.5% and 1.25% over base rate.

    When interest rates rise to, maybe 2% -3%, millions of borrowers will face paying rates of
    5% or more on loans that were granted at 5-6 times income. A high proportion of these unfortunate home owners will find that they cannot remortgage onto a better deal thanks to the government-inspired tightening of mortgage criteria.

    Furthermore, many BTL landlords in this position will get an even more unpleasant shock when they try to sell and discover that they are actually well into negative equity when the very high rate of CGT is added to their mortgage debt.

    The only solution to these unfortunate people is for interest rates to remain low and house prices to continue an upward trend. Anything that prevents this from happening will unleash a new financial crisis in the housing market and a very high rate of repossessions.

    • stred
      Posted November 28, 2015 at 10:19 am | Permalink

      Exactly. If you have more than 40% borrowing in BTL, get out now. Even if you have no borrowing but have made relatively small capital gains it is also a good time to sell.

  45. Mark Doel
    Posted November 27, 2015 at 6:41 pm | Permalink

    The big starting point is how much the UK currently has financially. At present it has around £1.8 trillion (and according to UK Public spending website) followed by £1.9 trillion in 2016. So let’s round that to £2 trillion. Current public spending is £748 billion or 41% of GDP. In 2016 it will be £760 billion or 40% of GDP. So if we assume a 1 percentage point decrease in the amount government spends as a proportion of GDP, then in 2020 we’ll be spending 36% of national income, and assuming that national income is rising by a factor of £100 billion a year, then with around £2.4 trillion, government would be spending around £840 billion by 2020.
    The deficit which should be measured more in percentage terms. Even if we stuck with 2015’s £80 billion figure by 2020’s spending it would account for a mere 1% of GDP. Currently it accounts for roughly 4% of GDP. So much like spending, the deficit should be as a share of GDP not pounds and pence.
    We should remember that it is ultimately economic growth which enables the government to raise revenues. I will not say that the private sector is wholly responsible for wealth creation being that public corporations such as Channel 4 raise much of their revenue via commercial means.
    What is needed is a vision of the type of society we want to have by 2020. For me it is a dynamic capitalist economy, a socially mobile population and a decent safety net. The type of state which a Tory or Labour moderate or a Liberal Democrat might want.

    We should take into account how much business can afford to pay a workforce. Lower business taxes and remove unnecessary regulation.
    In fact we should have lower taxes across the board and greater freedom.

  46. Mike Wilson
    Posted November 28, 2015 at 1:05 am | Permalink

    The plan, clearly, is to increase state spending just enough to stop everything falling over (with no real attempt to cut unnecessry spending or remove waste) and to grow the population by 4 or 5 million over the next 10 years in the hope that tax revenues will go up faster than public spending.

    That is it. That is the plan.

  • 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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