Deficits and growth

The UK Treasury is still worried about the deficit. Getting it down further is going to be easier to do if the economy grows more quickly. So the obvious thing for the Treasury to do would be to move on from the question of how do we get the deficit down, to the more interesting question of how do we get the UK economy to grow faster? There is always the danger that if the Treasury spends all its time talking of the deficit it dampens expectations of growth and diverts attention from cutting tax rates or targeting spending in ways which can do most to promote more activity.

The Treasury does have one other important refrain as well as the deficit. It wants to get productivity up. This is worthwhile cause, though the word itself does not usually ignite warm support or spontaneous applause. Indeed, productivity raising investment in training, computing, plant and equipment is a prime way of raising the growth rate. In recent years under Conservative led governments the UK economy has been very successful at generating many more jobs, and getting more people into work. It now needs to improve at getting more of those people into better paid jobs. It is easier to get a better paid job if you already have a not so well paid job. Your employer may well back you, train you, promote you, or some other employer may poach you for a better paid role.

The announcement that the UK will build 5 new frigates in UK yards is an intelligent use of government procurement to support and develop the manufacturing economy. Defence is the one area where the UK can spend public money under EU rules whilst granting priority to UK suppliers. The aim is to provide workloads for several UK yards who can then seek other private sector work or seek to sell naval vessels to allied and friendly navies, extending the workload and sustaining the overheads and skills base. The procurement also features the new idea of offering a fixed price and asking the yards to provide the best ship for the money.

In the exchanges that followed the Statement I asked that this idea of using government procurement to strengten UK supply be used more widely within defence. Once we are out of the EU, as the Secretary of State confirmed, we could amend EU procurement rules and apply this approach to some non defence areas as well.

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92 Comments

  1. Posted September 7, 2017 at 5:33 am | Permalink

    Well they are not so worried about the deficit that they have stopped pissing money down the drain in HS2, Hinkley C, the green crap and electric car subsidies, the sitting duck aircraft carriers without aircraft, the 50% of pointless “University” degrees offered and all the other endless other government waste.

    There are many win, win ways to grow the economy:- Cut red tape hugely, cut taxes, ignore the climate alarmist religion and go for cheap reliable energy, go for easy hire and fire, cut out all the part of the state that do nothing useful or do damage, encourage the hard working and wealthy to live in the UK with sensible taxes, stop augmenting the feckless with benefits to encourage then not to work or even learn how to work, get sensible private competition in education and health care ……

    In short get the state out of the way and off the backs of the productive. Unfortunately we have Theresa May who is clearly a daft, interventionist, socialist who want “to build on worker rights”, follows the climate alarmism religion and wants to mug and disrupt the gig economy. She is more concerned with pathetic virtue signalling on things like gender pay (yet more damaging red tape) and interfering in free employment contracts.

    Her side kick Hammond keeps increasing taxes and tax complexity, even from the absurdly high levels left by Osborne. He even thinks an insane up to 15% stamp duty turnover tax is sensible and taxing landlords (and thus tenants) on “profits” they have not even made.

  2. formula57
    Posted September 7, 2017 at 5:33 am | Permalink

    “…an intelligent use of government procurement to support and develop the manufacturing economy” – so akin to or constrasting with the enormous cost and meagre apparent benefit of HS2?

    • getahead
      Posted September 7, 2017 at 6:54 pm | Permalink

      Presumably the sort of manufacturing referred to is that where products may be sold at a profit. Not sure HS2 falls into that category.

  3. Dame Rita Webb
    Posted September 7, 2017 at 5:34 am | Permalink

    “In recent years under Conservative led governments the UK economy has been very successful at generating many more jobs, and getting more people into work. ” The problem is though do not ONS statistics show that over half of them have been taken by people who were not born in the UK? https://www.ons.gov.uk/releases/uklabourmarketstatisticsnov2016

  4. Lifelogic
    Posted September 7, 2017 at 5:47 am | Permalink

    The bloated and inefficient government is clearly the problem for productivity certainly not the solution. May is however a champion of the bloated interventionist state and the 20% who work there (remunerated at 50% more than the 80% who do not).

    Some more easy win wins.

    Relax planning laws and make building control laws sensible, scrap the daft apprenticeship levy, the nonsense work place pensions, the absurd energy performance certificates, the absurd spit between National Insurance employers, employees and income tax. They are all the same, a tax on income (in total up to nearly 70%).

    Anything that cuts out non productive workers, litigation, tribunals, HR consultants, courts & most lawyers would be a very good thing for productivity.

    The only real protection from employees is lots of available jobs if they do not like the one they have. That is what we should aim for.

    Also kill the dire virtual state monopolies in health and education.

    • James Doran
      Posted September 8, 2017 at 6:59 am | Permalink

      John Redwood should arrange for these comments to be printed on a postcard and sent to every Conservatives MP. The ‘easy wins’ would make an excellent election manifesto.

  5. Duncan
    Posted September 7, 2017 at 5:56 am | Permalink

    Deficits and debt are the consequence of free-spending politicians who simply do not posses either the courage or the will to cut public spending or failing that implement reforms that lead to the spending of public monies in a more efficient manner.

    It is the height of political cowardice that no politician will stand up and call for cuts in debt financed public spending.

    It is also the height of political cowardice that parties in Govt always capitulate to the threats expressed by public sector vested interests whenever their privileges are targetted for efficiency savings

    There exists today a political culture that embraces ever more public spending as a moral good, which of course it isn’t, while cuts in public spending are met with distaste and howls of faux anguish. This is a disgrace and testament to the total absence of conviction now evident amongst all parties

    There’s a war at the heart of the State. Like rats in a sack a myriad of vested interests compete against each other to expand or protect their public sector budgets and guess who pays for this State arrogance and absolute waste of resources? Yes, the taxpayer

    The taxpayer has become nothing more than an entity to be abused either through direct, indirect or deferred taxation (debt) simply because it’s politically convenient to do so rather than confront the public sector unions and other parasitic vested interests (BBC) for fear of negative political headlines in the press

    Thank god for private sector productivity or else this nation would be absolutely and utterly BANKRUPT though some would say we morally bankrupt

  6. Bryan Harris
    Posted September 7, 2017 at 6:04 am | Permalink

    Sensible comments – hope the Treasury reads this

  7. Lifelogic
    Posted September 7, 2017 at 6:07 am | Permalink

    The BBC pushing electric cars yet again today with their on message “expert” Professor David Bailey.

    When electric cars work (and are competitive) people will buy them. Other than as a second city car (for a few rich who want to virtue signal) they more no sense at all currently. Why roll out these duff (with current technology) cars using tax payer subsidies and tax breaks? They use more energy not less, cost far more and have huge limitations!

    A second hand for say £1000 is generally a far better and more flexible vehicle than a £30,000 + brand new electric ones. Much cheaper to run and maintain too.

    Another win win – scrap all these daft incentives to get people to buy duff expensive cars!

    • Richie Keen
      Posted September 7, 2017 at 5:21 pm | Permalink

      I am sick and tired of BBC promotions and campaigns.

      They distort markets which ultimately adds expense to everyone.

      • Lifelogic
        Posted September 8, 2017 at 5:17 am | Permalink

        Indeed now the BBC pushing the hurricanes made worse by global warming line. Even Richard Branston taking this line have he and the BBC not looked as the history of hurricanes and tornados?

        How much fuel does his airline burn each year I wonder and what is his person transport mileage PA. Is he trying to out do Prince Charles in the “do as I say not as I do” stakes?

        The way to save lives in hurricanes is more strong cellar refuge buildings not reducing atmospheric co2 concentrations which would not work anyway and would cost far more.

  8. Posted September 7, 2017 at 6:36 am | Permalink

    “Once we are out of the EU…”
    Are you absolutely sure, Mr Redwood, that our current course is not going to lead to a complete breakdown on 30/3/19?
    I am not at all sure, even if you do, that the people who run our economy (the producers) agree with the current direction of the British government.
    The pound tends to agree with their doubts – it is now down to 92p for the Euro.

    • Anonymous
      Posted September 7, 2017 at 6:50 pm | Permalink

      Worrying.

      This does need answering.

    • Know-Dice
      Posted September 7, 2017 at 7:13 pm | Permalink

      Mike,

      Where do you get 92p?

      M&S – 1.0669

      Our FX people are quoting 1.09036

      • michael mcgrath
        Posted September 8, 2017 at 1:26 pm | Permalink

        KD

        He’s quoting price of the Euro in pounds not the price of a pound in Euros

  9. Mark B
    Posted September 7, 2017 at 6:59 am | Permalink

    Good morning.

    The method of procurement and the ships being built are both new and revolutionary. And the fact that Scottish ship builders will now have to compete with English, Welsh and N.Irish ship building is also a boon. This competition should not only drive down prices but create jobs more evenly throughout the UK, meaning that we are not held hostage to unions and ‘other types’.

    The ships are not just built to be cheap. They are being built with the aim of increasing export orders and building up manufacturing in the UK. Steel, energy, services and such will all need to be built up and, the government can play an important role by simply scrapping the Climate Change act post BREXIT. Yes there will be howl’s from the Snowflakes but that can easily be brushed aside.

    • JoolsB
      Posted September 7, 2017 at 6:23 pm | Permalink

      I thought that traitor Cameron in his bid to bribe the Scots had ended any serious competition when he closed Portsmouth and with it a 500 year history of shipbuilding.

  10. acorn
    Posted September 7, 2017 at 7:11 am | Permalink

    Crikey! Do I read a JR move to Modern Monetary Theory (MMT)? The government tells the private sector what it wants and how much it is prepared to pay for it.

    A realisation that the government can afford anything it wants to buy, that is for sale in its own currency. That there is no bill it can’t afford to pay, presented to it in the government’s own currency. That the only constraint on government spending is spending too much into parts of the private sector,such that it exhausts the capacity of a part and creates inflation.

    • acorn
      Posted September 7, 2017 at 5:01 pm | Permalink

      Assuming I am on a winner today with JR’s moderation department, I very seriously want you to read and understand the following. Google “ECB is running out of debt to buy – more smoke and mirrors needed Posted on Thursday, September 7, 2017 by bill”. It amplifies my above comments a couple of orders.

      If I was going to cite the EU of breaching the Treaties and demand compensation, it would be for breaking half a dozen Treaty articles. Read the above and you will see what I mean. The Euro-system, has its own built in failure mechanism. Brexit is not the only clock that is ticking. 😉

    • Edward2
      Posted September 7, 2017 at 5:33 pm | Permalink

      Zimbabwe and Venezuela show what happens when you carry on shaking the magic money tree.

      • acorn
        Posted September 8, 2017 at 7:06 am | Permalink

        Sadly your comment tells me that it would not be worth me trying to explain a private sector supply side collapse, and a borrowing in a foreign currency collapse.

      • Peter Martin
        Posted September 9, 2017 at 9:53 pm | Permalink

        @Edward2

        Are you saying the “Magic Money Tree” actually exists? If we can shake it I suppose you must do. However, I seem to remember Mrs May told us all it didn’t exist, so no shaking can be possible.

        It is rather a silly name for the process of money creation. You must be pleased that Government created the money you have in your possession. But if we must use the “tree” analogy we should perhaps say that we do need to shake it just enough to prevent the economy falling into recession but not so hard that we create higher than desirable levels of inflation.

  11. Richard1
    Posted September 7, 2017 at 7:18 am | Permalink

    But a bad example of this was Gordon Browns diversion of a huge part of the defence budget to building aircraft carriers in Scotland. They seem to have produced white elephants with no planes & which run on diesel power (not very green!) unlike the nuclear powered US carriers (and so have to be followed around by a vulnerable supply ship). Let’s hope all these defence analysts like Max Hastings who say the building of these carriers is bonkers given the UKs budget are wrong. Let’s also hope these frigates are the best the Navy can possibly get, rather than just ‘British built’.

  12. Ian Wragg
    Posted September 7, 2017 at 7:25 am | Permalink

    Productivity will never improve whilst half a million immigrants annually keep coming in.
    It would appear that the Home Office objects to a reduction in immigrants even though the NHS is bursting at the seams and classrooms are packed.
    We have to carry on with the Ponzi scheme to give the illusion of growth.

  13. Peter
    Posted September 7, 2017 at 7:34 am | Permalink

    The UK has been dogged by poor productivity for generations. There is no quick fix.

    However, foreign companies setting up in the UK, such as Japanese car manufacturers, can provide examples of best practice. Good apprenticeship schemes would also help.

    Whilst building warships might be a clever wheeze to keep investment in British hands, I question the genuine need for this type of expenditure and would prefer it to go to projects more relevant to today’s world.

  14. Michael
    Posted September 7, 2017 at 7:49 am | Permalink

    We must not be shy or defensive about putting the UK first . Priority needs to be given to all things from the UK while at the same time playing our traditional role on the international stage. If we can buy and employ “British” on competitive terms it would be foolhardy not to do so.

    • zorro
      Posted September 8, 2017 at 7:21 am | Permalink

      We will need them to patrol and protect our coastal waters.

      zorro

  15. Bert Young
    Posted September 7, 2017 at 7:52 am | Permalink

    Productivity and innovation are the main ingredients of success . Competition is rife in all areas of manufacturing and , if we are to succeed in a much more open market , we have to lead the way . Once we have an established position , wages can then reflect this success together with other forms of motivation . In the service sector stimulating and attracting talent is the way forward ; we have a formidable base supply from our universities – certainly ranking at the top of the world .

    Forward planning in all organisations is paramount ; from an analysis of markets key management can be chosen and put in place to make sure present and future actions are exploited and maintained ; without selective and capable management and direction , a company will linger . Behind all our activity is the support and initiative of Government ; low taxation is a spur history has always shown produces results and growth .

  16. Richie Keen
    Posted September 7, 2017 at 7:53 am | Permalink

    There are too many jobs in the UK. That is, there are too many jobs in the public sector.

    The immense power to buy labour and talent in the public sector is leaving the well dry for the private sector.

    The result is increased costs and the need to import people from overseas.

    imho one of the main solutions to poor productivity is to switch employment from the unproductive public sector to the private sector.

    Shrink the state!

    • JoolsB
      Posted September 7, 2017 at 6:28 pm | Permalink

      Absolutely agree but unfortunately this Socialist Government doesn’t. Either that or they are just too frit to confront the unions. The public sector is just as bloated, just as overpaid and just as wasteful as ever and that’s before you take account of their gold plated pensions paid for by us mugs in the private sector.

    • Turboterrier.
      Posted September 7, 2017 at 6:57 pm | Permalink

      @ Richie Keen

      Shrink the state!

      No argument with that one Richie

  17. A.Sedgwick
    Posted September 7, 2017 at 8:00 am | Permalink

    Vastly improved productivity is needed in all forms of Government and the public sector. This would, of course, reduce costs significantly and the deficit. Waste and overpersoning are legendary, the recent revelations about BBC and university pay is obscene and remember the bonfire of quangos-clearly matches in short supply.

    Money spent on the RN is long overdue, maybe the best home port for the second aircraft carrier is Gib. With allies like Spain who needs enemies.

  18. fedupsoutherner
    Posted September 7, 2017 at 8:02 am | Permalink

    I do hope the English ship yards are going to get some of the work this time and not all given to Scotland.

    As for the economy John, it would be good for the UK if Mrs May abandoned her stupid ‘green’ initiatives and got back to a good old sensible energy policy would make our energy bills cheaper and make manufacturing more competitive. Instead we go down the route of giving subsidies and investing in the most expensive forms of energy mostly given to foreign companies and to a foreign workforce in many cases.

    We need to take a realist approach to this and start fracking. When I see this government taking action on this then I might feel they are taking the state of the economy seriously.

    • JoolsB
      Posted September 7, 2017 at 6:31 pm | Permalink

      This Government like the one before it and Brown and Blair’s before that will do whatever it takes to keep the Scots happy and if that means sending England to hell in a handcart, so be it, as they have proved by their actions time and time again.

  19. Know-Dice
    Posted September 7, 2017 at 8:09 am | Permalink

    “Getting it down further is going to be easier to do if the economy grows more quickly.”

    Before LL chips in…easiest way is to stop wasting money on vanity projects…

    • Lifelogic
      Posted September 7, 2017 at 5:15 pm | Permalink

      Indeed and on green crap expensive energy subsidies, the pointless red tape, gender pay reporting and the likes.

  20. Christine
    Posted September 7, 2017 at 8:09 am | Permalink

    The country has to get away from providing low paid jobs that are topped up by the benefit system. All it is doing is pulling in more migrant workers from abroad. Also giving benefits to self-employed jobs that are unviable like Big Issue Sellers and metal collectors should be stopped. I know the EU forced us to pay these to foreign workers but when we leave this can be ended. More investment in training our own people for high skilled jobs is what’s needed.

    • Lifelogic
      Posted September 7, 2017 at 5:21 pm | Permalink

      Indeed. The system mean there is little point in paying some an extra £50 if the government take back £48 of it in extra tax/NI (both employer and employee) and the loss of benefits. Often you cannot get people to do any extra hours for this reason. The government is as usual the problem.

    • eeyore
      Posted September 7, 2017 at 8:08 pm | Permalink

      “Low paid jobs topped up by the benefit system” (Christine) were tried 200 years ago. It was called the Speenhamland system and led inexorably to the utter destitution of the rural working class.

      And so it will today, to the destruction of all who have nothing to sell but their labour. Given such a clear recent parallel, it is inexplicable that politicians who profess sympathy with the poor should pursue such policies.

  21. agricola
    Posted September 7, 2017 at 8:14 am | Permalink

    Personally I think that the treasury and myriad other government departments should consider their own productivity and nett benefit to the nation. The Deficit and the National Debt are a direct result of the Treasuries financial mis-management of the economy, aided and abetted by politicians. In real terms government produces nothing. Like ivy it lives on the backs of people who do produce and create.

    While I accept that a level of tax is necessary for Health, Defence and other laudable causes, it has become an ever growing parasite that lives on the back of enterprise and stifles it. Ask yourself why so many of the enterprising seek to be financially judged in less avaricious tax regimes around the World. They thrive , grow and employ as a result.

    Getting out of the EU should be combined with a root and branch pruning of government, the brake on enterprise. In the natural world pruning leads to a greater fruit yield. I liken government to the suckers and spurious branches I have removed from my avocado and lemon trees in anticipation of a better crop next year.

  22. Denis Cooper
    Posted September 7, 2017 at 8:37 am | Permalink

    This might help with the deficit:

    http://facts4eu.org/news_sep1_2017.shtml#lfb

    “We don’t owe the EU any money”

  23. Epikouros
    Posted September 7, 2017 at 8:40 am | Permalink

    Reducing the deficit and increasing productivity would be enhanced by changing some of our societies mores. We have to turn away from expecting politicians and government to create our prosperity for us and reject our culture of dependency and entitlement. We need to accept some hardships and personal effort are necessary if our nation is to be more successful and we are to be more prosperous and so enjoy greater social justice. We have to accept that the competition of the market place is where our betterment lies and not in the monopolist arms of government, state run enterprises and crony capitalists.

    As merit worthy that government procures all it’s requirements from home produced sources is it has some considerable disadvantages. Primarily it deprives the UK taxpayer from procuring goods and services that are best value for money. It removes competition so that the producer has no incentive to give high quality of product or service. So no I do not endorse your only home procurement sentiment.

  24. Leslie Singleton
    Posted September 7, 2017 at 8:42 am | Permalink

    Dear John–Don’t think much of “new” (?) idea of fixed price ships, in fact can hardly believe it–We are not going to Rule The Waves like that. How is this different from a new house or maybe just a new roof–Surely you wouldn’t just agree a fixed price in advance with a roofer and then leave it to him? Very rapidly this would mean smaller scantling, cheaper wood, mastic where lead would be better, fewer nails you name it. Every householder soon learns this. Better perhaps five good frigates than six substandard.

  25. Denis Cooper
    Posted September 7, 2017 at 9:42 am | Permalink

    I’ve just watched Labour MPs trying to persuade the government into supinely accepting the EU’s indissoluble, fundamentally ideological, linkage between trade and immigration, which was arguably the foremost reason why the UK population voted to leave the EU.

  26. Terry
    Posted September 7, 2017 at 9:44 am | Permalink

    It seems rather ironic that the Treasury wishes to reduce our deficit and debt yet maintains Interest Rates at ultra low level, thus encouraging even more borrowing.

    Surely boosting the returns on deposits for the millions of pensioners would encourage them to spend more to increase our GDP? And higher interest rates would deter the masses of care-free spenders from spending money they do not have.
    A rising GDP based on increased borrowing cannot be good for the economy as once proclaimed by Labour PM, Jim Callaghan.
    “You cannot spend your way out of a recession”. Clearly, those wise words have fallen on very deaf ears in Century 21.

  27. Denis Cooper
    Posted September 7, 2017 at 9:51 am | Permalink

    Why should the UK continue to allow resident EU nationals the right to vote in any of our elections? They should never have been given that right in the first place, so why has David Davis already told the EU that we stand ready to allow that to continue?

  28. WalterM
    Posted September 7, 2017 at 10:01 am | Permalink

    The economy is not going to grow more quickly- for it to grow more quickly we will need expansion, hard work, more dedication with more productivity- things that, by ourselves, we were never very good at in the past. Giving pay rises to low skilled workers is not going to make them work any harder only increase their desire for extra freebies- so lets not kid ourselves.

    Neither will building ships increase our prospects as they can be built nowadays more economically and at a fraction of the cost in countries like say Korea so again throwing money about in the hope that it will motivate is a nonsense. At one time we were good- we could turn our hands to anything- work around the clock- but those days are well and truly gone- the younger generation today all want to go to college and to while away their lives a la the bank of benefits and mom and dad until they find something soft and cushy- they are not going to do the hard and dirty jobs- because it would not be cool! d’ye get my drift.

  29. WalterM
    Posted September 7, 2017 at 10:09 am | Permalink

    Sorry.. at one time we were good at building ships

  30. Posted September 7, 2017 at 10:51 am | Permalink

    Good!

    I like what I’m reading here, Mr Redwood.

  31. Denis Cooper
    Posted September 7, 2017 at 12:16 pm | Permalink

    I’m just watching the Commons debate and certain euromaniac MPs on both sides of the House are getting themselves worked up into a lather because the EU withdrawal bill does not protect the status of the European Charter of Fundamental Rights in UK law.

    This puzzles me, because I can remember the Labour MP and Europe Minister Keith Vaz claiming that the Charter would have no more legal weight than the Beano:

    http://www.telegraph.co.uk/news/worldnews/europe/1370340/European-summit-Charter-on-rights-no-more-binding-than-the-Beano.html

    and in any case I was pretty sure that Tony Blair later claimed to have us got an EU treaty opt-out from it:

    http://news.bbc.co.uk/1/hi/uk_politics/6232652.stm

    “EU treaty good for UK, says Blair”

    “Liberal Democrat leader Sir Menzies Campbell said the treaty had not come “cost-free” for Britain.

    “By opting out of the Charter of Fundamental Rights, there is now the danger of a two-tier citizenship in the EU,” Mr Campbell said.”

    And indeed there is such a protocol attached to the EU treaties:

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/228848/7310.pdf

    “PROTOCOL ON THE APPLICATION OF THE CHARTER OF FUNDAMENTAL RIGHTS OF THE EUROPEAN UNION TO POLAND AND TO THE UNITED KINGDOM”

    So what is the problem if its legal effects in the UK are not preserved by the withdrawal Act when it was never supposed to have any legal effects in the UK?

    • matthu
      Posted September 7, 2017 at 9:03 pm | Permalink

      Thank you for reminding us how duplicitous politicians can be and have been – especially when it has had anything to do with the “Big Project”.

  32. Lifelogic
    Posted September 7, 2017 at 12:37 pm | Permalink

    All parties are uniting behind a stultifying, statist vision for Britain – as Allister Heath sensibly puts it in the Telegraph today. May needs to change her duff compass or go.

    http://www.telegraph.co.uk/news/2017/09/06/no-political-debate-britain-just-endless-series-surrenders/

    • Chris
      Posted September 7, 2017 at 8:50 pm | Permalink

      I would agree, LL.

  33. Tony Sharp
    Posted September 7, 2017 at 12:53 pm | Permalink

    This whole matter of ‘lack of UK productivity’ is never adequately categorised.

    Yet one can make some pretty simple assumptions from the performance of our advanced technology, defence, capital goods and infotech with other high-skills sector employers who appear to be equal to, or better than, competitors internationally. Somehow that cannot be a result of ‘lack of productivity’.

    The productivity statistics are dsitorted (as is the UK labour market) by the huge growth in those employed in ‘Personal Services’, domestic servants, ‘leisure-retail’ , food and drink etc, with a bit of leavening from ‘call centres and sales’. The Producivity of these areas are inelastic, you double sales, you double employees, you can ‘t answer more than one ‘phone at a time, not put waiters on skates.

    The governement indicates from some leeks that we shall clamp down on the number of low/ no-skill immigrants and this shortage in manpower will lead to two results, higher mechanisation in some sectors and higher wages less dependent on Benefits than currently in others.

  34. Beecee
    Posted September 7, 2017 at 1:15 pm | Permalink

    I am all for building the new ships although this usually means we are scrapping some of those already in service.

    Clearly the English tax payer will pay the bill so I hope this is reflected in the shipyards awarded the contracts!

  35. The Prangwizard
    Posted September 7, 2017 at 1:42 pm | Permalink

    Good news about the cheaper frigates. Now let’s go smaller still and place orders for coastal and close fishing defence. Maybe form a beefed up coastguard, rather than RN control. Armed fast patrol boats, about 50.

    • Anonymous
      Posted September 7, 2017 at 6:48 pm | Permalink

      No.

      They’ll become a ferry service.

  36. Posted September 7, 2017 at 1:49 pm | Permalink

    The best way to tackle deficits and promote growth is to reverse course and stay within the EU single market and customs union

    • Denis Cooper
      Posted September 7, 2017 at 4:52 pm | Permalink

      And your objective evidence for that assertion is … ?

    • Edward2
      Posted September 7, 2017 at 5:39 pm | Permalink

      I’m sure your comment will be read in Cyprus Greece Portugal Italy and Spain with some derision.
      Growth in the Eurozone once you remove Germany’s figure has been low compared with most Western nation.

    • Turboterrier.
      Posted September 7, 2017 at 7:03 pm | Permalink

      @ Charles E

      You are having a laugh. Take more water with it.

  37. Denis Cooper
    Posted September 7, 2017 at 2:17 pm | Permalink

    I’ve just watched Keir Starmer tell a straight lie in the House of Commons, falsely claiming that Part 2 of Schedule 7 of the Bill would allow a minister to amend the EU Withdrawal Act itself with a statutory instrument passed just by the negative procedure, when that is expressly excluded by Section 6(2) of the Schedule.

    And this is what we are up against: a Labour supporter comments elsewhere that this is “A brilliant point” without bothering to check whether it is actually true …

    https://publications.parliament.uk/pa/bills/cbill/2017-2019/0005/cbill_2017-20190005_en_5.htm#sch7-pt2

    “Power to implement withdrawal agreement

    6(1) A statutory instrument containing regulations under section 9 which contain provision falling within sub-paragraph (2) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.

    (2) Provision falls within this sub-paragraph if it …

    … g) amends this Act.”

    • Denis Cooper
      Posted September 7, 2017 at 3:51 pm | Permalink

      Keir Starmer:

      https://hansard.parliament.uk/commons/2017-09-07/debates/DA3CC146-F8AB-40FF-812B-FE2CADDEA2F4/EuropeanUnion(Withdrawal)Bill

      “What are the procedures? Are they enhanced? No. The opposite. Part 2 of schedule 7 deals with clause 9. It makes it clear that unless the delegated legislation creates a public authority, or the function of a public authority, affects a criminal offence or affects a power to make legislation, it is to be dealt with by – what? The negative procedure for statutory instruments, which means the least possible scrutiny: it means that the widest possible power, with no safeguards, will be channelled into the level of least scrutiny.”

      Disgracefully he has deliberately omitted the last case on the list in sub-section 2 referenced above:

      “(1) A statutory instrument containing regulations under section 9 which contain provision falling within sub-paragraph (2) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.

      (2) Provision falls within this sub-paragraph if it –

      (a) establishes a public authority in the United Kingdom,
      (b) provides for any function of an EU entity or public authority in a member State to be exercisable instead by a public authority in the United Kingdom established by regulations under section 7, 8 or 9 or Schedule 2,
      (c) provides for any function of an EU entity or public authority in a member State of making an instrument of a legislative character to be exercisable instead by a public authority in the United Kingdom,
      (d) imposes, or otherwise relates to, a fee in respect of a function exercisable by a public authority in the United Kingdom,
      (e) creates, or widens the scope of, a criminal offence,
      (f) creates or amends a power to legislate, or
      (g) amends this Act.”

  38. Tabulazero
    Posted September 7, 2017 at 2:48 pm | Permalink

    Out of topic but “Theresa May has caused fresh ill will in Brussels by rejecting an invitation to address the European parliament in public, instead insisting she will only talk to its leaders behind closed doors.”

    What a fantastic own goal. Whether you like it or not, the European Parliament is the directly elected parliamentary institution of the European Union. It represents the second-largest democratic electorate in the world, starting with the people of the United Kingdom.

    With the conservative conference just round the corner, I simply hope that someone will have the courage to put Theresa May out of her misery. How long can you still tolerate her making mistakes after mistakes ?

    The leaked immigration memo and now this. It is really starting to become embarrassing.

    • Edward2
      Posted September 7, 2017 at 5:40 pm | Permalink

      What would our PM achieve by making a speech in the EU Parliament?

      • formula57
        Posted September 7, 2017 at 9:26 pm | Permalink

        Casting pearls before swine perhaps?

    • Narrow Shoulders
      Posted September 7, 2017 at 6:34 pm | Permalink

      If that is true it Truly is an own goal. A speech emphasising our friendship desire to trade and pointing out the difficulties caused by intransigent negotiators and the flimsy legal case for an exit fee would really have put us on the front foot and taken the fight to the EU on the world stage.

      • Turboterrier.
        Posted September 7, 2017 at 7:06 pm | Permalink

        @ Narrow Shoulders

        Once a remainer always a remainer. Did anyone expect anything less?

    • lp
      Posted September 7, 2017 at 6:40 pm | Permalink

      May probably doesn’t want to waste her time speaking to those who are not involved in the decision making process. The EU stopped inviting us to the key meetings from June 2016, our membership fee should reflect this fact.

      • Tabulazero
        Posted September 7, 2017 at 7:18 pm | Permalink

        The EU Parliament will actually get to vote on any Brexit agreement between the U.K. and the EU Commission. It’s quite important actually.

        A no show by the current British PM beggars the mind under the circumstances. Theresa May should not be afraid to defend her vision of Brexit. Is she unable to do it without a backbench cheering her on ? Is she such a bad public speaker ?

        Refusing to engage with the EU Parliament shows weakness.

        Could someone bring her at the back of the shed during the next Conservative conference, please.

        Reply She has offered the meet reps of the European Parliament for serious talks. What good would come of a public political session? We do not need to re run the referendum for the other member states!

        • Tabulazero
          Posted September 8, 2017 at 7:00 am | Permalink

          Not showing up at an invite from the EU Parliament is not what one would normally associate with a Strong & Stable Prime Minister.

          It is bad because it look like a cop-out and the reps of the Parliament is not the same thing as the Parliament each week.

          As you know, I have been highly critical of the UK’s decision not to engage in public diplomacy surrounding Brexit. Her decision is yet another perfect example of that.

          I do not understand the decision because Theresa May does PMQs every week. Handling a few tough questions and barbed comments from MEPs is surely within her skill set. She has been a professional politician for 31 years.

          Which brings me to my question: She is not going because Farage is there, isn’t she ?

        • Narrow Shoulders
          Posted September 8, 2017 at 7:03 am | Permalink

          Disagree with your reply Mr Redwood.

          The reasons for leaving were so obvious and incontestable that Mrs May would get a free hit.

          What could the MEPs say in defence of the EU that is relevant to us? They could only Scaremonger like remain.

          She could position it as speaking truth to power and come away looking bullied by those protecting their own positions. She might even land a couple of powerful soundbites.

          I don’t propose she acts like Mr Farage in the chamber but laying out how they are viewed by us plebs can only be a good thing.

          • Tabulazero
            Posted September 9, 2017 at 9:37 am | Permalink

            I agree. It is first and foremost a missed opportunity.

  39. Prigger
    Posted September 7, 2017 at 2:51 pm | Permalink

    JR. Listened to you in Parliament. What need of Remoaner Labourites when Nicky Morgan and Anna Soubry are braced and spragged in the upper rear corner of the House weaving a web?

    • rose
      Posted September 7, 2017 at 5:35 pm | Permalink

      Mr R’s best point among many was that we shouldn’t pay the EU to do what it wants and needs to do anyway.

  40. Sakara Gold
    Posted September 7, 2017 at 4:10 pm | Permalink

    Fixed price contracts rarely work in defence. One must first look at the threats to be faced and then decide what equipment we need to counter these threats, we must then go to the defence contractors for proposals and having agreed what the military want, fund it adequately. Just building five new frigates that cannot fight the current threats is pointless.

    The UK has a long and sorry history in defence procurement, wasting billions on sub-standard equipment that is delivered late and grossly over budget. There are various reasons for this but in the main the MoD does not have sufficient technical expertise to effectively oversee large projects – from the new Type 45 air defence destroyers with embarrassing propulsion, noise and electrical supply issues to the new Astute class of hunter-killer submarines that cannot “sprint” or even keep up with the aircraft carriers.

    The Navy does not even have an effective anti-ship missile and will not have one until 2025 at the earliest so what is the point of having these naval assets in the first place??

    We waste so much money on defence procurement the only way that the Treasury can fund it is by cutting the numbers of units ordered and reducing manpower.

    Here is a link to an excellent article on the subject of naval procurement, it gives a clear understanding of what is going wrong and it suggests effective solutions. Is the defence establishment up to taking the necessary changes?

    http://www.savetheroyalnavy.org/defence-procurement-where-it-has-all-gone-wrong/

  41. Mike Wilson
    Posted September 7, 2017 at 5:30 pm | Permalink

    Sorry, off topic. I am not at all comfortable with the tone of the immigration pronouncements. Which bit is tricky? I would prefer something like …

    After Brexit we will invite people here on the basis of this country’s needs. If British farmers need people to pick crops and they cannot find local people to do it, we will WELCOME people from other countries to come here. If they come here and live and work here for five years, we will invite them to apply for citizenship.

    The current tone makes us seem nasty.

    OKAY, SIX attempts to get past the stupid Captcha! Click all squares with street signs! Does that include the square with the post the sign is on? Does it include a square with just a tiny bit of a sign overlapping from the next square? Utterly inane. Please find a better method. There are loads of them around that are not that stupidly constructed.

    • Mike Wilson
      Posted September 7, 2017 at 5:33 pm | Permalink

      I did have a lucky run where I didn’t get intercepted by the Captcha. Those halcyon days are gone.

      Ah, it gets better. Click all images with roads. Click verify when there are none. So you click an image with a road – and it gets replaced by a different image with a road! And you do it again. Then you get an image with cars in it and a pavement showing … hmm, is that a road picture or not.

      I’m sure you won’t be bothered, but I give up.

  42. kenD
    Posted September 7, 2017 at 5:34 pm | Permalink

    It’s all nonsense, taking back control of laws from the EU- why don’t we just ditch them on 29th March 2019 as we leave and reset the clock to the laws we had in 1973- all of this hu ha is making my head dizzy. Likewise we can ditch Ireland North and South and Scotland too and that would save us all a lot of money and headache- we don’t need any of them

  43. Andy Marlot
    Posted September 7, 2017 at 6:24 pm | Permalink

    “….how do we get the UK economy to grow faster?” Seriously? You mean there is some doubt. I’ll clear up the mystery for all the socialist politicians in the Tory, Labour and every other party. Cut regulation and taxation. Only problem is politicians never want to do either in case the voting tax cattle realise we don’t need regulating, taxing or politicing.

  44. Posted September 7, 2017 at 6:42 pm | Permalink

    We voted to leave.. we did not vote for all of this foot dragging..neither do we need a transition period either because we don’t want anything more to do ever again with the EU- and as michael gove and liam fox already promised we will get whatever new trade deals we want with our new partners overseas including japan and india. So why go on all of the time about the EU, they are history as far as i am concerned.

    • Turboterrier.
      Posted September 7, 2017 at 7:13 pm | Permalink

      @ DancerJ

      I do not think you are on your own regarding the EU

  45. margaret
    Posted September 7, 2017 at 6:48 pm | Permalink

    There is too much fear around and people hanging on to see what is going to happen post Brexit. We only live once . It is difficult for 30 year olds to really understand this as they think time is on their side, but these are the people we have to make easier entrepreneurial allowances for . Older people like myself have done all we can as far as building is concerned and just want peace and to give others courage.

    • Turboterrier.
      Posted September 7, 2017 at 7:11 pm | Permalink

      @ Margaret

      Well said.

  46. John
    Posted September 7, 2017 at 7:46 pm | Permalink

    That was very good news, warms the heart that UK Gov procurements will not have to tender across the EU but concentrate on the UK and increase critical mass of talent and skills here!

    Brilliant result already from Brexit.

  47. John
    Posted September 7, 2017 at 8:03 pm | Permalink

    On Productivity it is my view that this, iro the UK, has more to do with tax than the other normally correct reasons.

    With our tax free Personal Allowance we attract low paid low skilled to this country. In turn they take their non taxed earnings home to Eastern Europe to spend driving up the statistical productivity in those countries whilst ours decreases with that same loss.

    The left promotes buying cheap trained Drs and health staff from the 3rd World rather than upskilling our own. We duly pay billions to try in vain to plug the monetary and health professional skills gap in the 3rd World.

    Unlike some other countries, we have priced out the semi and retired UK citizen from part time work by replacing several of these for one cheap migrant that will do the same in a 12 hour day. Those semi and retired potential UK workers are in receipt of income and therefore more likely to start or to pay more tax than the nil tax payer migrant.

    Unfortunately from my incidental observations from commuting to Liverpool St Stn to my home town, we have daily been receiving many illegal immigrants, caused by the EU borderless zone. These illegals are now huge in number but no one knows how many. I can tell you that they are working in our economy, just not paying tax.

    Our productivity problems today are much to do with tax and border issues than investing in technology and education of UK citizens. Again the news in this blog is great news in this respect.

    • John
      Posted September 7, 2017 at 8:33 pm | Permalink

      Especially when we have been growing as an economy, reduced productivity stats should raise question marks.

  48. melD
    Posted September 7, 2017 at 9:44 pm | Permalink

    I am afraid that IDS is making a big mistake betting on mrs merkel to smooth things over..after the election she too is likely to be greatly weakened. “What germany wants germany gets”…presumably he is talking about the car industry?..germany will not go against the EU27 or yhe EU parliament.

  49. Posted September 7, 2017 at 10:32 pm | Permalink

    Listening to Ian Duncan Smith on bbc newsnight, where he puts all his reliance on mrs merkel to work things out for us is a big mistake- we’ll have to act much faster than that if we are to prevent disaster and leave the EU without a transitional arrangement. It’s too late for playing games..the EU crowd have the measure of mrs may and DD and they are going to screw us

  50. Peter Martin
    Posted September 7, 2017 at 10:48 pm | Permalink

    It should be remembered that deficits and debts are usually expressed as a % of GDP. So even if the debt/deficit (in £ terms) rises at the same rate as the economy grows the ratio remains the same.

    On the other hand if your the contracts the ratio is likely to increase. Firstly it is just about impossible for Government revenue to keep from falling so the deficit and debt is likely to increase. Even if it didn’t a falling GDP would increase the ratio of debt/deficit to GDP. It’s a double whammy!

  51. Tabulazero
    Posted September 8, 2017 at 10:09 am | Permalink

    Sorry to pop your bubble but why is the UK economy under performing the EU economy in what is supposed to be an expansionary phase, Mr Redwood ?

    As you well know, the UK Q2 GDP only grew 0.3% this quarter which is not only below the 0.6% reported for the Eurozone but also below its own pre-referundum trend.

    This is surprising as the Euro & US economies are accelerating, with both reporting sequential improvements in GDP figures. You would expect the UK export led economy to outperform under the circumstances since its two main markets are doing better.

    This does not appear to be the case. What could be the cause for that, do you think ?

    And finally, if I may add: it’s not really new frigates that the U.K. needs. It’s fisheries patrol vessels (River-Class).

    They are less glamorous but if you really intend to be leaving the common fishery policy, they are far more cost effective.

    Yet again I am surprised that the UK is not seriously giving itself the tools it would require to claim back its “sovereignty”. It is really starting to sound like you are not really serious about the whole endeavour.

    Reply The UK economy grew faster than the Euro economy in the second half of last year after the vote. This year the Bank of England has tightened credit for homes and cars, and the government has hit vehicle sales with higher taxes and by condemning diesel and petrol vehicles. The relative growth rate, both when it was higher and now when it is lower is not the result of Brexit.

    • Tabulazero
      Posted September 8, 2017 at 10:24 am | Permalink

      Are you sure ? Don’t you find weird that the UK trade deficit is flat in what is an expansionary global economy and what were are repeatedly told is a fantastic environment for UK – based manufacturing owing to the pound trading at 8 year lows relative to the Euro. Weird isn’t it ?

      You should be out-exporting the Germans given how low the Pound has fallen.

      Could project fear simply have gotten the timing wrong by six-month ?

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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