My contribution to the debate on the Budget, 16 March

John Redwood (Wokingham) (Con):
I support the main measures in the Budget, and the thrust of the Budget statement. I strongly welcome the tax reductions. I am very pleased that the Chancellor is making progress in implementing our promises to take more people out of income tax altogether, and to take people out of 40% tax when they are on relatively modest incomes in comparison with the costs of housing and living in many parts of the country. The more progress we can make in that regard, the better.

I am delighted that I, and others, made representations on behalf of the North Sea oil industry, that those representations have been well heard, and that substantial changes have been made. It is important for us to do all that we can to give that industry, which has been hit by the very low oil price, some momentum and some hope for the future. I am also very pleased about the capital gains tax changes, because I have campaigned for them for some time. I think we will find that they bring in more revenue, not less.

It is interesting to read the forecast in the Red Book that, by 2019-20, there will be a substantial increase in revenues from CGT at the lower rate, but there will be a period of no increases for two or three years. I find that a surprising profile, and I think it draws attention to an underlying problem. I do not think that the economic models and the tax forecasting system used by the Office for Budget Responsibility are fit for purpose. The OBR was obviously very wrong about the impact of the reduction in the 50p rate to 45p: there was a big surge in revenues which was not in the original forecast figures.

This is the background against which we meet today. Many of the changes that the Chancellor has had to make are simply a result of the OBR changing its mind over the very short period between the autumn statement and today, and deciding that the economic outlook is not as good as it thought it was at the end of last year. We have to ask why it has reached that conclusion.

John Pugh (Southport) (LD): Does the right hon. Gentleman think that the OBR has been any better at predicting the economy than the Treasury was before?

John Redwood: I do not think that there is very much difference. All economic forecasters experience difficulties in getting their forecasts right, but some of us are more humble about our expectations than these official forecasters. I think that the danger of having an official forecast is that too much credibility is given to it, and big decisions are then made on the back of it. When official forecasters are zinging the forecasts around every three or four months, it becomes difficult for any Chancellor to run a stable medium-term policy involving, for example, important spending items that matter a great deal to our constituents.
I urge the Chancellor to be a little more sceptical about the wisdom and virtue of the OBR forecasts. The one thing of which we can be sure is that, over the period during which we have had the OBR, it has always been wrong, but what is stunning is the degree of the error. The OBR itself kindly points that out to us on page 234 of its very readable book, saying that, on average, it has revised the underlying borrowing forecast by £46 billion for the review period in question on each occasion. Given that the figure is an average, it is clear that the forecast revision has been considerably higher. The OBR tends to make its biggest revisions in autumn statements, but it has given us quite a whopper on this occasion. When a Chancellor must face a £46 billion revision every time he has to do the sums, it makes the task of stable economic management much more difficult. This is one of those instances in which an idea that was intended to produce more stability has proved to be destabilising.

The same can be said, I am afraid, of the current Governor of the Bank of England. The Governor of the Bank of England is meant to provide stability and wisdom, but we have now heard four different mantras from this Governor about when interest rates are going to rise. That is a very important statistic, which informs the forecasts of the OBR.

First of all, the Governor said that interest rates would probably go up when unemployment fell below 7%. When it tumbled rapidly below 7%, the Governor changed his mind. I am glad that he did, but the fact remains that he changed his mind. He then said that when real wages started to go up, interest rates would probably go up as well, and I am pleased to say that almost as soon as he had said it, they started to go up. Then he changed his mind, in that he had apparently not meant what he said.

The Governor then said that the turn of the year, 2015-16, would be a witching hour, when interest rates might have to go up. Well, we roared through the end of the year and the beginning of the new year, and they did not go up. Again, I was pleased about that, because I think it might have been unhelpful if they had. However, that shows that people and institutions who should be good at providing stability can be very destabilising and very misleading, and it is all noise that the Chancellor has to deal with.

The one good thing about all this is that when these ridiculous forecasts are made by the OBR and the Governor of the Bank of England that we would be worse off if we left the European Union, we can completely ignore them. We know that those people are always wrong about the things in which they are meant to specialise, so why should we believe what they say about something that is more important?

Graham Jones (Hyndburn) (Lab): Will the right hon. Gentleman illuminate us on the section of the Chancellor’s speech that dealt with the European Union? Will he share his thoughts with us?

John Redwood: I think that I am doing that now. The Chancellor quoted the OBR, and the one thing that I disagreed with profoundly in a very good Budget was the OBR’s forecast on what would happen with Brexit. [Laughter.] It is not funny. Labour Members might learn something if they listened. They have obviously closed their ears to any idea that an independent Britain could be rich, prosperous and free, but many of us think that we will be more rich, prosperous and free if we leave the EU.

Sammy Wilson (East Antrim) (DUP): Will the right hon. Gentleman give way?

John Redwood: I want to develop the argument a little more. As has already been pointed out, the forecast contains very worrying figures about the balance of payments deficit. And of course, were we to leave the EU, we would immediately have £10 billion at our disposal that we would no longer have to send abroad to be spent in rich countries on the continent. That is the net amount that goes to the continent. So our balance of payments would immediately improve by £10 billion a year if we did not have to make those contributions.

To cheer up Opposition Members even more, and to get them to change their vote, I can tell them that we and they would have the pleasure of spending £10 billion a year more in our own country—[Laughter.] Why is that funny? Why should not British taxpayers who have to pay £10 billion not have the advantage of spending it on things that they want instead of it being spent on new roads in France or Spain? I think my taxpayers want it to be spent here. That £10 billion a year could more than banish the austerity that Opposition Members claim has done some damage to our country. Looking at the figures, we can see that real public spending has gone up all the time under the coalition and the Conservative Government, but not by as much as it went up under previous Governments. If we had that £10 billion back to spend in the United Kingdom, we would have a better profile on public spending and on tax reductions.

Neil Carmichael (Stroud) (Con): Can my right hon. Friend be sure that any figure he quotes is accurate, given that he has just rubbished the OBR and the Bank of England? Presumably he has a list of other British institutions to which he would give the same treatment.

John Redwood: But of course. I have checked the Government’s very own net contribution figures, and it is very likely that they have got those figures right, because even the Government can count how much they have spent and how much they have had to give away to the rest of the European Union. That is the damage that is being done.

On the balance of payments, I would urge my right hon. Friends on the Front Bench to do more work on getting the balance of payments deficit down. Obviously, they will not all agree with me about taking the quick easy hit of getting our £10 billion back to make a big reduction in the deficit, but we need to understand that that deficit is entirely the result of an adverse goods trade with the rest of the European Union. We are in profit with the rest of the world and we are in profit in services, but we have a colossal manufacturing deficit with the rest of the EU. Some of that relates to the way in which France and Germany get round the EU rules to make sure that they can buy French or German product, whereas we in Britain apply the EU rules extremely fairly and end up buying a lot of foreign product from the continent.

It is also the case that the very dear energy that European policies require and enforce is doing a lot of damage to our steel industry, our ceramics industry and other high energy-using industries. It is a great tragedy that, despite higher domestic demand for steel, we are still unable always to use British steel in British public sector contracts. Surely we ought to have a fix to create more demand for our own domestic industries.

We also import massive amounts of timber, despite having a big state sector involvement in the timber industry in this country. Why cannot more be done to cut more of the timber we already have as a state resource to meet our domestic demand, along with replanting and extending the planting, given that many people would like more forests? Why cannot we have more managed timber, with the state having an influence over it? We could also do more with the tax system to encourage more private forestry. We have rather good growing conditions here, compared with some of the colder Nordic climates from which we import timber at the moment.

We also import energy, but we have no need to do so. We are an island of coal, oil and gas set in a sea of coal, oil and gas. We also have lots of natural renewables, particularly lots of potential water power. Why cannot we create an energy policy in which we do not need to rely on importing timber from Canada, electricity from France and energy from Norway?

I am pleased that the Budget is starting to tackle the issue of the oil industry offshore through tax changes. We need to do other work on that, and we also need to get on with gas extraction onshore. We will probably find further oil resources when we are prospecting for shale gas in the shale sands. We need to start bridging the gap on energy before it becomes even more damaging to our balance of payments.

Mark Prisk (Hertford and Stortford) (Con): On encouraging greater exports, would my right hon. Friend acknowledge that one of the challenges that small and medium-sized firms face is the availability and pricing of mid-sized capital to enable them to pursue longer-term export plans?

John Redwood: I am not sure that the cost of capital is a problem. The Government have already done certain things to try to deal with that through the investment bank and so forth. It is often the case that medium-sized companies probably need equity investment but are reluctant to give away control. That is a cultural issue that we have to deal with. Certainly for bigger companies there is nothing wrong with the long-term cost of borrowing if they have access to the bond market, because we have exceptionally low interest rates at the moment.

I am all in favour of the Government pressing on with large infrastructure projects if they make economic sense. The main ones that we need to reinforce are broadband and extra energy capacity. We are short not only of affordable energy but of energy of any kind. We do not want our economic recovery—which we have rightly been told is the fastest in the advanced world, on the historical and prospective figures—suddenly to come up against the constraint that there is not enough energy available to fuel the recovery.

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98 Comments

  1. JJE
    Posted March 18, 2016 at 6:29 am | Permalink

    All excellent points, well made.
    Unfortunately I fear you are talking long term economic sense to a very political Chancellor who can’t see beyond the next few months.
    I expect we will have the real Budget after the referendum.

    • Lifelogic
      Posted March 18, 2016 at 9:16 am | Permalink

      It’s politics over what works every time with Osborne. But what works (low & simple taxes, cheap energy and smaller government) is what is best for votes too in the end.

      Not Osborne’s absurd sugar tax, landlord/tenant mugging, non dom attacking, pension robbing and IHT ratting). Vote Brexit and get a proper chancellor in charge. Are Tebbit & Lawson too old for a come back? Lawson seems rather wiser now than he was first time. Or perhaps the youthful JR?

      • Hope
        Posted March 18, 2016 at 1:35 pm | Permalink

        JR, cogent logic to everything you said. Do not pay attention to those who mocked through laughter, they are ignorant and so because they go by what they are told and do not have the intellect to read and understand for themselves. Hence the need for a clear out in the rotten institution called parliament.

        Osborne’s budget does not add up. I think this might be because of his personal interest is put before national interest. It would not surprise me if another budget was needed if Cameron walks in June and an early election is brought forward, in the hope he will be the Tory leader. Overseas aid, EU contributions in All forms not mentioned, nor EU governance over VAT.

        You have the answer to make things better- get rid of Cameron. Osborne is dead in the water, his ego will not let him consider it. Both posh boys forget they could not beat Brown at the election. Nor could they beat Farage at the EU elections despite all the media trying to assonance UKIP.

        If it was not for the loathing thought that the Scotts might take over our country, albeit in tandem with Miliband, then would have not beat Miliband on his own. In the real world people are turning against Cameron, and your party, for not sticking up for the national interest. You cannot believe a word he says, Pritty Patel has a good narrative on this that you cannot believe a word the remain camp says.

        • Lifelogic
          Posted March 18, 2016 at 3:12 pm | Permalink

          Someone on radio 4 today was saying Osborne was largely responsible for the election (scraped) victory. Not at all that was the fear (for the English) of the Ed Miliband dog wagged by the SNP and the dreadful Sturgeon. Osborne was just slightly better than them.

          He is a dreadful chancellor who has doubled the debt increased complexity (and tax rates) hand over fist, while pissing money down the drain all over the place. Failing to meet even his own pathetic targets.

          • Hope
            Posted March 19, 2016 at 9:30 am | Permalink

            37.5 percent tax take to each household higher than Labour since 2001! Over 300 tax rises for slight reduction in deficit, debt doubled, QE continued etc. Rich pensioners still getting fuel allowance, disabled people get benefit cuts. What do the posh two not understand? Both are idiots out of their depth.

  2. Lifelogic
    Posted March 18, 2016 at 6:29 am | Permalink

    An excellent contribution.

    As you say:-

    The one good thing about all this is that when these ridiculous forecasts are made by the OBR and the Governor of the Bank of England that we would be worse off if we left the European Union, we can completely ignore them. We know that those people are always wrong about the things in which they are meant to specialise, so why should we believe what they say about something that is more important?

    We can also safely disregard anything said by any of the long stream of failed politicians who where in favour of the ERM and/or the EURO. These people are endlessly being wheeled out by the BBC to tell us how imperfect the EU is, and how it needs huge reform, how skeptical they are, but (by the way) we are still far better off on balance staying in – as otherwise plagues of locusts and snakes will come and kill us in our beds.

    Also telling us that we cannot solve open door immigration by putting up the draw bridge. Perhaps not but surely this rather helps somewhat.

    Further telling us that it will take at least several millennium to renegotiate some EU trade agreements as the EU are so very slow and useless at this and anyway it will be like a bitter and acrimonious divorce.

    We can further discard almost everything that comes out of the DECC as clearly no one there seems to have any knowledge or understanding of electrical engineering, physics, power generation, energy resources or the economics of electricity production. They are essentially a scientifically illiterate, religious group of greencrap, wind, PV, biomass and lagoon pushers and job/co2 emissions exporters.

    Get a decent engineer to work there and sort them out.

    • Lifelogic
      Posted March 18, 2016 at 9:00 am | Permalink

      So it seems Cameron is claiming victory in the war of the tampon. I wonder why he did not ask for anything substantive in his hugely long fake long grass non “renegotiation”.

      Doubtless there will be more minor victories announced over the next three month to try to avert a Brexit vote. But the fundamental point is that even those who want to stay in will get a far better deal post a Brexit vote. There is no sensible reason to vote to stay in at the first referendum.

      We should, of course, keep voting to leave regardless – until we get a free trade only, control of our own borders and democracy, general mutual cooperation & no fee to pay agreement. This is perfectly attainable.

      Nicky Morgan uttered the hilarious phrase on Question Time – a reformed EU, or was it even a reformed Europe – the remainers like to confuse the two very different things.

      What reform is she talking about? There is none at all. Indeed it is getting far worse, migration is totally out of control, the EURO is complete a disaster, the whole drive is toward an anti-democratic, fake green, socialist super state.

      http://www.telegraph.co.uk/news/politics/12197451/David-Cameron-claims-victory-following-deal-with-EU-leaders-to-axe-tampon-tax.html?WT.mc_id=e_DM100449&WT.tsrc=email&etype=Edi_FAM_New_AEM&utm_source=email&utm_medium=Edi_FAM_New_AEM_2016_03_18&utm_campaign=DM100449

      • scottspeig
        Posted March 18, 2016 at 1:32 pm | Permalink

        Yet these are billed as “victories” when we all know they are just not being “defeated”!

        It’s like not increasing taxes is seen as a good thing!?! It is neither good nor bad as it is neutral. Lowering tax is good!

        It is all rather frustrating, especially when the media doesn’t hi-light such a farce!

        • Hope
          Posted March 18, 2016 at 3:13 pm | Permalink

          I think it should be a retarded EU not a reformed EU. Cameron has not reformed anything, he needs to be held to account for his failure and for failing to rule nothing out by his failure. He never achieved any of his main points, dropped all the big issues before discussion and is currently handing over £500 million of our taxes for an EU policy that the UK is not committed to! Is this what this idiot means by battling for Brtian or perhaps standing silently by when. French PM makes threats to our nation before walking past our war dead who sacrificed their lives to protect the French who capitulated twice to Germany! Coward, gutless and useless springs to my mind.

    • Know-dice
      Posted March 18, 2016 at 9:34 am | Permalink

      Robert Chote from the OBR was on one of the news channels a couple of nights back.

      When asked why why they [OBR] had only produced an economic forecast for the Budget based on us Remaining in the EU, he claimed that was because the Government had only asked for that!!!. He denied that they had produced ANY forecast for the UK leaving the EU.

      This cannot be true… if it is then this quango should be renamed Office for Budget Irresponsibility…

      Reply It is true. Their forecast assumes we stay in.

      • Know-dice
        Posted March 18, 2016 at 11:19 am | Permalink

        And they REALLY haven’t done the same for Leave?

        With the vote currently at pretty well 50/50 it’s irresponsible of them not to examine the alternative.

      • hefner
        Posted March 18, 2016 at 12:19 pm | Permalink

        I would expect the Leave side to have already produced a similar economic forecast for the Budget and I hope it will be publishing it soon.
        Or will such Brexit economic forecast be kept as a (good) surprise just before the vote?

        Anyway, I really cannot understand the whole emphasis about these £10 bn, it is a tiny part (< 1% ) of the budget. Isn't there anything better to show? The whole "debate" is getting less and less interesting: it is either this small number or rather high-spirited words like democracy, sovereignty, and the like. I am awfully sorry but more or less sovereignty will not add much to my day-to-day life.

        Reply The money matters, and Leave will be producing a Brexit budget to show how we will be better off. It also illustrates the need to have control over our taxes and spending, which chimes with your sovereignty theme

        • Know-dice
          Posted March 18, 2016 at 4:37 pm | Permalink

          Hefner:

          I think you are coming at this

          “Anyway, I really cannot understand the whole emphasis about these £10 bn, it is a tiny part (< 1% ) of the budget."

          from the wrong angle…

          The question should be what can you do with 10 Billion?

          How many hospitals, schools, roads etc can you build?

          Buckinghamshire CC is short of 1 Million and could use this to keep their libraries open.

          • Lifelogic
            Posted March 18, 2016 at 9:18 pm | Permalink

            The costs of the EU is probably 50 times the £10bn, in over priced energy, over regulation of everything and all the rest of their bonkers agenda.

        • eeyore
          Posted March 18, 2016 at 5:28 pm | Permalink

          Even if £10bn were a “small number” (which it isn’t) it would still be a significant good to the country to have it in hand. As we all know from personal experience, it’s the sums left over after necessary and routine expenditure has been met that make the difference to one’s quality of life.

          The current debate about benefits reductions for the disadvantaged would seem an ideal opportunity for showing the good that could be done with a post-Brexit £10bn windfall.

          Mr Redwood’s assurance that a Brexit budget is to come is very welcome. May we also expect a general Brexit manifesto?

        • stred
          Posted March 19, 2016 at 9:08 am | Permalink

          Am I right to believe that the 10bn does not include extra money we pay through higher food prices to support the CAP, doubled water bills to pay for EU directives, higher energy bills to comply with targets and fraudulent bio fuel directives etc. Could we add a temporary Swiss style licence for foreign lorrie to use our motorways if we left? And when they insist on full tax on insulation, who is paid this VAT? Does the EU receive some?

    • Lifelogic
      Posted March 18, 2016 at 11:10 am | Permalink

      I see that the money that Osborne believes he will raise from the Jamie Oliver tax will allegedly be used to finance sport in schools.

      Hopefully not thing as dangerous & accident prone as rugby seems to be or it might end up costing the NHS rather more in the end. I cannot see than many will change their behavior for the sake of a few pence on a fizzy drink.

      Some public water fountains in parks and schools might be a far better way to go. Just as they used to have. They have public toilet too once, but now even this is too much for the state to provide. Far too busy issuing parking tickets or cameras issuing tickets for people doing 22 in a 2o mph zone as they try to get to work. It is all about priorities and the priority is local authority pensions and wages it seems.

    • Mockbeggar
      Posted March 18, 2016 at 11:25 am | Permalink

      Fraser Nelson in The Spectator reckons that the Chancellor misquoted the OBR forecast which, he says, is ‘fairly relaxed’ about Brexit. He quotes: ‘It is not for us to judge…’ The OBR forecast goes on to quote a study by Open Europe, a think tank, which…
      “… modelled a scenario in which the UK leaves the EU in 2018 and found that GDP could be 2.2 per cent lower or 1.6 per cent higher by 2030, depending on the arrangements for trade and regulation that follow ‘Brexit’.”

  3. Horatio
    Posted March 18, 2016 at 6:29 am | Permalink

    Thank you JR. completely agree; especially on Mark Carney and energy. Those husky lovers on the front bench ont care though.. The gatwick gusher is destined to become a thing of myth rather than a fount of prosperity

    Lessons from Question time last night
    1a terrible advertisement for women in parliament; Emily Thornbury as odious as usual, Nicky Morgan utterly pathetic, Ahmed-Sheikh ghastly and all aided by an abject, cuckolded Dimbleby
    2 never underestimate the BBCs ability to find a europhile audience even in one of the most Eurosceptic parts of the country
    3 never underestimate the BBCs ability to field the most utterly useless Eurosceptics available. I was bemused by Mark Littlewood who can be such a persuasive, numerate individual with a superb grasp of facts. Yet he could not even be bothered to employ any. With Nicky Morgan in charge of education one really fears for the next generation.

    • Lifelogic
      Posted March 18, 2016 at 9:07 am | Permalink

      Indeed they do seem to be rather scraping the bottom of the barrel just to find a few women to show the required “BBC think” gender balance. Or rather to actively discriminate against men as it clearly does.

      I did not think the two EUsceptics were that bad though. Littlewood was however foolish enough to fall for the EU when younger. It always seemed bonkers and anti democratic to me even as a young teenager. Peter Shaw, T Benn and E Powell seems far more rational and sensible than Heath, Wilson, Shirley William and the rest even then.

      • Phil Richmond
        Posted March 18, 2016 at 11:35 am | Permalink

        Nicky Morgan & Anna Soubry alone remind me of why I left the Conservative Party!

        • Lifelogic
          Posted March 18, 2016 at 3:17 pm | Permalink

          Was Soubry not an SDP person doubles why Cameron seems to like her. I think Morgan is rather better that Soubry but not very much.

          • Phil Richmond
            Posted March 18, 2016 at 5:34 pm | Permalink

            Neither of them have a conservative bone in their body. They are politically correct / dim / Blarite and way over promoted.
            Considering Cameron has appalling judgement it’s no surprise they are Ministers.

    • Qubus
      Posted March 18, 2016 at 4:43 pm | Permalink

      What second-raters they do have on QT these days, and where on earth do they dig up their audience from? I am finding that the programme annoys me so much that it is hardly worth watching. In any case, when I watch, I want the opinions of the panel and not the usually uninformed audience; I can get that type of opinion any night in any local pub.

      Whatever happened to the economist Ruth Lea? I got the impression that she really talked sense. Unfortunately, she never seems to appear these days. I do not know what her opinion is on Brexit, but I suspect it must be pro or she would feature more often.

      • Know-dice
        Posted March 18, 2016 at 7:15 pm | Permalink

        Here you go:

        Ruth Lea:

        There is no doubt that the forthcoming referendum on Brexit is of the greatest political significance. For me, it is a choice between remaining in an increasingly dysfunctional EU, as it struggles with the migration crisis, ponders further Eurozone integration and worries about sluggish growth, or leaving and thus regaining control over our future. There are no prizes for guessing that I shall vote to leave.

        http://www.cityam.com/234438/ignore-eu-scaremongers-why-britain-would-thrive-post-brexit

      • Lifelogic
        Posted March 18, 2016 at 8:39 pm | Permalink

        Indeed Ruth Lea was one of the fee sensible women the BBC seems able to find. Get her back or others like her.

        • Lifelogic
          Posted March 18, 2016 at 9:19 pm | Permalink

          few!

    • Cliff. Wokingham.
      Posted March 19, 2016 at 12:31 pm | Permalink

      Yes, with the three women on there, I couldn’t stop thinking about the opening scene of Macbeth.

  4. Jerry
    Posted March 18, 2016 at 6:36 am | Permalink

    You made some excellent points, much to the discomfort of Labour and the BSE group I expect. One thing though, I’m not clear on John, do you support the OBR (and indeed the ‘independence’ of the BoE) or not, by your criticisms it might be suspected (right or wrongly) that you would prefer that neither existed?

    Also I’m not sure that it is just EU rules that have lead the UK to have a trading deficit with the rest of the EU, we can not buy from ourselves, nor can other countries buy from the UK, products that we simple do not make and can not make due to our lack of manufacturing capacity. I would hope that some of the £10bn per year (Brexit ‘bonus’) will be used to revive our own manufacturing industries. Am also a bit surprised that you mention the need to import coal, indeed the UK is built on much coal, unfortunately it was the government that you were a part of who did so much to close down our deep mines and thus access to much UK coal.

    Reply I do not support the OBR

    • Lifelogic
      Posted March 18, 2016 at 9:10 am | Permalink

      The BoE is clearly not independent any more than the BBC is. They know where there bread is buttered and who appoints people.

      Any organisation that feels the need to claim it is independent rarely is.

      The OBR is just wrong nearly every time. Just assume the opposite will follow and you will not go far wrong.

      • miami.mode
        Posted March 18, 2016 at 2:46 pm | Permalink

        The only question you need ask is ‘who pays their wages?’.

        Anybody who constantly criticizes their employer will not stayed employed for long.

    • Know-dice
      Posted March 18, 2016 at 9:42 am | Permalink

      Good points about reviving our manufacturing industry.

      On the coal side, another way of looking at this is; may be its good to use (deplete) other people’s coal and save ours for some stage in the future.

      • Anonymous
        Posted March 18, 2016 at 12:47 pm | Permalink

        The coal issue was far more complex than that. It was too uneconomic to extract.

        What I do think was a mistake was to leave the mining communities intact but subsidised with welfare. It – along with the closures of heavy industry – helped transform the welfare state into the money pit that it is now and rather defeated the object of closing down uneconomic industries.

        Those industries may no longer exist but they are still subsidised. A bit like paying the mortgage after the house has been repossessed.

        • Jerry
          Posted March 18, 2016 at 5:36 pm | Permalink

          @Anonymous; Quite a sweeping comment there, but one you have left hanging, so just what do you suggest should have happened to those ex-mining communities?!

          As it is, as far as I’m aware as many ex-mining communities as possibly did received redevelopment grants rather than the endless welfare you suggest, just as happened in areas were British Steel plants closed etc.

          As for the economics of coal, once again the UK proved that it knows the value of everything but the worth of nothing. Our real problem with ‘King Coal’ was political, and no I’m not defending the NUM, far from it, but did we really need to kill the patient to cure the cancer…

          • Anonymous
            Posted March 18, 2016 at 8:31 pm | Permalink

            Jerry – Thanks for asking.

            What should we have done with the miners ? Kept them mining if at all possible.

            Alternatively ?

            Forced them to get on their bikes and find work in other regions. Anything other than support the sink estate culture which followed.

      • Jerry
        Posted March 18, 2016 at 1:52 pm | Permalink

        @Know-dice; The problem is that we do not (yet) know if we can reopen the old coal reserves, there are lots of risk and costs in mining close to now flooded and unmaintained old workings. Even if we can reopen, even if a lot of the old manual labour can now be done by remotely operated machines, there has been a lot of coal lost for ever that can not now be mined and thus used.

        I suspect it would have made more sense to have conserved our own oil and gas reserves…

    • forthurst
      Posted March 18, 2016 at 8:02 pm | Permalink

      “Am also a bit surprised that you mention the need to import coal, indeed the UK is built on much coal, unfortunately it was the government that you were a part of who did so much to close down our deep mines and thus access to much UK coal.”

      Did he? Deep pit mines are totally uneconomic which is why they have been shut down all over the world; the future of coal mining is open cast.

      Coal is cheap to extract in many parts of the world and to transport; what is perplexing therefore is that the Drax power station which was built to burn coal is burning processed wood from North America instead. Apparently Ed Miliband ordered that all coal-fired power stations must close unless they invest in Carbon Capture & Storage, an entirely imaginary technology; it would be far easier and more benefical to entomb europhiles and eco-nutters than a beneficial gas.

      • Jerry
        Posted March 18, 2016 at 10:36 pm | Permalink

        @forthurst; …and deep sea oil and gas exploration, or fracking for that mater, is not uneconomic unless crude oil prices are kept artificially high?!

        The right-wing have hated coal since the NUM strike of 1974 sent the Heath government packing, the economics of production had little to do with the fate of coal in the UK.

        Also many things are cheap to buy from abroad and ship to the UK but that is not the issue, if a country is not self sufficient in its basic power needs it has no (economic) security.

        • forthurst
          Posted March 19, 2016 at 3:43 pm | Permalink

          I would not deny that the Tories were not enamoured of the NUM; however most of the coal mines originally closed involved wheezy Yorkshiremen crawling on their hands and knees with picks and shovels; many of those colleries that have closed since had met adverse geological conditions which rendered them unsuitable for modern cutting equipment, having previously passed into private hands. In fact, the Tory government offered the Coal industry to Rio Tinto, our major mining company, without a positive response.

          I agree that closing pits for economic reasons whilst subsidising expensive and unreliable ‘green’ technologies is absurd; unfortunately, coal as a fuel is deprecated by the Climate Change Act despite its many advantages; there are huge reserves of coal under the North Sea and we are told that modern technology can be used to harvest it, in which case, we should go for it for reasons of energy security and the balance of trade.

          • Jerry
            Posted March 19, 2016 at 8:28 pm | Permalink

            @forthurst; If the mines could not be worked with any sense safely or economically due to geological issues they would have closed under any pre 1980s NCB regime too, no one ever said that such pits should never close! You seem to think that such miners liked to risk their lives every shift just so long as their mine was kept open, such miners would have been happy to transfer or take voluntary redundancy and/or retraining out of the industry [1]. Historical facts, in the shape of now released government/NCB papers from the period, appear to show that it was not just the uneconomic pits though that had been penned in for closure but then economic and reasonably modern pits.

            [1] as many did before the 1984/5 miners strike

  5. Mike Stallard
    Posted March 18, 2016 at 7:13 am | Permalink

    Rollicking good arguments! Well spoken.
    Is it symptomatic of the state of this province of the EU that yesterday on LBC one hour was spent discussing the Home Secretary’s dress?

  6. Roy Grainger
    Posted March 18, 2016 at 7:25 am | Permalink

    I have not looked into this in detail but my impression is the OBR’s predictions are always, or usually, wrong in the same direction: they have to revise growth down and they revise borrowing up and so on. In this case a better prediction would be gained by correcting their current predictions by their average past errors. It would be an interesting exercise. It is somewhat like the estimated cost of major public infrastructure projects or NHS IT projects, we all know that costs will overrun by some huge percentage, so why not just add that on in advance ?

    • JJE
      Posted March 18, 2016 at 7:53 am | Permalink

      In my time working in manufacturing I had to contend with big swings in sales forecasts. I learnt to only half believe the forecast changes – if the forecast was up 20% I geared up for a 10% increase in output and waited for an increase in the real orders before doing anything more. This made things a lot more stable and cost effective.

      To your point on realistic budgeting, I think that a lot of the projects would never get approved if realistic estimates were submitted at the outset. So the promoters put in over optimistic assumptions to get the project going and then deal with overruns later. In private industry this would rightly get the managers fired but this discipline appears absent in the public sector.

    • David Murfin
      Posted March 18, 2016 at 8:04 am | Permalink

      Because the costs would still overrun by some huge percentage.

      • Roy Grainger
        Posted March 18, 2016 at 12:29 pm | Permalink

        Well yes, there is that. However these politicians are missing a trick by being unable to boast about being under budget.

        My local council just wasted £300,000 on a new website but because their original estimate was £376,00 they can trumpet it as a project brought in under budget. The fact that for £500,000 they could have reduced council tax by 1% is conveniently ignored.

    • Antisthenes
      Posted March 18, 2016 at 9:49 am | Permalink

      It is common practice in the private sector to add a contingency amount to any future planned spending which varies according to size and complexity of what that spending is to be on. It appears this is not a practice of the government or the public sector. Why should it be as it will make something that they want to do look less attractive. Besides which when the time comes and it does go well over budget it is not they who suffer but the taxpayer.

  7. alan jutson
    Posted March 18, 2016 at 7:53 am | Permalink

    Good points well made JR.

    Afraid that with our complicated tax system becoming ever more complicated, with more and more revenue reliant upon stealth type taxes, the income it generates for the Government will become even more difficult to forecast.

    Just like many Budgets of the past, the devil is always in the detail, and I see some of that detail is causing the Chancellor a bit of hassle again.

    Would not surprise me if the so called sugar tax is just the start of more tax on some other foodstuffs, in order to start a new revenue stream, under the guise of we are looking after your health.
    We have had it with fuel for vehicles (different rates for different emissions), now we have started to tax fuel for humans. (Remember the Pastie and take away Tax fiasco) !

    • Denis Cooper
      Posted March 18, 2016 at 4:43 pm | Permalink

      The so-called sugar tax is not a sugar tax like the tax that was levied on sugar itself from 1764 to 1874, and unlike sugar the sugary drinks to which the new tax will be applied on top of standard VAT are not classed as basic foodstuffs which are still zero rated for VAT, because when we joined the EEC we were allowed to carry on with zero taxation of food and other basic items as a special concession. I suppose if the UK government did impose a tax on sugar and other food then the EU might be asking why it should still keep its zero rating for VAT.

      • alan jutson
        Posted March 18, 2016 at 5:53 pm | Permalink

        Denis

        Please let us not get into a discussion about basic foodstuffs and non basic foodstuffs, you will only encourage the Chancellor even more.

        What is basic for some, is a luxury for another.

        We already pay VAT on heat, light, and power and that is about as basic as it gets.

        • Denis Cooper
          Posted March 19, 2016 at 9:51 am | Permalink

          My suspicion is that Osborne also wants to avoid any discussion of that kind until the EU starts it, which I believe is due to happen.

  8. Antisthenes
    Posted March 18, 2016 at 8:05 am | Permalink

    Declaring your interests at the beginning of your speech is something I note other MP’s do not always do to their shame. An excellent speech that sinks the stayers fiscal, energy and balance of payments arguments for remaining in the EU. No doubt not changing their minds one jot. Not your fault of course it is just their inability to rationalise properly or more likely their self interests preclude it.

    Pointing out the inherent flaws of the OBR and the BoE points to three things. Firstly it supports my contention that government is a very fallible institution and should not be trusted to do much. That so called experts when attempting to predict things it is only by the law of averages that they sometime get it right. So climate change predictions we can certainly take with a pinch of salt.

    Secondly it proves that good intentions very often do not achieve the desired results. The OBR, BoE, BBC, Network Rail, CPS, NHS and so many other government agencies, organisations and institutions all set up for the right reasons in the end fail their customers. It is not a way to run a kindergarten bun fight let alone a country. Naturally the left would have all the country run that way and many would be happy to let them.

    Thirdly it shows that government is not really in control, events, circumstances and natural forces are and in the end can confound any who try to control them. Having to change direction from one budget to the next I believe is a major proof of that. So instead of government steering things it should be left to free markets and the citizens to do that. Government should be there only to facilitate their will not interfere in it.

  9. Alan
    Posted March 18, 2016 at 8:08 am | Permalink

    We do not know whether we will have an extra £10 billion if we leave the EU, because we do not know the terms of the trade agreement that we will make.

    The easiest agreement to make if we leave, and therefore perhaps the likeliest, will be to continue the present agreements with the exceptions that we will not have a vote in the EU and we will not have to follow EU law within the UK. We would still be paying the $10 billion to the EU.

    Reply That is not the deal we want or will seek! It is £10bn not $10 bn net

    • Pud
      Posted March 18, 2016 at 12:38 pm | Permalink

      Why should we, and why would we want to, pay anything to an organisation we were no longer a member of?

    • Jerry
      Posted March 18, 2016 at 5:45 pm | Permalink

      @Alan; If we settle a Brexit on the terms you suggest then what the the point in leaving, many EU laws will still have be followed to abide by their trading rules etc. What is more we would likely have to sign up to TTIP also, if we do that we might as well not pay the EU a single EUR-cent but (apply to) join NAFTA instead…

  10. Ex-expat Colin
    Posted March 18, 2016 at 8:25 am | Permalink

    Common sense unavailable due to excessive game playing?

    The weaknesses you expose need public airing more often. I think most of it goes over the public’s head…therefore must be right?

    • Leslie Singleton
      Posted March 18, 2016 at 5:12 pm | Permalink

      Dear Colin–I absolutely agree that somehow we need to get speeches like John’s brilliant effort today, and his articles generally, out more before the public, many of whom would never hear or see stuff like this, routinely or otherwise.

      I was a bit depressed at a UKIP meeting this week that nobody seemed aware that John and others write regularly in this way. Some did at least, when I praised John to the skies, say they would investigate. Oddly, the meeting totally downplayed UKIP, instead promoting a local (Essex) ‘We want Out’ campaign but, that said, going outside UKIP for material seemed to them not the way to go. All they seemed to want to do was plough their own parochial furrow including writing their own leaflets.

      I gave them the benefit of my opinion (I was a visitor) that we need more focused and co-ordinated nation-wide comments, PR the whole bit. Surely it is time that, in addition, punchier headline-type posters started to appear all over the place or perhaps that has to wait a bit, after which (I hope) le deluge.

      My favourites, not particularly clever or original, might be 1) Europe Yes, EU No, 2) £10 billion each year down >>> on top of a picture of a drain, 3) Sovereignty & Democracy–the fewer words the better in this context.

      Number 1) I mention because the Chairman of the Meeting said that unconvinced passing people in the street would often reply, as he tried to accost them as they went past his stall on a Saturday morning, “Sorry I am a European”. He apparently would let that stand and seemed a bit surprised when I asked why he didn’t go back hard with “So am I” etc.

      It was also a puzzle that there appeared to be NO literature or leaflets or posters AT ALL at this meeting from UKIP’s High Command or any of the Leave organisations and of course certainly not from the Tories. They were all mustard keen good people and if we could get our act together instead of being so split we would win Brexit going away. Cannot imagine what (convincing) brief and punchy (or not so brief and punchy) posters the Remainers could come up with–so far it has been drivel from them. The meeting, certainly including me, couldn’t stand our EU loving MP.

  11. Ian Wragg
    Posted March 18, 2016 at 8:26 am | Permalink

    The OBR is in no way independent. It is there to support its creator and act as a mouthpiece for the Remain side.
    Already the wheels are coming off Gideons wagon. It very much looks like massive tax rises will be necessary to eliminate the deficit.
    With another recession on the horizon that will be popular.
    What’s your opinion on Germany taking over the LSE
    Another case of economic suicide.

    • bigneil
      Posted March 18, 2016 at 12:44 pm | Permalink

      Happy with the new washer? – Hope to be well enough for a cuppa on Monday.

    • Ken Moore
      Posted March 19, 2016 at 12:45 am | Permalink

      Germany taking over the LSE….I had to check it wasn’t April 1st.

      It’s anti British, short sighted, cowardly, defeatist… yeah it must be the workings of the modern Conservative party led by England hater and cultural revolutionary in chief Osborne.

  12. Denis Cooper
    Posted March 18, 2016 at 8:47 am | Permalink

    Yesterday was St Patrick’s Day, which is celebrated by some in the UK, but in the future all the British people, and especially the female half, will also celebrate it as Tampon Day.

    No doubt for generations to come we will commemorate this famous victory, when our patriotic and powerful Prime Minister , a giant on the European stage, persuaded twenty seven other statesmen to sit down and hammer out a deal for the abolition of an iniquitous 5% tax on feminine hygiene products which was being applied in his home country.

    No matter if the EU leaders actually had no legal power to suspend the EU law which had included those products as eligible for taxation under the EU VAT system, a law duly passed by the processes laid down in the EU treaties which had been approved down to the last comma by all twenty eight elected national parliaments and in some cases directly by the people in referendums, and that under those treaties any reinterpretation of that EU law would rest with the EU’s Court of Justice not with the EU leaders.

    No matter if by agreeing to this action on the international plane, purely as an exercise of Royal Prerogative without the UK Parliament having expressly authorised him to act contrary to laws it has previously passed on the domestic plane, the Prime Minister may have breached the first two articles of the 1688 Bill of Rights which is still the founding document of our parliamentary democracy:

    http://www.legislation.gov.uk/aep/WillandMarSess2/1/2/introduction

    “That the pretended Power of Suspending of Laws or the Execution of Laws by Regall Authority without Consent of Parlyament is illegall.”

    And no matter if a woman on TV said that by her calculation the abolition of this 5% tax would save her just a few pounds a year; this was a historic diplomatic triumph for our Prime Minister which will be remembered long after polling day on June 23rd.

    • Know-dice
      Posted March 18, 2016 at 11:32 am | Permalink

      Dennis,

      The ink is not dry yet and as we all know the “Devil is in the Detail”.

      Lets see if they go for Zero Rated or VAT Exempt?

      • Denis Cooper
        Posted March 18, 2016 at 4:20 pm | Permalink

        Either way, according to Osborne:

        “We’ve achieved what no British government has even tried to achieve. It just shows how Britain can make a case for a reform that will benefit millions as a powerful voice inside a reformed EU.”

        • Know Dice
          Posted March 19, 2016 at 10:56 am | Permalink

          The point is (I think), if they are VAT exempt the manufacturer cannot claim back input VAT paid on raw materials, so could actually put up the price to the end users.

          Whereas Zero rated for VAT would be the same cost to manufacture (because input VAT can be reclaimed) and also cheaper on the retail market with 0% VAT to be paid.

          • Denis Cooper
            Posted March 21, 2016 at 11:30 am | Permalink

            Thanks for that.

    • stred
      Posted March 18, 2016 at 2:35 pm | Permalink

      Now that we will have cheap tampons ans the restof the EU will have to pay through the nose we may expect the French customs officers in Dover to be checking for tampon runners.

  13. agricola
    Posted March 18, 2016 at 9:12 am | Permalink

    Accepting your analysis of the OBR and BoE, is it the quality of the people they employ or constraints within their remit that lead to them getting it wrong. One’s natural reaction is to suspect political shading on what they come up with, but when in the space of four months they leap from an undiscovered 27 billion to the need for an extra 46 billion you do begin to absolve the politicians. Whatever, neither organisation looks to be up to the task.

    Unrelated, except on an incompetence level of accounting, the MOD has been calculating flying pay for helicopter pilots in the Army incorrectly on a grand scale. The personnel concerned are now being asked to pay back vast sums, received in innocence and trust. It is time to ask the minister to explain matters and demand that those responsible suffer the consequences of their own incompetence. It is now reported that large numbers of pilots are resigning in disgust. The sum should be written off and the accountants disciplined.

  14. Bert Young
    Posted March 18, 2016 at 9:16 am | Permalink

    John’s contribution is an illustration of in depth experience and knowledge of what he was talking about . The advantage of experience is the ability to make the present a transparency to the past ; if you add to this the control of detail that John has it shows how amateurish Osborne is and the weakness of the OBR. I’m also pleased that the Governor of the BofE was singled out for criticism ; he and the OBR have made predictions that have all been wrong – obviously they can not be trusted now .

    No mention has yet been made of the hike in VAT rates imposed by the EU . They do not take into account how our economy can do better without them ; they simply illustrate why we must get “Out”. Osborne chose not to mention this detail at all – why ?.

  15. Bob
    Posted March 18, 2016 at 9:41 am | Permalink

    With the legendary reliability of Mark Carney’s “forward guidance” and the accuracy of the OBR’s projections one wonders how much the taxpayer could save by combining both functions together and contracting them out to Mystic Meg?

    Would it be in the hundreds of thousands? or millions perhaps?

  16. brian
    Posted March 18, 2016 at 9:53 am | Permalink

    The forecasts may be made by the “independent” OBR but when forecasts are not met the opposition claims that the government’s “targets” have not been met and that the government has “failed”.

    • Ken Moore
      Posted March 18, 2016 at 6:23 pm | Permalink

      Gideon keeps saying how much the OBR is ‘respected’and ‘independent’…despite a track record of bullish growth forecasts that have turned out to be helpful to the chancellor but spectacularly wrong….What sort of idiots does this overgrown schoolboy take us for ?.

  17. Bob
    Posted March 18, 2016 at 10:03 am | Permalink

    Did you see what Roger Helmer’s appearance on Question Time did to the value of Sterling?

  18. Edward M
    Posted March 18, 2016 at 10:34 am | Permalink

    Excellent, to the point and spoken with clarity.

  19. Vanessa
    Posted March 18, 2016 at 10:40 am | Permalink

    JR – This is off topic. Mr Cameron is lying about his renegotiations to the House, he is lying about the consequences of Britain leaving the EU. In normal times to mislead the House was a criminal offence. Why has nobody alerted the Speaker to this and made him resign?
    Cameron said before the referendum shenanigans that IF he did not get a good enough deal for Britain, he would campaign to leave. Well, he has NOT got a good deal for Britain and therefore he should campaign to leave. The sticking plasters over his lies are peeling off and revealing a “scratch”.
    If we vote to stay in you can imagine the treatment we will get from the FIVE presidents of the EU! Our terms will be reduced to prison rations and we will not be able to do anything about it.
    Why has NOBODY at least asked a question as to the validity of cameron’s promises?

    Reply He is not telling a lie on this matter- he just happens to have a very different judgement on what is satisfactory to us.

    • ian wragg
      Posted March 18, 2016 at 11:31 am | Permalink

      John, even with the most charitable analysis, the Prime \Minister is lying and being aided by his side kick Osborne.
      It is not a matter of judgement but the future of our once great country.
      Cameron is a disgrace and history will portray him so.

    • bigneil
      Posted March 18, 2016 at 12:37 pm | Permalink

      Reply to reply – you beat me to it Mr Redwood. Car salesman would love to see Dave walk through the door. Commission would go through the roof. ( Apologies if this post from a working class chap upsets anyone).

    • Ken Moore
      Posted March 18, 2016 at 6:20 pm | Permalink

      Reply He is not telling a lie on this matter- he just happens to have a very different judgement on what is satisfactory to us.

      I can assure Mr Redwood his loyalty to the PM is undeserved.
      We now have it confirmed the referendum and sham renegotiation con trick were contrived to close the Eu argument and silence the ‘mad’ wing of the Conservative party that don’t wish to be Brussels slaves. He holds JR and many grassroots members of his party in utter contempt.

      David Cameron would have no qualms about dispatching those he disagrees with into political oblivion – why doesn’t the sceptic wing of the party toughen up, fight fire with fire and meet out the same treatment ?. It’s the only language the useless leadership of the blue party understand – power and strength.

      Because it was purely a ‘party management exercise with no hope of Eu withdrawal, the leadership will stop at nothing to keep us IN.

      Perhaps Mr Redwood can explain why the PM and all the other ministers are not lieing when they refer to the Eu as being ‘reformed’..when we know that only a few minor changes have been made.

      The charge of the Rt Hon David Cameron being a liar is valid.

  20. agricola
    Posted March 18, 2016 at 10:41 am | Permalink

    When asked in your diary what I wanted from the budget I said “Honesty, and no suggestion of penalising the truly disadvantaged in our society.”

    It would now appear that Osborne thinks the disabled are a fair target for the saving of £4.0 billion. A sum he could comfortably exceed if he went after all those companies who incorporate off shore as a means of avoiding corporation tax. I think the HoC should start to put the screws on such grubby thinking.

    • bigneil
      Posted March 18, 2016 at 12:42 pm | Permalink

      Nicky Morgan ( I believe) said that reducing tax levels brought more money in. If levels were dropped even further then surely we would get so much extra in, that the disabled ( genuine ones only, punish the fake) could actually have a rise.

  21. oldtimer
    Posted March 18, 2016 at 10:47 am | Permalink

    Thank you for making so many very good arguments so very clearly.

    This observer is left with the impression that the OBR is used as a convenient crutch by Mr Osborne when it suits him to do so. The only potential advantage the OBR has over other forecasters is foreknowledge of the budget measures; but as you point out its forecasts of the effect of the CGT rate changes are highly questionable. The whole process of deciding the effectiveness of a budget on what is forecast to happen in four or five years time is a mugs game, but one it seems Mr Osborne (like most of his predecessors) has been happy to play. But eventually, with the passage of time, grim reality overtakes the sunny forecast; and if you stay in office long enough that grim reality will overtake you, the Chancellor of the Exchequer. He has had his chance to deal with the deficit and the ballooning national debt, and he has muffed it.

    • alan jutson
      Posted March 18, 2016 at 11:37 am | Permalink

      oldtimer

      You are absolutely correct, forecasting anything without some degree of contingency or margin for error is courting possible disaster.

      The simple solution would be to dump forecasting, and work on facts.

      Base the budget on last years known take tax, and work out all expenditure against that, with of course a sensible safety margin, which should of course also include for some element of repayment of debt.

      So simple it would never catch on !

      • hefner
        Posted March 18, 2016 at 6:32 pm | Permalink

        A real naive question: how do you know that the modelling for future budget is not already done like that. At times, I find really funny some of the comments, which appear to assume that everybody outside the little bubble of people writing on this blog are complete idiots.

        Do you have any idea what criteria are used to select the successful candidates for jobs in the Treasury? I obviously don’t know but I would imagine there is a bit of selection based on some intellectual competence.

        • oldtimer
          Posted March 18, 2016 at 9:01 pm | Permalink

          What passes, these days, for Keynesian thinking permits budgets with bult in deficits – though some argue that Keynes is probably turning in his grave at some of the policies in support of which his name is invoked. If I read him correctly, Alan Jutson is seeking budget which will generate a surplus (thus premitting some repayment of the national debt), or if the worst came to the worst would offer tha chance of achieving a balanced budget. It is what the country needs to do, probably for a decade or more, if the national finance are to be restored to some sort of order.

          • alan jutson
            Posted March 18, 2016 at 11:17 pm | Permalink

            Oldtimer

            Got it in one.

        • alan jutson
          Posted March 18, 2016 at 11:16 pm | Permalink

          hefner

          I certainly do know the criteria on which the Chancellors advisors are chosen.

          I am also aware of some the modelling procedure used.

          Think I have now said enough.

  22. stred
    Posted March 18, 2016 at 11:26 am | Permalink

    A very entertaining speech. What a pity it is that few people will hear it. The OBR was created in order to prevent chancellors overspending or making policy based on false figures. At present the chancellor has two sets of highly paid economists. One chief is in the Treasury and the other is in the OBR. As you say the OBR is almost always wrong. But what about the other one in the Treasury? It would be surprising if they were any different, as they are married to each other.

    Reply Speeches in Parliament go out live and are available in Hansard record and on video record. The essence of it has also been picked up by other media.

  23. stred
    Posted March 18, 2016 at 11:44 am | Permalink

    The news this morning all about the successful visit to Brussels and how Eural and Oz told Mrs Merkel and all where to shove their tampax tax. Well done boys.
    At least half of the population will be so grateful that they may vote for IN.

    The other MSM stuff is about the decision to pay for tax cuts by reducing allowances for the disabled. As hardly anyone would agree with this, I was wondering if there was any other policy that the master tactician could have thought of which would be less popular and damaging to his party. Well one in four have mental health needs and 3% are either schizophrenic or have bi-polar depression and autism is common. How about cutting help for them and legalising and taxing skunk? How about cutting home help for the aged?

  24. stred
    Posted March 18, 2016 at 11:49 am | Permalink

    corrected
    The news this morning is all about the successful visit to Brussels and how Eural and Oz told Mrs Merkel and all where to shove their tampax tax. Well done boys. At least half of the population will be so grateful that they may vote for IN.

    The other MSM stuff is about the decision to pay for tax cuts by reducing allowances for the disabled. As hardly anyone would agree with this, I was wondering if there was any other policy that the master tactician could have thought of which would be less popular and damaging to his party. Well one in four have mental health needs and 3% are either schizophrenic or have bi-polar depression and autism is common. How about cutting help for them and legalising and taxing skunk? How about cutting home help for the aged?

    • alan jutson
      Posted March 18, 2016 at 6:00 pm | Permalink

      stred

      I see it is now reported that insulation products are going to attract 20% vat, up from 5% in a couple of months, will Cameron go begging to the EU for that to be reduced as well ?

      Go Green but pay us 20% VAT for doing so.!!!

      Another reason to leave the EU as if anyone wanted more.

  25. acorn
    Posted March 18, 2016 at 12:01 pm | Permalink

    An economy that is crying out for more spending, has a Chancellor that is hell bent on making people save and not spend. I am guessing that he is into “loanable funds theory”, (banks lend peoples deposits and an interest rate balances supply of deposits with desire for business loans). Another duff mainstream economic theory. At the moment, we have corporations worldwide who are saving lots and investing little.

    Osborne says he is off target because he warns world’s economy faces ‘dangerous’ period. Remember the Keynes bit about the “Paradox of Thrift”, when one person stops spending and starts saving, the economy does not worry. When everybody stops spending and starts saving, the economy collapses.

    If one Osborne stops spending the global economy may tick down a bit. When all the Osborne neo-liberal equivalents around the planet, stop spending, driven by the “austerity” mantra from the likes of the IMF; OECD and EU Troika; the global economy collapses. (Google – Changing private investment activity requires higher fiscal deficits)

    • petermartin2001
      Posted March 18, 2016 at 6:33 pm | Permalink

      If only everyone understood this!

      Keynes understood too But, what we seem to have forgotten, is that if any particular country, as a whole, has a net deficit trading position with the rest of the world then either the government of that country, or the inhabitants of that country, have to fund that deficit by borrowing. In other words, the internal deficits run by governments, and the extent of the debts which can accumulate in the private domestic sector, are directly related to the external deficits caused by a trade imbalance. So, we can see that countries such as Germany, Switzerland, Holland and Denmark which run large trading surpluses do not have any of the public or private sector debt problems which we see in the UK or USA which run large trading deficits. Unfortunately, though, the solution to world debt problems cannot be for everyone to run a trading surplus!

      George Osborne’s proposals for reducing the government’s deficit simply do not take these fundamental relationships into account. Transferring the burden of debt, necessary to sustain the current UK trading imbalance, from government to the private sector is going to do less than nothing to solve the economic problems of the country. If he wants to reduce his government’s deficit, without crashing the economy by imposing an unrealistic debt burden on everyone else, he has to acknowledge that this can only be done by reducing the external or trade deficit too. He has to start to tackle the problem from both ends.

  26. Stephen Berry
    Posted March 18, 2016 at 2:45 pm | Permalink

    John is absolutely right about the Office of Budget Responsibility. It consists of economists who make forecasts and not very good ones at that. But let us be clear that all economic projections are very fallible, not just those from the OBR.

    It amused me no end to see commentators very earnestly discussing as to whether the chancellor will meet his budget target and how he is overly dependent on certain revenue accruing five years from now. Five years from now? We can’t forecast the economy with certainty five weeks from now. A rapid fall in the oil price has demonstrated that.

    What if there is a recession in the U.S. in the next year or two? What if interest rates rise? Last year the Russians raised interest rates to more than fifteen per cent to defend the rouble. Russia’s national debt is low so the extra interest bill was low. Many Western countries have mega-debts so their increased interest payments would be a major problem.

    Would it not be simpler just to sack all the forecasters, save money and assume that the British economy will grow at an average of two per cent in normal times? That’s near enough. When recession hits, revisions have to be made – but that’s what end up doing anyway!

  27. Lindsay McDougall
    Posted March 18, 2016 at 3:18 pm | Permalink

    Bravo. You have produced the blockbuster arguements where it matters, in parliament. The Cabinet and the Opposition will now think twice before talking rubbish.

    One word of caution: If more forests are to be provided, there must be somewhere to grow them. We cannot afford to lose agriculural land. Zero population growth, led by zero immigration, would be a good idea. Why don’t you – and everybody else in the Commons and Lords – ever mention this (not a rhetorical question)?

    • acorn
      Posted March 18, 2016 at 6:27 pm | Permalink

      What Cabinet are you talking about? It only appears to have two members, Cameron and Osborne! The rest just appear to have walk-on parts in this pantomime parliament.

      Particularly the token “babes”, who turn up in front of a TV camera and demonstrate their total ignorance and even less understanding, of what’s going on. It really is cruel and embarrassing to watch or hear.

      Did you see Andrew Neil take apart Chris Philp MP yesterday. If ever there was a definition of Conservative, indoctrinated, lobby fodder MP, this guy is it, in spades.

      • Monty
        Posted March 18, 2016 at 9:00 pm | Permalink

        Except for Ian Duncan Smith, who appears to have taken a “walk-off part” in the panto this evening.
        Revolt is in the air. One hopes.

  28. Margaret
    Posted March 18, 2016 at 5:39 pm | Permalink

    A few comments there which presuppose that the OBR have somewhat superior views to yourself. Why do people give credibility to names or titles without sufficient reason and even then try to back up their errors with mockery? It certainly spoils honesty and effectivity. I become exasperated. We are certainly in need of improved broadband. Cyber space will not go away. Good arguments there John, but maybe lost to those who were voted into power due to the local sway who are easily fooled.

  29. Ken Moore
    Posted March 18, 2016 at 6:08 pm | Permalink

    John Redwood,

    ‘Some of that relates to the way in which France and Germany get round the EU rules to make sure that they can buy French or German product, whereas we in Britain apply the EU rules extremely fairly and end up buying a lot of foreign product from the continent’.

    Ah yes the ‘Gold plating issue’. and the issue of ‘the German run racket’.

    Would our kind host be willing to elaborate on the way in which Germany and France are able to interpret Eu rules so they are able to favour their own producers? . Why are they not fined for doing so ?. Why are the British so dogged in their determination to destroy it’s own manufacturing base to the benefit of foreigners ?. Why do those in charge with real power always appear to despise their own country?.
    We need to hear about they symptoms but also the cause of the patients condition…
    It seems that the Eu is a’ level playing field’ which is leveller for some more than others…

  30. jeffery
    Posted March 18, 2016 at 7:58 pm | Permalink

    ” I think that the danger of having an official forecast is that too much credibility is given to it, and big decisions are then made on the back of it.”

    While having no knowledge of the OBR macroeconomic model and its forecasts, it is possible to make a general observation about modern macroeconomic models of the kind the OBR presumably uses. They provide very detailed statistical uncertainty analysis. How much of this might be presented to politicians one can only guess. But rushing to spend every uptick in the central forecast, as in November, is hardly consistent with the large inherent uncertainties the modellers will know exist. After all, no one can really believe that annual growth will be steady at 2% for the next five years. One can be pretty well 99% certain this will not be the outcome. More relevant is the envelope of uncertainty around this central prediction, to which any sensible chancellor would pay due heed.

  31. fedupsoutherner
    Posted March 18, 2016 at 9:10 pm | Permalink

    Just received this from a friend.

    As I type the metered wind turbines in the UK are producing a mammoth 478MW (out of a metered capacity of 9000MW) – and Scotland is importing some 500MW from England. What a mess politicians have got us into – through total ignorance!

    What a joke!

  • 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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