An end to austerity?

I am glad the new government wishes to end the use of the “a” word.  It has been much used and abused over the last six years. It has been a rallying cry for the Opposition. It has been a misleading spin line used by the Cameron/Osborne government.  As a policy it has been lop sided and ineffectual. The last Chancellor did not succeed in bringing new borrowing levels down as promised. He relied on tax rises rather than on overall spending cuts. Within spending he did  make some cuts in welfare and defence many urged him not to make, whilst presiding over large increases elsewhere. I spent much of the last six years trying to explain what was really going on from the published figures, fighting against political lines from both Opposition and government which did not reflect the reality of the spending and tax plans.

So what will a prosperity driven policy look like? The government will examine how it can borrow money  very cheaply in today’s markets to invest in major infrastructure. There will be two constraints. The first is the difficulty the UK experiences in reaching agreement and in progressing plans for much visible large scale development. Sometimes we have too much delay to discuss, with endless consultations and arguments over whether a road or railway line or airport can be built. If the government wishes to cut through and shorten times for such debates, the best way would be much more generous compensation schemes so anyone adversely affected in their homes has the money to move or improve their property  if they wish. The second is the need to ensure we build infrastructure which generates a proper return. In the case of water or energy or telecoms there remains a market test to see if the investment pays. In the case of roads and heavily subsidised railway lines there is no such direct test, so government needs to make honest  study of need and economic impact.

The government will pursue its life chances agenda. This will be a package of policies designed to improve schooling, mentoring, training and access for all, so that more people can develop the skills needed for better paid employment. There is no more important task to raise productivity than to help each individual find a good place in our economy, with emphasis on more small businesses, more entrepreneurship and better rewards for success. Tax policy is also important. The outgoing government was more generous to large corporations with cuts to Corporation Tax than to individuals risking all in their own business with CGT and Income Tax. A very large company pays tax at 20% and a successful individual at 45%.

The government needs to worry about the balance of payments. The first and easy way to cut the outflows is to repatriate our EU contributions, slicing £12 bn off the balance of payments deficit. Spending the £10bn net public sector contribution here at home would give a welcome boost to jobs and output. I would bring that forward even if there is delay in cancelling the payments. Let’s have the removal of VAT on domestic fuel, and the extra spending o n the NHS with more nurses and doctors as identified in the Brexit  budget first published here.

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92 Comments

  1. Gary
    Posted July 16, 2016 at 5:41 am | Permalink

    did The City make a deal with China to make up the void left by Brexit? Looks like it.

    What austerity? The national debt has ballooned in 5 years more than labour managed in 13.

    • Lifelogic
      Posted July 16, 2016 at 11:34 am | Permalink

      Indeed the problem has been austerity in the wealth creating sector and endless, over remuneration or waste and misdirection in the state sector.

      • rose
        Posted July 17, 2016 at 8:33 pm | Permalink

        But I would like some attention paid to the public space: what is the point of being fifth largest economy in the world,with this huge population and 1.7 million unemployed if we can’t have park keepers in our parks, bus conductors on our buses, and policemen in our streets? Civilization is gradually breaking down in the cities – not London – and though nothing like as bad as in Italy, this is demoralising for people.

        • Jack
          Posted July 18, 2016 at 7:44 pm | Permalink

          We can employ all of those 1.7 million people for the public purpose, if we want. After all, the unemployed are in the public sector anyway, may as well give them a living wage and something to do.

          Or we could cut taxes so that the budget deficit is large enough to provide enough spending (demand) in the economy for more private sector jobs. It just depends on your political views. Firms hire based on sales, not the gimmicks like corp tax cuts or “competitiveness”, it’s as simple as that.

          Unfortunately, this requires our politicians to understand what is known as Modern Monetary Theory (MMT). I recommend reading a book (free online) called the Seven Deadly Innocent Frauds of Economic Policy by Warren Mosler.

    • Anthony Makara
      Posted July 17, 2016 at 10:09 am | Permalink

      The idea that we need more trade with China and India to replace the EU is dangerous. We can’t compete on currency, wages or deregulation. The GOP will be going to the American people with the message that giving China a free pass on free trade and currency manipulation must end. We must do the same. We need to build trade with hard currency economies.

  2. Mark
    Posted July 16, 2016 at 6:02 am | Permalink

    It has been a long time since there has been any proper market test for energy and transport investments. The HS2 economics have been monumentally fudged – it should have been cancelled during the coalition in Greening’s time as minister – and energy investment continues to be inverted, with all the expensive projects going ahead while cheap sources are hobbled with taxes and regulation.

    At least we might have a new minister prepared to slash the aid budget – that’s another £12bn of money paid mainly abroad.

    • agricola
      Posted July 16, 2016 at 12:28 pm | Permalink

      Will someone who knows, like an ex-RN submarine engineering officer, please explain why it is impossible to adapt the atomic /electricity generating plants from atomic submarines to civilian electricity generation. We have this technology, why are we not using it to power our small cities. Rolls Royce who create this technology have to date failed to even acknowlege the question. Is the windmill lobby to strong to allow such thinking.

      • hefner
        Posted July 16, 2016 at 5:51 pm | Permalink

        You might want to search along the lines of
        quota.com/Can-you-run-a-town-off-electricity-from ….

      • libertarian
        Posted July 16, 2016 at 7:49 pm | Permalink

        agricola

        Totally agree we’ve completely overlooked small nuclear plants in favour of massive headline grabbing plants.

        Interesting article on it here

        http://www.world-nuclear.org/information-library/nuclear-fuel-cycle/nuclear-power-reactors/small-nuclear-power-reactors.aspx

      • Des
        Posted July 16, 2016 at 8:49 pm | Permalink

        Hi. They use enriched uranium – v v expensive. Are too small and not designed to be “left on” for power generation. They are good for constantly changing demands. Refuelling is expensive. The steam secondary side would need to be v different. In short it would be like using a 2 stroke motorcycle racing engine for a train.

  3. Antisthenes
    Posted July 16, 2016 at 6:32 am | Permalink

    As you often pointed out austerity did not amount to cuts in expenditure but not increasing expenditure to previous ridiculous Labour levels. I hope that will continue we have to reduce tax spending down to 35% of GDP at some point so that we can encourage wealth creation. We have to eventually achieve a budget surplus if we are not to saddle the next generation with large amounts of debt.

    As you say infrastructure spending should where possible be spending the private sector would happily undertake. Otherwise how is government to know if it will be money well spent. There are of course exceptions and the experts will have to decide but they should be kept to minimum as we all know how experts get so many things wrong. I think we can safely say that they do so 80% of the time by the very fact that appears to be amount that so called predictions by these experts are seen to be wrong. The left leaning ones get it wrong 99% of the time.

  4. formula57
    Posted July 16, 2016 at 6:40 am | Permalink

    Chancellor Hammond’s ability to deliver promptly is constrained, presumably, by the astonishing undertaking arising from the Prime Minister’s meeting with Scottish First Minister Sturgeon that seemingly gives the Scottish government a veto over the approach to Brexit.

    That disappointment is only slightly eclipsed by the welcome news that Anna Soubry is now an ex-minister.

    • Chris
      Posted July 16, 2016 at 12:38 pm | Permalink

      Delighted about Soubry, butgreat disappointment that the Overseas Aid commitment to that dubious target set by Cameron is to be retained apparently by May.

      • hefner
        Posted July 17, 2016 at 5:49 pm | Permalink

        Mark, Chris,
        In its time, the Cameron Government strategy clearly linked aid (the DfID budget) with the UK’s defence and foreign policy objectives. International development funding has been used in peace-making efforts, with most peace-making spending on areas where the UK is militarily involved.
        Furthermore the development targets were driven by what could be called a “neo-liberal ideological agenda”, for example channelling millions of pounds into harnessing non-state actors for better health for the poor (the so-called Hanshep scheme), which has been promoting private sector investment (by a majority of UK among some other Western companies) in the health sectors of poor countries.
        Finally money from DfID through the “Joint Security Fund” has been funding some “development” priorities of the Foreign Office, MI5 and GCHQ (for £1.3 bn).

        It would be better if those on this blog always complaining about the aid budget had the slightest idea of how the money is being used. But I won’t be holding my breath.

    • Peter Stroud
      Posted July 16, 2016 at 2:06 pm | Permalink

      We should never forget that Mrs Sturgeon leads a Party that is hell bent on leaving the UK, and claiming complete independence. Her opinion regarding the UK leaving the EU is of little or no value. It should never affect our path to freedom.

      • Mark B
        Posted July 16, 2016 at 6:40 pm | Permalink

        The problem with the SNP, like all Socialists, is their arguments with regards to economics is fundamentally flawed.

        The Scottish First Minister claims that she wants what is best for Scotland and that leaving the EU is somehow not in Scotland’s interests. Is it not the case that, Scotland’s largest trading partner is in fact the rest of the UK and, should Scotland leave the UK and join the EU it would be seen as a foreign country and would have tariffs, if any, imposed on its goods and services. It would also have to join the Euro and surrender control to Brussels.

        None of the above is clearly in Scotland’s best interests. It is such a shame that these simple facts are not aired enough, for that would surely shoot the SNP fox.

        • Lifelogic
          Posted July 17, 2016 at 3:17 am | Permalink

          Indeed the Scottish would not be daft enough to vote for independence from the UK, have their own currency (or adopt the EURO) and lose all the UK subsidies.

          The BBC favourite Sturgeon and the SNP are a disaster for Scotland and they are slowly realising this as the socialist SNP economic damage and incompetent SNP government increases by the day.

  5. Mark B
    Posted July 16, 2016 at 6:41 am | Permalink

    Why cannot private industry raise the money itself and charge consumers for the use of infrastructure projects like HS2 ?

    If there is a business case for it then it should be easy for them to do, would it not ?

    We need to stop using taxpayers money to sure up bad businesses by creating artificial demand. We should allow risk to be rewarded. It is time both government and the people accept that it is high time that government is not the solution to everything. We want and need less of it. It is just too costly and inefficient.

  6. CHRISTOPHER HOUSTON
    Posted July 16, 2016 at 6:48 am | Permalink

    Second Paragraph: “Sometimes we have too much democracy, with endless consultations and arguments over whether a road or railway line or airport can be built.”

    Apologies first for taking the above out of direct context. But I last heard the carp about ..”too much democracy” from leading politicians and quality newspapers as a means of thwarting the Brexit result.

    Not getting ones way often leads to accusations of Mr Peasant and his uncomfortable and time-consuming objection being disregarded: “Oh give him 10 Bob and a free bag of tomatoes, he’ll be alright ”

    On this tiny island, successive governments have made a fine mess of roads, dug them up, put them back down again, dug them up, put them back down again , built railways, pulled up the track, built more roads to compensate, now tries to dig them up and put rails down; has planes making a complete mess of our small sky. Enough. Stop. OK we’ll all emigrate to Canada or the USA just so we can have something which stays in one place for 5 minutes in a row. make use of the Second Amendment to uphold “too much democracy”
    Same too with wind turbines. “Lovely idea.” A kind of windmilled Constable painting with a modern gadget instead of those elegant sails. Bypassed local democracy, and stuck the things up against all commonsense.
    Politicians come and go but someone’s village and home should not.

    We have a leadership in government in place now elected by 300 out of over 35 million. Not a good time, if there ever is a good time to speak of “too much democracy” in any context at all. Especially not from Parliamentarians who could be then grouped with Mr Lammy MP, not good.

    • hefner
      Posted July 16, 2016 at 5:42 pm | Permalink

      CH, Don’t you give these 300 MPs any credit in representing the majority (in a FPTP sense) of voters in their constituency?
      What you seem to be believing in that suddenly the UK has transformed itself into Switzerland. You’d better wake up.

      • CHRISTOPHER HOUSTON
        Posted July 16, 2016 at 10:19 pm | Permalink

        hefner: Short answer: NO
        It is folklore but a truth that in many Constituencies “You could put a donkey up and he’d get it in. ”
        If the 300 or the 172 Labour MPs REALLY believe they represent their electors then all they have to do is drop the Party logo and stand as independents. The UK Parliament knows exactly what happens in such cases. And I’m sure you do too.

  7. petermartin2001
    Posted July 16, 2016 at 6:48 am | Permalink

    “The government needs to worry about the balance of payments. ”

    I’m not sure that worry is the right word but it, and, for that matter, all of us need to understand how the BOP deficit affects borrowing levels in the country generally. Someone has to borrow to fund the BOP deficit.

    So if that deficit is 7% of GDP we can have the government run a deficit of 7% of GDP too.

    Or we can have the government have a 3.5% deficit and the rest of the UK has a 3.5% deficit too. We run into deficit if we start borrowing.

    But say we all get scared and stop borrowing like we did after the 2008 GFC. Say we start saving to the extent of 5% of GDP

    Then, if the BOP deficit is still 7% of GDP, the government will be running a deficit of 12% of GDP. It will be borrowing our savings as well as covering the cost of the 7% BOP deficit.

    That could happen again! 12% Budget deficit !! Shock Horror!

    Not really – providing we understand why that is. The last thing we’d want to do was plunge the economy deeper into recession by raising taxes and/or cutting spending. That’s never worked in the past and it’s important to understand why it hasn’t worked.

  8. Ian Wragg
    Posted July 16, 2016 at 6:59 am | Permalink

    It would be ideal to get rid of VAT and replace it with a simple sales tax
    Hinckley Point makes no financial sense now neither does HS2.
    I see Mrs May is already backsliding on Brexit. England is sick of the whining, hectoring Krankie sister.
    Let them have a second referendum on independence and then be quiet.
    Let’s see who really wants a socialist utopia on the fringes of Europe.

    • libertarian
      Posted July 16, 2016 at 7:53 pm | Permalink

      Ian Wragg

      I’d like to see how your “simple sales tax” proposal would work. As a businessman with many businesses I find VAT a relatively straightforward tax to administer, what would be the benefit of replacing it?

      • Lifelogic
        Posted July 17, 2016 at 3:21 am | Permalink

        It is not at all, perhaps your VAT affairs are simple, but VAT is an absurdly complex and vert costly nightmare for many. A very inefficient way to raise tax indeed.

        • hefner
          Posted July 17, 2016 at 6:03 pm | Permalink

          Are you still using Chinese abacus for this VAT job? Most book-keeping softwares linked to shop/warehouse/employee “inventories” softwares deal with such a job relatively easily.

        • libertarian
          Posted July 17, 2016 at 8:07 pm | Permalink

          Lifelogic

          So please explain in what way and how a Sales Tax would be simpler?

          By the way I have many businesses with differing VAT rules maybe you find it too complicated for you to work out but seems to be ok for me. Perhaps you thinking its costly is a part of the problem in your lack of understanding of the complexity of a sales tax. As you dont seem to know let me tell you. Sales tax is collected by the retailer when the final sale in the supply chain is reached via a sale to the end consumer. End consumers pays the sales tax on their purchases. Businesses issue resale certificates to their sellers when buying business supplies/inputs that will be resold since sales tax is not due. Tax jurisdictions do not receive the tax revenue until the sale is made to the final consumer. You think this is simpler? Your last statement is just factually incorrect it is far more efficient for the tax authorities as they get their revenue at every stage of the chain and VAT is far far harder to evade than a sales tax.

  9. Caterpillar
    Posted July 16, 2016 at 7:02 am | Permalink

    I know I commented a couple of days back to the same effect, but I think some elements of a Bradford X tax are appealing:-
    For employees a progressive tax on expenditure (wages – saving), and for businesses receipts-investment at a tax rate equal (or proportional) to the rate of the highest paid worker.

    • Caterpillar
      Posted July 16, 2016 at 7:23 am | Permalink

      There is a brief Cato summary (2014) of two approaches, just search ‘Move to a Progressive Consumption Tax’, a bit US but it gives the idea.

  10. Jerry
    Posted July 16, 2016 at 7:03 am | Permalink

    In the last few days we have seen the ‘Cam-borne set’ and their distortions polices being ousted, in the last few years Blairism has been put to bed, but unless Thatcherism is also going to be put to bed the UK will carry on with the “same-old same-old” course of failed polices that are not suitable for the times we now live in (they were specific to the 1980s, just as trouser flares were to the 1970s…). Quite frankly the UK faces the biggest challenges since perhaps the end of WW2, they are at least equal to that period and thus need the same clean-sheet, even blue-sky, thinking. Back to the future, as they say…

    Nothing will change though as there are to many people with snouts in the trough, not just the usual suspects, but even Mr and Mrs Pleb, for example there is a housing problem, if not crisis, in this country that could be solved by new council housing era [1] but then of course that would impact on the various types of (buy-to-let) landlords and depress the value of the private housing market.

    [1] allowing people to easily, and perhaps more quickly, move around the country to were the work is or were their skills are needed

  11. Richard1
    Posted July 16, 2016 at 7:05 am | Permalink

    Two disappointing features of George Osbornes chancellorship were the failure to close the deficit quicker by bringing down spending and the refusal to simplify our absurdly complicated tax system. Simplicity in the tax system in itself would be a confidence boosting measure. We need to be fiercely competitive, post-Brexit, so let’s hope Mr Hammond uses this opportunity to simplify and flatten taxes and makes sure the UK is in line with the most competitive in Europe (Ireland for Corp tax and Switzerland for others in most cases). Let’s hope also for an end to virtue-signalling spending policies which clearly don’t stand up to rigorous scrutiny. Automatically increasing Overseas aid, green crap and HS2 are obvious examples.

    A few quick hits by Liam Fox on trade deals would be a huge confidence booster as it would reassure business that there is life after the EU after all!

    • petermartin2001
      Posted July 16, 2016 at 3:12 pm | Permalink

      You can’t bring down the deficit by cutting spending and raising taxes. If you don’t believe me ask George Osborne about that. He’s found out the hard way.

      Money spent into the economy by government will always come back as taxes unless it is saved. The money flow is like an electrical current. If you push fewer electrons into a circuit at one end you’ll get fewer out at the other. The difference between what goes in and what comes out is the charge that is stored.

      So total debt of government is the total savings of everyone else. The deficit is just the rate of change of the debt in any one time period. ie the new savings.

      So cutting the debt means cutting our savings. Is that such a good idea?

      • Richard1
        Posted July 16, 2016 at 9:20 pm | Permalink

        I did not suggest raising taxes, it is perfectly possible to cut the deficit by cutting wasteful spending. You are not right that all govt spending comes back as taxes. Overseas aid, much green crap, subs to the EU et are examples of spending which doesn’t.

      • Gary
        Posted July 18, 2016 at 5:46 am | Permalink

        yes, with the insanity of debt based money by repo’ing govt debt by fiat decreed monopolies, we arrive at this state of affairs. The world will only prosper on an equitable basis when we scrap this fraud and goto sound money ie money that’s not created as debt and cannot be inflated.

    • sjb
      Posted July 16, 2016 at 5:56 pm | Permalink

      Richard1 wrote: ‘A few quick hits by Liam Fox on trade deals would be a huge confidence booster […]’

      The EU has exclusive competence over trade deals and the UK looks like remaining a EU member for some time yet.

      • Richard1
        Posted July 16, 2016 at 9:19 pm | Permalink

        Not so, agreements could be struck to come in force at the time of Brexit.

  12. Nig l
    Posted July 16, 2016 at 7:07 am | Permalink

    Umpteen billion in HS2? Yes let’s see payback before proceeding and get the third runway going. Both have proved a poor advert for your Governments commercial intent and acumen.

    As for wealth creation, I agree about the importance of entrepreneurship, having worked with hundreds, maybe more, the thread was the poor management and financial skills of the owner manager, leading to poor customer service and lack of efficiency. Too many lifestyle businesses, and reluctant/ non existent risk taking having be burned by successive economic downturns .

    The majority of people start their businesses with no training or knowledge apart from whatever the service they are going to provide. We need HMG to provide real support, not the usual lick of paint, in terms of a in depth mentoring programmes, far greater levels of risk capital and even greater efforts to spin out R &D from universities to the private sector. Also rewards for risk, for instance flex taxation for Entrepreneurs in Hi Tech Sectors .

    Finally it could all be academic, it looks as if we are going to be held to ransom by Scotlsnd, re Brexit. Are we starting to see Theresa’s Mays lines forming that keeping the UK together will take precedence over Brexit, I hope I am wrong. If Scotlsnd gets too demanding let them go, when can we in England have a referendum asking if we want them or not?

  13. Denis Cooper
    Posted July 16, 2016 at 7:11 am | Permalink

    The good news that Soubry is out of the government does not compensate for the bad news that Theresa May has not yet seen fit to invite our host to join her government. I find that hard to understand, I would have thought that his undoubted talents would have been a very welcome addition.

    • Chris
      Posted July 16, 2016 at 10:32 pm | Permalink

      Very much agree on both counts, Denis.

  14. CHRISTOPHER HOUSTON
    Posted July 16, 2016 at 7:17 am | Permalink

    Scots have a delightful accent. The stuff of spoken-aloud poetry. Though Mrs Sturgeon’s continual repetitive references and primeval urgings to take Scotland into a European dictatorship of “…EU; EU… EUEU…now grates the ear as does her mouthing of “austerity, austerity, austerity” as though saving a penny or two was and is right out of the Scottish mindset.
    But it is economically and socially unhealthy for a nation to think and believe it can spend itself out of difficulties.
    The last government, the one we had a few weeks ago which we voted for, and this new government which we have not voted for, should not lead us into an economic trap. Leave that to the Corbynistas. They’ll do it. The 172 Labour dissident MPs would too, if they ever got the chance, as stripping the gold off the nation’s churches and flogging it is all they have in mind so long as they get a fat pension and stay in power as many salaried years as possible.

  15. Lifelogic
    Posted July 16, 2016 at 7:23 am | Permalink

    We need to cut public spending and release the private sector from the straight jacket of over taxation and red tape. About half of the state sector does little of any use anyway. Their staff are about 50% over remunerated too (when pensions are included) too. Many actually just cause positive harm to the economy and inconvenience the productive and wealth generators. The tax systems need to encourage self provision rather than dependence on the state. This in education, health and many other areas. Foolish Osborne just put 10% on private medical and indeed other insurance. Undo almost everything Osborne did, that would be a good start. Cancel Hs2, build some roads and get on with a runway at Heathrow and Gatwick.

  16. Oggy
    Posted July 16, 2016 at 7:27 am | Permalink

    Hi John,
    I would agree 100% to the removal of VAT on domestic fuel and further investment in the NHS if not at least to show the electorate that the Brexiters are not liars ! Unfortunately whilst we are still in the EU and have not yet invoked A50 we have a committment to pay the EU contributions and abide by EU law.
    However, yesterday it was reported Mrs May said we won’t invoke A50 until we have UK wide agreement (meaning Mrs Sturgeon) – BUT I say we already have UK wide agreement, what was the UK referendum result again ? LEAVE – Brexit means Brexit remember ?
    OR do I detect some backsliding going on here ?

    The only good news I’ve seen this morning is Anna Soubry is no longer in Government – Hoorah !

    • Leslie Singleton
      Posted July 17, 2016 at 4:03 am | Permalink

      Oggy–What Soubry needs is deselection never mind being no longer in the Government–Simply unbelievable what she was saying

  17. Lifelogic
    Posted July 16, 2016 at 7:28 am | Permalink

    Apparently Mrs May made a maiden speech strongly supporting the assisted places scheme.

    Starting that again would be an excellent plan and Grammar schools too. Is Mrs May a conservative at all or just another pathetic & wet LibDim in the Heath, Major, Cameron mode.

    • Lifelogic
      Posted July 17, 2016 at 3:24 am | Permalink

      Tax relief for all would perhaps be better still ( for education and medical cover) thus lightening the load on the state provision.

  18. bigneil
    Posted July 16, 2016 at 7:52 am | Permalink

    In my home county we have recently heard of 29 closures of Children’s Centres. Now comes the news that 2 ( possibly 3 ) Community hospitals are to close. All to “save money”. Nothing has been said about the continuing rise of costs due to the amount of people walking into this country with their hands out. All need housing. A good portion of them will expect, and get, housing paid for by us. They will also get money, handed to them from our taxes. ALL of them will be able to use the NHS. Those who came here with children will see their offspring put into overcrowded schools, probably causing the child of someone local to be moved to another school, maybe miles away, causing problems for them and their parents. The child who has newly arrived will need extra help because of language problems. All this costs money.

    Not using the “A” word John does not mean it is not there anymore. As more and more people walk in expecting “Lifeboat Britain” to be a never ending supply of free everything, the cost of supplying it, which cannot continue, will come at our expense, financially and culturally. We are importing/admitting, and paying for, our own destruction. When foreign criminals can be handed better lives, for turning up illegally, and doing nothing, than what pensioners get for 45 yrs contributions, then something is DRASTICALLY wrong. The criminals and the freeloaders of the planet will continue to turn up while ever free lives on the UK taxpayer are handed out. They know the chance of being deported are just above nil. Released after any sentence will mean straight onto more crime for them, more cost for us.

    The new version of an old saying is . .We are robbing Peter . . to pay Tomas, Iqbal, Paulo etc . . and everyone else who wants a free life on the UK taxpayer. It HAS to stop.

  19. oldtimer
    Posted July 16, 2016 at 7:55 am | Permalink

    The May government now has what is, probably, its one opportunity to refashion government spending priorities and the tax code. The guiding principle, it seems to me, should be efficiency. Subsidies, vanity projects and complexity should be candidates for the chop. My list of projects that deserve the very closest scrutiny would include the proposed HS2 line from London to the Midlands, the hugely expensive nuclear station, subsidies for renewable energy projects and the bloated aid budget (which should be cut down to a contingency fund for disaster relief). There is a case for radical tax reform; there is no shortage of ideas about how to do this, such as the Single Income Tax proposal of the 2020 Tax Commission. Link herehttp://www.2020tax.org/
    In addition Brexit offers the opportunity for significant simplification of regulations as competence is returned from the EU to the UK.

  20. Denis Cooper
    Posted July 16, 2016 at 7:57 am | Permalink

    Off-topic, I hope that media reports are inaccurate and Theresa May is not going to make our withdrawal from the EU conditional upon the agreement of Nicola Sturgeon because I doubt that would ever be forthcoming.

    The government cannot put in the Article 50 notice while that is still the subject of legal proceedings – it would be contempt of court to do that – and so the Scottish problem is not yet creating any additional delay, and nor should it be allowed to do so.

    However it occurs to me that once we are out of the EU there will be new possibilities to help address Scottish concerns/complaints, for example the UK government could issue work permits which were only valid in Scotland.

    That wouldn’t entirely stop people from abroad using Scotland as an immigration back door to get into England, which is where most of them would actually want to go, but it would go a long way to doing that and reduce the need for border controls.

    • Chris S
      Posted July 16, 2016 at 2:10 pm | Permalink

      I submitted a similar post before your’s appeared here, Denis.
      This is a really crucial point and one that needs clarifying as soon as possible.

      Could our host please write to Mrs May and/ or David Davies ?

      It is necessary to ask exactly what Mrs May has conceded is in respect of needing the “permission” of Scotland, Wales and N. Ireland before proceeding with Article 50.

      If indeed she has naively given Sturgeon that assurance, I can see it developing into years of litigation when, as will be inevitable, the talks stall and she has no option other than to go ahead without SNP agreement.

      Mrs May could end end up in a veritable legal minefield.

    • forthurst
      Posted July 16, 2016 at 2:33 pm | Permalink

      Mrs May has an invidious reputation for sucking up to ‘minorities’; what she needs to understand is that every ‘minority’ would like to become the tail that wags the English dog if given half a chance; a bit more bulldog spirit would be in order if this government is not to fail by attempting too hard to appease ‘minorities’ and all their ‘special’ concerns whilst losing its focus on the greater good: our country, our rules.

    • Anonymous
      Posted July 16, 2016 at 6:18 pm | Permalink

      The Scots voted to remain British. As British we voted to leave the EU.

      End of.

      (They should have not take part in the referendum at all if they were going to ignore the outcome.)

  21. MikeP
    Posted July 16, 2016 at 8:10 am | Permalink

    Indeed you did point out, several times, that overall public spending has continued to increase, perhaps not by as much as it might have done without a deficit to clear, but hardly worthy of the name “austerity” which played directly into the Opposition’s narrative. As a pensioner I’m torn – delighted but no less surprised that the triple-lock survived and the amount spent on pensions within the welfare bill increased markedly as a result. Perhaps the 2.5% minimum should be re-visited while public sector employees get little if anything on their pay, unpopular party-politically-wise though. The Corporation Tax rate is a difficult one as we need to encourage companies to continue to settle here, to employ and develop here – it would just be nice if they paid their taxes here too.

  22. agricola
    Posted July 16, 2016 at 8:36 am | Permalink

    Yes the emphasis needs to be on the creation of wealth,particularly at the small business end, not the spending of it on prestige projects that cannot show a profitable return. HS2 rail fares London- Birmingham return are likely to be similar to London-New York air fares return.

    With road and rail transport, look at the reduction in costs and increment in profits to all or most of the end users. I would gues that businessess, large and small, are unnecessarily burdoned by the inadequacies of our road and rail systems.

    On the subject of the day, Turkey has just demonstrated her total unsuitability to be part of the EU. Let her trade freely , but not become part of the political mix. An EU mix which I suspect will be unrecognisable in five years time. A conflict of religion and things secular has no place in a modern Europe. The countries of the EU and for that matter the UK need to realise that one is a matter of faith and belief, the other is a democratic means of conducting society. Henry V111 got it about right, there should be no blurring of the edges.

    • Mitchel
      Posted July 16, 2016 at 1:28 pm | Permalink

      Chris Bryant MP disagrees with you;what’s more he seems to think you reckless Brixiteers are to blame for Turkey’s abortive coup.This prize tweet from last night :-

      “Turkey is now and has long been a lynch pin in European & wider security.Ludicrous Brexit lies undoubtedly contributed to destabilising”

      • Oggy
        Posted July 16, 2016 at 3:19 pm | Permalink

        Well CB has completely lost the plot and is living in some alternate Universe.
        Who votes for these idiots and puts them in Parliament ?

      • Denis Cooper
        Posted July 16, 2016 at 6:08 pm | Permalink

        I would have thought Cameron saying that he would veto Turkey joining the EU before the year 3000 might have had a greater effect.

    • sjb
      Posted July 16, 2016 at 6:12 pm | Permalink

      agricola wrote: ‘Turkey has just demonstrated her total unsuitability to be part of the EU. Let her trade freely , but not become part of the political mix.’

      If we remain an EU member we could veto Turkey’s application and thus shape the ‘political mix’; but outside, as part of a Brexit deal with the EU, we might find we have to accept free movement in exchange for a good arrangement for our services industry – especially financial services.

  23. SecretPeople
    Posted July 16, 2016 at 8:39 am | Permalink

    I enjoy reading your blog, John, though never having been a Conservative voter.

    Regarding:

    extra spending on the NHS with more nurses and doctors as identified in the Brexit budget first published here.

    I do hope the government invests in growing our own. There is a demand for nurse training places here in the UK, but there has been a cap on places. It is a false economy. We should also go back to nursing banks or pools, rather than paying extortionate agency fees – same goes for doctors. We can better control quality that way too.

    • Leslie Singleton
      Posted July 17, 2016 at 4:11 am | Permalink

      Dear Secret–This cap on Nurse Training Places–Does anybody understand what that is all about?

  24. CHRISTOPHER HOUSTON
    Posted July 16, 2016 at 9:05 am | Permalink

    Tackle immigration seriously. Never mind the “We really need skilled professionals” blah blah blah. As part of a comprehensive and highly popular austerity plan we should reduce immigration to as close to zero as humanly possible .

    The outflow of people..what is it, 200,000 per year ? This will reduce our population within 15-20 years at that rate to a manageable and healthy number of individuals on these islands. We can spend much more on health care then…for we will not need to build MORE roads, MORE houses, MORE fire stations, employ MORE police, MORE firefighters, MORE doctors, MORE nurses, MORE traffic wardens, MORE judges, MORE magistrates, build MORE roads, build MORE railways.MORE reservoirs.

    We can also reduce the number of MPs to HALF their number. ( reducing “too much” democracy ) Have HALF the number of Select Committees;HALF the number of local councillors; HALF the number of local and national bureaucrats.
    This would be reasonable and highly popular austerity. A vote winner.

    Should we ever need immigration again then we will have an island which is spacious, healthy, excellent road and rail communications. A place for young migrants and their children to breathe… away from the foul air and rabbit-like warren cities and towns of Europe.

    • Graham
      Posted July 16, 2016 at 12:39 pm | Permalink

      Well put.

      Quality over quantity every time – just like the Danes have it.

    • Martyn G
      Posted July 16, 2016 at 5:57 pm | Permalink

      Too late, I fear, far too late. Whatever their race, colour, creed or from which country immigrants have entered the UK, came they did and in substantial numbers. It would be unethical, immoral and illegal to force their removal but the fact is, compared to the average 1.3 children per couple of the indigenous population, immigrants tend to have 3 or more children per couple and, indeed, marry at a much younger age and then tend also to have 3 or more children.
      It is likely, therefore, that the UK’s current indigenous population will, within perhaps 2-3 generations, become an ethnic minority. Demand for all you say must continue to ramp up to cater for an every-increasing population – even if it were possible to halt all immigration today. Which of course it is not.

    • Dennis
      Posted July 16, 2016 at 9:31 pm | Permalink

      C. Houston – Absolutely right. Even if every immigrant was an Einstein, Michelangelo, Henry Ford etc., etc. the UK needs to be an uncrowded sane society. The main culprits clogging the UK up are about the 50 million so called indigenous whites which does include me. What’s wrong with a population of 10-15 million? Make it 7 million and we can give asylum to the many more deserving than we currently do.

      Unfortunately the needed zero immigrant plan scotches my plan – I have invented a wonderful widget which needs around 20 million skilled workers unavailable in the UK to which the govt. would give the go ahead and raise no objection as it would increase our GDP, boost our economy etc. and make us all rich (and the ecosphere much poorer but who’s counting?)

  25. acorn
    Posted July 16, 2016 at 9:13 am | Permalink

    If the Conservative party stops using the “a” word, what word will it replace it with? Austerity is a fundamental part of laissez faire, neo-liberal, Conservative ideology! That’s not going to change. Conservatives, don’t know how to spearhead an “innovation nation”; you leave everything to “markets” that are not self-sustaining, are unstable and require significant government support and regulation to function properly. Regulation being a dirty word in the neo-liberal globalist world. Hence as the man said,”if you don’t know which way you are going, it is unlikely you will get there”.

    Anyway, for those that have still not grasped the fact that the government’s “national debt”, is the non-government sector’s “national savings”, have a google of – Sectoral balances of the eurozone This afternoon I devoted to the sectoral balances of the eurozone -. The UK is like France but with a bigger current account deficit (red bar above zero on the y-axis).

  26. CHRISTOPHER HOUSTON
    Posted July 16, 2016 at 9:30 am | Permalink

    Mr Cameron , before he bolted, was for reducing the number of MPs. He’s resigned of course but still remains an MP. His constituency, from what is said in Parliament, is barren of immigrants/asylum seekers. Hard to see why his Constituency exists at all if its not accommodating all the useful people from abroad. So why not get rid of his Constituency? No need to pay his MP’s salary which should save a bob or two and it will cut down on wasteful democracy in the area.

    Also, many people are wondering quite rightly, what the Labour Party is for. Their MPs have got loads of time on their hands. We see them having a really good time holding meetings against one another, where more Labour MPs are in attendance. Obviously they cannot be doing any important work for their constituents in those daylight hours.
    It should be part of any austerity plan that Labour MPs pay back that part of their salaries where they attend leadership meetings entirely for their own amusement. And pay a fine for accepting that part of their salary in the first place.

  27. The PrangWizard
    Posted July 16, 2016 at 9:39 am | Permalink

    Amen to all that.

    I’d like to see a fund for the retained equivalent annual retained EU contributions – the UK Independence Capital Fund say – from which projects can be financed and identified as such so people can see directly how the country benefits from leaving the EU. These should not be ultra large projects but new or replacement bridges, widened local roads and the like which can be started and finished and the benefits enjoyed quickly. and which are spread widely across the country for everyone.

    And let’s hope we can see improvements in the mindset of planners, let’s build in more future to infrastructure developments – expand major roads from two lanes to four or maybe even five lanes instead of to just three, ( the A34 between Winchester and the M40 is a case in point and the A 27 past Chichester ), and apply the same thinking everywhere. There will be economies of scale so there are cost benefits to be had in the present and future costs deferred considerably. I imagine it’s too much to ask that we get new runways at Heathrow AND Gatwick, but that’s the kind of thinking which ought to prevail.

    Delay after cowardly delay is a national and international embarrassment of enormous proportion.

  28. Narrow Shoulders
    Posted July 16, 2016 at 11:16 am | Permalink

    Soubry is out I see.

    Who will fill the shrill female politician seat on Question Time now?

    Amber Rudd
    More of Diane Abbott
    The other Eagle
    Any SNP woman

  29. Chris S
    Posted July 16, 2016 at 12:09 pm | Permalink

    Just when things were looking up with the appointment of David Davies as Brexit Secretary, Teresa May appears to have made a massive strategic blunder on her first visit to Scotland.

    Consulting the devolved administrations is one thing but to tell Sturgeon that article 50 will not be triggered until there is effectively an agreed view across the UK, is effectively giving Sturgeon a veto.

    Trying to bring Scotland into the heart of internal UK discussions was clearly designed to try and hold the Union together but Mrs May is being naive, at best. She has fallen headlong into an obvious trap set by the SNP leader.

    Mrs May has forgotten that Sturgeon’s one goal in life is independence. The SNP are NEVER going to agree a strategy for Brexit. As a result of her statement in Edinburgh, Mrs May has condemned David Davies to months of fruitless negotiations from which there can only be one outcome : stalemate.

    In order to move things on, The Prime Minister will inevitably have to trigger Article 50 without Scottish agreement.

    Sturgeon will immediately launch a whole new tirade against Westminster and England, immediately demand a second independence referendum claiming that The Prime Minister has broken her very first pledge to Scottish voters. That is exactly what the SNP leader wants.

    She can, of course, then go into the second Scottish referendum campaign blaming English intransigence and claiming that the English cannot be trusted.

    She must regard Friday as a very good day’s work.

  30. Caterpillar
    Posted July 16, 2016 at 12:42 pm | Permalink

    Yes to infrastructure, I am very much looking forward to the inspirational HS2 progressing, and demonstrating a clear rebalancing of such investment from London to the rest of the U.K.

    More generally for large, long-life infrastructure I think “a proper return” will remain a very difficult concept to tie down (forecast and relevance). Aside from fundamental economic arguments including the validity of GDP, simple post-Keynesian effective demand arguments, the conditions under which government investment does not crowd out private investment (e.g. monopoly breaking, or when rates are low so that private investment is not motivated to seek longer term risk) and the difficulties of forecasting over the projects lifetimes (and when to build in the real option values) etc., there is a difficulty of where benefits and costs fall. Large scale infrastructure inevitably benefits some, while others lose – and this is certainly going to be expected when rebalancing the country, part of the payoff is the rebalancing which is a different concept to “a proper return” conventionally understood. (If a country could be managed on NPV or EVA or such, it might be nice, but we all know that the world is not that simple).

  31. Oggy
    Posted July 16, 2016 at 12:57 pm | Permalink

    Off topic
    re Scotland as it’s been mentioned above a few times.
    Ms Sturgeon said regarding a second Scottish IND referendum and Mrs May’s refusal to hold another – “So I work on the basis that trying to block a referendum, if there’s a clear sense that that’s what people in Scotland want, would be completely the wrong thing to do.”
    So Ms Sturgeon what about you and the SNP MP’s wanting to block the LEAVE result of a UK WIDE referendum which is what the majority of the UK people want to do. Total and utter hypocrisy.

  32. Colin
    Posted July 16, 2016 at 1:16 pm | Permalink

    We need to do what we should have been doing since 2010:

    Cut spending;
    Cut taxes;
    Cut regulation.

    We need to be able to promise people:

    Higher wages;
    Lower taxes;
    Lower prices.

    Corporation Tax should be abolished, and dividend income be subject to Income Tax at the taxpayer’s marginal rate. That way companies will be encouraged to reinvest their profits in growing their business, leading to more jobs and better pay, and profit taken out of the business will be fairly taxed at the same rate as other income.

    Once we’re out of the EU we can abolish VAT and replace it with a Local Sales Tax. The amount collected in VAT is roughly equal to the amount given by central government to local authorities, so in future they should raise their own revenue, and compete with each other to be cheaper and more efficient, or people won’t want to live in their town or businesses establish themselves there.

    We should also stop encouraging young people of modest academic ability to take on crushing debt for a worthless degree that will only get them the kind of job that thirty years ago they could have got with a couple of O-levels (which we should bring back). Then we’d have enough money to restore free university education for the 20% or so with the ability to make use of it. And bring back grammar schools!

    The least academic young people should be encouraged to learn a proper trade – bricklayer, carpenter, chef, hairdresser, plumber, mechanic – something that can’t be outsourced to another country and will afford them the opportunity to own their own business one day.

    Immigration should be stopped for all but the most exceptional individuals – we have 1.7 million unemployed, we don’t need more unskilled labourers. And we’d have room for some genuine refugees.

    Planning laws should be relaxed (or better yet, repealed) so that enough houses can be built for everyone to own their own home, at a price that bears some rational relation to their income.

    Or am I just a wacky, extreme, swivel-eyed loon?

    • ken moore
      Posted July 16, 2016 at 5:45 pm | Permalink

      Business rates should be cut radically ,it is a most unfair tax that has no connection to turnover or profitability…

      • Leslie Singleton
        Posted July 17, 2016 at 4:14 am | Permalink

        Dear Ken–Or rationality–The Government should be paying businesses for all the work they do for nothing on the Government’s behalf, not the other way round

    • sjb
      Posted July 16, 2016 at 6:36 pm | Permalink

      @Colin
      About your point that we do not need unskilled workers because we have 1.7m unemployed:

      At The Great Yorkshire Show, held a few days ago, an arable farmer said 80% of his pickers were from the EU because he could not find enough local workers. He claimed UK horticulture relied on 70-80% of EU workers.

      http://www.bbc.co.uk/news/live/business-36746800
      (scroll down to 15:30 UK farms ‘need EU workers’)

      • Dennis
        Posted July 16, 2016 at 9:49 pm | Permalink

        “At The Great Yorkshire Show, held a few days ago, an arable farmer said 80% of his pickers were from the EU because he could not find enough local workers. He claimed UK horticulture relied on 70-80% of EU workers.”

        If or when all EU countries have the same standard of living which is supposed to be the object, who will be doing the agricultural work then? Presumably those workers, if willing, will be paid £15, £20/hour or maybe much more at that time or perhaps the equivalent of £500+/week today. It will be interesting to see what food prices in the shops will be – probably quite high so tax credits, food banks etc. will be needed.

        • sjb
          Posted July 18, 2016 at 8:53 pm | Permalink

          @Dennis
          Assuming the UK leaves the EU, do not be surprised if cheap Eastern European labour is replaced by even cheaper Indian labour.

          • Lindsay McDougall
            Posted July 20, 2016 at 1:35 am | Permalink

            Or even cheapish (but not so cheap) English labour. There is no reason to suppose that politicians know better than employers what the prices of the various types of labour should be.

            Immigration control is more for cultural reasons than economic reasons. You don’t need to be a genius to recognise that ghetto-isation, which happens when too many immigrants arrive from a single source, is not ideal.

    • getahead
      Posted July 16, 2016 at 7:30 pm | Permalink

      Or am I just a wacky, extreme, swivel-eyed loon?

      If you are , you are one of the majority Colin.

  33. Turboterrier
    Posted July 16, 2016 at 2:16 pm | Permalink

    Austerity funny word that especially as Dave has increased the payments as a farewell gesture to his 32 special advisors that and what the sacking of so many this week how much is all that going to cost?

  34. Margaret
    Posted July 16, 2016 at 2:26 pm | Permalink

    Some people choose to be austere in their approach to life. In fact the historical Oxford Dons I believe used to live their lives like this until the high flying money merchants took over. This is OK. It is a choice. The broad generalised approach to it meant that all wages could be lowered , frozen with the excuse of austere times. It was a useful word for unscrupulous employers. The diametrically opposite approach to life is spend, spend , spend .This smacks of carelessness , boom and bust. If only we could go back to a time where there was moderation in all money matters and people were not ruled by material trash which made them think they were superior to others.

    Reply Go and look at grand North oxford homes built it is said for some dons in the Victorian and Edwardian era, now unaffordable for most academics.

  35. ian
    Posted July 16, 2016 at 3:30 pm | Permalink

    Cannot make assessment on this new government till april next year, need to see what new departments will be doing and what ideas they come up with also the first two budgets and the timing of article 50.

  36. ken moore
    Posted July 16, 2016 at 5:40 pm | Permalink

    No need for ‘austerity’ as the uk has a thriving economy ,the 6th largest in the world with a record 30 million people in work…although i suspect atleast 29 million are engaged in selling coffee or tea towels and mugs printed with ‘keep calm and carry on’..
    Oh we still make jet engines but almost everything else has been sold of or moved abroad yet we as a nation have continued to spend like there is no tomorrow ….

    If the goverment cut taxes and regulation and made it easier to create real jobs and wealth through innovation …not short cutting by speculating on the property markets and selling of assets there would be some hope…

  37. Jack
    Posted July 16, 2016 at 6:07 pm | Permalink

    The Chinese have expanded their fiscal deficit to maintain demand and it is proving successful. Meanwhile the UK, along with the rest of the EU, are actively trying to reduce fiscal deficits because they still believe the failed and thoroughly debunked analysis of Kenneth Rogoff that higher public debt impedes growth – the truth is it doesn’t, it aides growth!

    In fact by definition there needs to be a constant growing nominal public debt for there to even be GDP growth in this country, because it’s part of the money supply!

    Also our current account deficit really isn’t a problem at all, we have a free floating currency so it’s impossible for it to ever be an issue. We just need to realise that a large current account deficit means the rest of the world is net saving Sterling assets and therefore we need to run a much larger budget deficit to cover the current account deficit whilst also promoting full employment and maximum output (prosperity) at home.

    Policies that need to be urgently implemented right now are a VAT tax cut, large payroll tax cuts, and extra government spending on infrastructure.

  38. hefner
    Posted July 16, 2016 at 6:15 pm | Permalink

    An interesting read (at least for me):
    How technology disrupted the truth, Katharine Viner
    easily found on the web.

  39. Ian Wood
    Posted July 16, 2016 at 8:39 pm | Permalink

    Half those in favour of Brexit want more globalisation and free marketry, and half want less. They will never be reconciled. Austerity was a way of bearing down on the budget deficit, which was the wrong deficit to be worried about. The current account deficit, featuring the enormous trade deficit, is a real worry. Austerity boosted this tremendously by depressing demand and thus crippling producers at home. Osborne was a disaster. Meanwhile Mr Redwood is saying we could spend our EU contributions on the NHS, which is a debunkable claim and has been debunked. It would not benefit our trade deficit at all, even if true. Brexit is the shock we didn’t need, and will push sterling over a steep cliff.

    Reply Yes it will cut the deficit as the contributions go out across the b of p account

  40. newmania
    Posted July 16, 2016 at 8:54 pm | Permalink

    National debt was being held at about 80% of GDP and now as I have said before the very people who whooped every cut are delighted to debauched the last remnant of the Nations borrowing resource as recommended by the Guardian and the Labour Party for years and allow debt to slide up to 100%. Borrowing has been cheap for years nothing has changed only their own political interests which have nothing to do with the country

    The dishonesty is appalling ,does anyone seriously think the reason for this volte face has any other motive that to hide the consequences of their own economy c foolishness aka Brexit
    I can hardly begin to express my contempt for the idea that 8£ billion net of EU payments , about 1% of govt spending could now be used to salvage the Brexit lie about the NHS while we are building up a debt mountain for our children and the country in the cause of Brexit

    Turkey joined yet , EU army on the move yet is it ?

    You are not going to be able to hide your guilt , the backlash is getting organised and it is not going away

    Reply You are the dishonest one. I campaigned for prosperity not austerity at the last election and opposed cuts to benefits that went too far, then opposed the punishment budget.

    • Anonymous
      Posted July 16, 2016 at 11:02 pm | Permalink

      Newmania – The £350m a week to the NHS promise had little to do with how people voted IMHO.

      They were seriously distressed by uncontrolled immigration and that is why they voted Out in such large numbers. There would have been more had it not been for Project Fear.

      Their concerns were ignored time and time again – lastly by the EU when David Cameron asked for modest controls to be repatriated.

      Far from being idiotic and ill informed (as you so often state) the people used patient, orderly, measured, democratic and peaceful means to make their stand.

      And so we voted to Leave and it was largely condescending language of the sort that you choose that made us do it. LOOK IN YOUR MIRROR.

      Most people I know (including myself) feel that there are some things that are actually more important even than the economy. National identity being one. They also know that the mass immigration of poor and uneducated people amounts to exactly the same thing as economic hardship.

      The exportation of wealth or the importation of poverty ?

      What use a newly created job if there are three newcomers to compete for it ?

      What difference to ordinary people who can no longer get homes, school places or doctor’s appointments !

      Besides. You never mention that the EU is about to implode economically and culturally.

      Been to Italy lately and seen how the refugee crisis has impacted it (I have) ? Seen how France is on the verge of civil disintegration ?

      Anyone would think that we’d left the EU already from the way you speak. Or that we’d decided to leave something which was working perfectly, fully formed, stable and certain.

  41. newmania
    Posted July 16, 2016 at 10:21 pm | Permalink

    I agree that you predicted that Brexit would end austerity
    “The UK could end austerity if it left the EU by reinvesting the money spent on contributions in the economy and the NHS, Tory MP John Redwoood has said.
    Mr Redwood, from pro-exit Conservatives for Britain, said the UK would be able to guarantee the current EU funding farmers and universities receive.
    It would have £10bn left to spend on new nurses and doctors and to cut “unfair EU taxes” ……….

    Now some would say that you made it insufficiently clear that in this happy prospect the assumption of a £375 bn increase in the scale of public debt ( which you had opposed since 2008 )would have to be slipped in. Of course you will reheat some version of “when the facts change yada yada “ but you are your tribe are going to be nailed for this .If you imagine you are going to be able to finesse you previous remarks into a support for throwing money out of helicopters onto any state boondoggle in the draw you are sadly and seriously mistaken.

    Reply The 375 bn QE has been a reduction in UK debt as we now owe it to ourselves!

    • Jack
      Posted July 17, 2016 at 9:38 pm | Permalink

      JR, to add to your reply, the £375bn of QE that was done is actually slightly deflationary. Banks are not constrained by reserves, nor do they lend them out, and so all the QE did was undo what the Treasury did by selling bonds.

      This further demonstrates that the government doesn’t need to “borrow” by selling bonds, nor pay interest on those bonds. Maybe it’s time you revealed the Noble Lie to your readers? https://medium.com/@aldursys/the-noble-lie-revealed-5b6fa592db7b

      The BoE can obviously still set its base interest rate by paying interest on reserves. Personally I’d keep interest rates very low (but not negative) permanently. Maybe leave the Bank Rate between 0 and 2% forever and then use fiscal policy to regulate the economy instead (since monetary policy is terrible at doing so).

      • Jack
        Posted July 17, 2016 at 9:44 pm | Permalink

        In fact, keeping the Bank rate at 0% forever is probably the way to go. I don’t see any justifiable reason to pay people interest just to hold the currency (and do nothing with it). By keeping the rate at 0% it forces people to move their currency into productive investments that yield returns.

        (And low to zero interest rates do not cause inflation, it’s actually the opposite)

    • Anonymous
      Posted July 18, 2016 at 6:25 am | Permalink

      Despite all the wailing about Brexit from the Remoaners, it is the EU that is facing disaster.

      The migration crisis is as bad as ever, fuelling social dislocation and extremism. Meanwhile the Eurozone continues to be a byword for economic paralysis and fiscal bankruptcy.

      Indeed, the EU is about to be plunged into more financial chaos, thanks to the vast weight of bad loans held by Italian banks and the colossal debts of the Spanish and Portuguese governments.

      The EU, not the Brexit, has created the real mess in Europe. We will be far better off when we fully embrace our independence.

  42. CHRISTOPHER HOUSTON
    Posted July 16, 2016 at 11:16 pm | Permalink

    Off Topic:
    I hear tonight in pre-seen tomorrow’s newspapers that the 172 dissident Labour MPs are considering a “Continuity Labour Party” as some kind of breakaway party from Official Labour.
    Good. If in fact they do not attempt to steal the Official Party name which, at local and national elections they are so very careful about other people not using the word “labour” in their party or individual electoral title. It will probably be the first politically honourable thing they have done in their entire political careers. They rub one as being like those Gothic masked attendees to Grand Balls where when unmasked the participants turn out uncomfortably to be not exactly as they seem.
    It will be enlightening to see them in their true colours having not the slightest relationship with socialism, social values or ethics of even the most primitive and developmental kind.
    One or two of them could get elected flying their own flag but not past two General Elections. Mr Carswell MP UKIP certainly of a more intelligent and truly genuine weave than the 172 dissidents is also unlikely to get re-elected if contending with a well versed local Tory Party candidate. UKIP died prior to Referendum. Unlikely he survived being pulled into the grave with such a downward draught, and will claw himself out and successfully stand at the graveside.

  • 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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