The government’s flexible friend



At the Budget (March 2017) The Treasury forecast £58.3bn of borrowings in 2017-18.

The out-turn was 30% lower, at £40.5bn

At the same Budget the Treasury forecast £40.8bn borrowings in 2018-19. This has since been reduced to a forecast £37.1bn. Early figures suggest the Treasury has again overestimated the borrowing.

The Treasury also say they need to reduce the outstanding debt, which is at £1800 bn. or 85.1% of GDP. They need to remember this is a gross figure. The UK state has bought in £435 bn of debt which it therefore no longer owes. The state net debt is £1365bn or 64.5% of GDP. This is a relatively low figure for advanced nations, and eminently sustainable.

The government did not herald tax rate rises in the Manifesto, and there is no need for them to finance the NHS and other priorities. In some cases lower tax rates could bring in greater revenues, as the cut in top rate Income tax did. What is needed is a policy to promote faster growth from the current slower growth brought on by monetary tightening and tax rises on homes and cars.

The NHS spending can be paid for by a mixture of the proceeds of growth and the savings on EU contributions. In the short term borrowing can be allowed to go up to forecast levels, as it has been running well below official forecasts for some time.


Update: Today’s figures for May confirm the trend to undershoot. They have now lowered 2017/18 further to £39.5bn, some £18.8bn below their forecast!  The year to date  2018-19 is 25% down on 2017-18 so far, though that is just two months.  Receipts on income and wealth are up by a large 6%, with spending growing by 2.5% plus a 4.5% increase in benefit costs.



  1. Mark B
    June 21, 2018

    Good morning

    The Conservative did however wish to bring in a tax on the old. It has also brought in additional taxes.

    More growth does not necessarily mean more taxes, not when you have an economy that is increasingly becoming more and more low wage.

    What we need is to stop But hitting small traders and businesses. These employ more people and are responsible for the majority of trade and the economy. Lower Corporation Tax is what is needed.

    1. Hooe
      June 21, 2018

      JR, Health minister on TV yesterday admitted NHS funding for years to come would be from tax rises. It appears you are out of step with the govt and its spin machine. The latter already fallen by the way side, no need for you to continue the myth. How can you say EU savings when you know it will continue for years as the U.K. Will be a vassal state! In addition the £100 billion give away by Davis and May to the EU has to come from somewhere!

      Come on be realistic. When will May take action against the Tory Lords and Rebel MPs who were threatening to collapse her govt? Surely at least a loss of the whip or more realistically deselection for treachery against, public vote, govt policy, Tory manifesto which they had the dishonest cheek to stand to be letter on!

      I think the public are absolutely disgusted by what they have witnessed, only to be repeated in October when the CUSTOMS features in the Trade bill.

      1. getahead
        June 21, 2018

        Perhaps it is the government which is out of step with conservative principles, which JR advocates.

    2. Lifelogic
      June 21, 2018

      Over 50% of people (mainly the lower paid on minimum wage or a bit more) pay no net tax beyond what they get back in immediate in work or other benefits for them and their family + schooling costs etc. They contribute nothing to the vast cost of government, defence, roads, police, social services, state pensions, overseas aid, HS2 etc.

      The tax burden is largely on the higher paid. Many of whom are leaving or no longer coming thanks to Osborne & Hammond’s daft tax changes. It is not sustainable.

    3. libertarian
      June 21, 2018

      Mark B

      As a business owner if we are changing corporation tax , the biggest change I’d like to see is the ability to invest at least a proportion of profits back into the business without incurring corporation tax. That would help improve wages and productivity

      1. alan jutson
        June 21, 2018


        Good idea.

        1. Mark B
          June 21, 2018

          I agree.

      2. Lifelogic
        June 21, 2018

        Indeed any corporation tax gives companies less to invest and expand next year and harm productivity hugely. It is a tax anyway that depresses wages and people’s pension returns and chases business and investment out of the country.

        Hammond (and May) seem to want to harm productivity as much as they possible can with very high taxes, absurdly complex taxes, bonkers unsustainable taxes, expensive religious energy, bank lending restrictions and daft regulations. Then they complain about poor productivity!

  2. Denis Cooper
    June 21, 2018

    Off-topic, LibDem leader Lord Newby yesterday evening:

    “we will not rest until we have stopped Brexit”

    This is the kind of company that rebel Tory MPs are keeping.

    1. Hope
      June 21, 2018

      They are not just keeping their company Dennis, they are leading and consorting with them. It is clear the treachery comes from the Greive, Soubry, Clarke and the likes. You do not make veiled threats to collapse a govt without knowledge of support to do it. What discipline action has been taken or is being taken against their behaviour? Civil service KitKat policy? I am yet to be convinced this is not with Govt support from May and Hammond to have only modest changes when leaving they talked about or not cry in their beer of forced to remain in by another name. Why more concessions yesterday? What message does this send other than a weak person willing to stay?

      Trump already has Merkel, without EU, saying she will drop tariffs! How long did that take for the threat about German cars to work out? If she can unilaterally make deals and then tell the EU how come no other country can? Still nothing from ahammond or Gove on German car emissions.

      1. Chris
        June 21, 2018

        They (our government) are pathetic, Hope. No other word for them. I share your despair and anger.

    2. Tad Davison
      June 21, 2018

      It’s not just him Denis. I have lobbied lots of remainers in the House of Lords at the behest of The Bruges Group, and the antithesis and contempt they show towards the democratic decision taken by the British people to leave the EU is astounding!

      To have a revising chamber where those with specialist skills can advise the government and recommend that laws as drafted be amended for technical reasons is one thing, but the place is stuffed full of lackeys who pursue their own political agenda for their own ends. That is bad for democracy.

      The situation is out of control, but were that not the case, I doubt if we would have had so much trouble trying to get legislation through the Commons. EU placemen answer to a foreign master. By my calculation and the very definition of the word, that amounts to treachery.


    3. Lifelogic
      June 21, 2018

      Indeed but at least Lord Newby is honest about it!

    4. PaulW
      June 21, 2018

      Denis Cooper..Rest assured nothing is going to stop brexit..yesterdays vote in tne HoC has cleared the way for mrs may to put it up to the EU..’deal with us on our terms or there will be no deal’ then that’s final ..there will be no deal..

    5. old salt
      June 21, 2018

      The Parliament Act 1911 effectively abolished the power of the House of Lords to reject legislation, or to amend it in a way unacceptable to the House of Commons.

      I guess times change.

      Mr Brake, another LibDem, (so much for the Democrat) also making it known likewise.

      1. Denis Cooper
        June 22, 2018

        “In 1911 it was necessary to take away their veto and allow them only a two year period of delay, in 1949 it was seen as necessary to cut that back to just one year, and now they should be finally neutered by cutting the maximum delay available to them to one month for all Bills, as it already is for Money Bills, unless the Commons positively votes to allow them a specified longer period for their consideration of a particular Bill.”

  3. Peter Wood
    June 21, 2018

    Good Morning Dr. Redwood,

    I have 2 concerns with our Conservative (?) government’s economic activity, perhaps you could be good enough to answer:
    1. Do you anticipate that there will ever again be a budget surplus? (I believe the last time was in 2001).

    2. What do you think is the correct level of government activity is, as a percentage of GDP? (It is currently about 40%)

    1. Lifelogic
      June 21, 2018

      About 20-25% of GDP is more than sufficient for government, but it would of course then be 20-25% of what would then be far larger tax base. The absurdly over complex taxation system and endless daft employment and other regulations, plus greencrap energy are another tax on top of the tax actually paid. Release the private sector from the state straight jacket.

  4. Lifelogic.
    June 21, 2018

    Indeed taxes are far too high and are killing the economy and reducing the tax base. Bank lending restrictions and red tape doing huge damage too. The way to get more money into health care is to encourage more people to go privately, pay and/or to insure, tax relief should be given and Hammonds IPT Tax on medical insurance scrapped. As should his absurdly unfair and unsustainable taxes on property.

    The NHS is generally fairly appalling with nearly the worst outcomes for a developed nation. It should get no more money at all until it is broken up and fully reformed

    I thought little could shock me about state incompetence and the endless state cover ups after Hillesbrough and all the rest of the scandals in the NHS and elsewhere but Gosport has shocked even me. The cover up for 20 odd years adding a huge further outrage & insult to the original crimes. Showing just how corrupt or negligent so many state organisations and professional bodies can be when protecting the state sector.

    1. Lifelogic.
      June 21, 2018

      A Heath is right as usual today the Tories need to cut tax, cut the largely parasitic sector hugely and cut red tape – not the reverse. May and Hammond must go or do a complete U turn now.

      What a horrible euphamism “shortened the lives of up to people” is.

      I did not murder him your honour just shortened his life a bit.

    2. Bob
      June 21, 2018

      Why does the Chancellor want to punish people for moving home?
      Anyone buying a house in London could be paying upwards of £40,000 in stamp duty, which is guaranteed to cut turnover in the property market, and has resulted in an outbreak of ugly loft conversions.
      What next, a window tax?

    3. Helen Smith
      June 21, 2018

      Labour’s abolishing of tax relief on private medical insurance caused large numbers of people to cancel premiums and rely on the NHS, at a stroke increasing costs to the public purse instead of decreasing them. A child could have told them that would happen.

  5. Nig l
    June 21, 2018

    Your health minister stated the obvious, namely until we exit, so at least for the next two years, there will be no dividend, so that means 40 billion? Unfunded?

    So although the dividend got the headlines, as usual, we were being spun. Is the Chancellor going to allow our deficit to ‘pay’ for it. Of course not, we are. Our taxes will go up, you will have to break a manifesto promise.

  6. Andy
    June 21, 2018

    There is no money. You are spending our cash on your Brexit folly.

    There will be fewer jobs. Less well paid jobs. Tax take will decline.

    You are deliberately perusing a policy of making us poorer.

    Let’s see how well that works out for the Tories in the long run.

    The country is being run by economically illiterate bandits.

    Term limits, age limits, bans on second jobs.

    We need to drain the Westminster swamp.

    1. Anonymous
      June 21, 2018

      Run by economic bandits.

      You mean Carney and Hammond ? Dr Redwood is on the back benches.

    2. Edward2
      June 21, 2018

      Start with the House of Lords.

    3. libertarian
      June 21, 2018

      Fact free Andy is at it again

      We have the highest number in employment EVER at 32 million, there are 749,000 unfilled full time job vacancies , we are on course to generate another 1.2 million new jobs in the next 2 years. Wages rose 2.8% last quarter & are ahead of inflation

      We have a record amount of inward investment and out tech/digital industries are leading the world

      Talking of economically illiterate bandits, have you shut your company and sacked your staff yet ?

      1. Dennis
        June 21, 2018

        libertarian – your scenario if correct is a nightmare – the road to disaster. You and most Mps and economists have no idea where this prosperity comes from. It’s like drinking a delicious potion which sooner or later will kill you.

        1. libertarian
          June 22, 2018


          Sorry , your post makes no sense , my “scenario” is actually the facts right now… I know EXACTLY where the prosperity is coming from as its what I do for a living… I run a data analytics business

      2. Andy
        June 21, 2018

        It amuses me that you think the economy is going well.

        It is this sort of complacency which will kill Brexit.

        None of you have yet realised what’s awaiting.

        EVERYTHING that happens for the next 10 years will be seen through a Brexit prism.

        You’ll get blamed for all of it. Job losses. Immigration problems. Shortages.

        You are all exhausted already and you’ve not even begun. Shame.

        1. Edward2
          June 21, 2018

          Certainly not exhausted.
          Remainers may try to say everything that happens is “because of Brexit” or claim as many do that anything positive is “despite Brexit”
          But I think people are already becoming tired of the propaganda.

          You are probably too young to remember all the crashes and the booms and busts, recessions and times of high unemployment in the last 40 odd years we’ve been in the EU but I am not.
          Presumably they were all the fault of the EU.

        2. Anonymous
          June 21, 2018


          You kept ignoring an enfranchised people over uncontrolled immigration.

          YOU caused Brexit.

        3. Ed Mahony
          June 21, 2018


          I think the economy’s doing much better than many Remainers predicted.

        4. L Jones
          June 21, 2018

          What an odd post, Andy – a waste of words, really.

          Instead of indulging in empty, meaningless bluster and insults – perhaps you’d like to tell us WHY you believe we should have chosen to ‘remain’. Tell us what is STILL so admirable about the rapidly morphing EU. But – more importantly – it’d be very interesting if you’d describe the grand and glorious future we have forfeited by choosing to leave the execrable and sclerotic EU – and what you think would happen if Brexit were stopped. I think many of us would like to know how your mind works.

        5. roger
          June 21, 2018

          Winning Andy, Winning!
          We pensioners love winning, we’ve won all our lives!

        6. libertarian
          June 22, 2018


          Leave your cave and start looking at reality

          53 per cent of business leaders said the UK leaving the EU would be best for the economy overall, 53 per cent said it would be best for the interests of their company and 63 per cent said they favour Brexit on a personal level. City AM Poll

          Last year, 2017 British #tech businesses attracted $7.8bn of funding, almost double the amount received in 2016, compared to France and Germany’s combined total of $6bn

          2.1m people are now employed in the digital tech #economy and a new digital tech job is created every 50 minutes.

          Our trade deficit narrowed by £12.8bn as UK goods and services exports grew to £625.9bn in the year to Jan 2018 @ONS figures released this month show.

    4. mancunius
      June 21, 2018

      There will…there will…there will…

      Poor Andy: you’ve got therewillitis.

      Meanwhile, since 2014 there are ongoing compound gains of 25% annually from UK smaller companies shares: the sort of companies the CBI is trying to prevent crossing their EU-lobbied moats.
      Quality will out.

  7. Richard1
    June 21, 2018

    We certainly do not need tax rises, we have too high a tax/gdp ratio as it is for a chance of high sustainable growth. We have seen the Laffer Curve efffect proven in both directions with the reductions and then increase in CGT, the increase then reduction in income tax top rate, the increase in stamp duty and the reduction in corporation tax. It ought to be enough evidence even for the most bone headed collectivist. And certainly enough evidence for Conservative ministers!

    It is a pity we are in an auction of virtue signalling commitment as to how much the parties will spend on the NHS as opposed to how they will ensure improved healthcare outcomes.

    Meanwhile is it really the case that whether the Govt’s negotiating stance with the EU can be set aside and replaced by a Parliamentary free for all will now be determined by John Bercow (or his successor in the happy event he is removed)? If I was junker & Barnier I would take my chances on that and drive an exceptionally hard bargain with the U.K. so it ends up in the hands of Bercow, a declared Continuity Remainer.

  8. Narrow Shoulders
    June 21, 2018

    The requirement for more NHS funding can be addressed in the short term by spending our taxes within the NHS much better.

    Prevention rather than cure, not funding IVF or gender reassignment procedures, charging a deposit to avoid missed appointments, only treating those who are genuinely eligible for treatment and reducing the price paid for temps and medicines.

    The usual siren voices will cry that each of these measures accounts for a small proportion of the whole sum but as Dave Brailsford has shown at team Sky cycling each 1% adds up to a win.

    The government does not need any more of my paltry income. I am still struggling from its continuing raids. (NI secondary earnings threshold rise for instance).

    1. Know-Dice
      June 21, 2018

      Agreed, and 1% of the NHS budget is what £1.5 Billion?

      so not peanuts…

    2. Anonymous
      June 21, 2018

      Targetting those who refuse to take responsibility for their own health instead of blanket taxes on everyone (sugar etc.)

    3. JoolsB
      June 21, 2018

      And not asking us to fund what is currently the International Health Service. The politicians have allowed mass immigration without public consent, putting pressure on our services and now they have the gall to expect us to cough up for their stupidity.

  9. formula57
    June 21, 2018

    But if there are no unnecessary, unpopular tax rises to help meet the NHS funding increases, what else should Mrs. May turn to in order to lose the next election?

  10. margaret
    June 21, 2018

    But these figures are relative to GDP and these are also very low at present, not that this matters too much as this can be likened to the selling and buying of houses , for example if my house to be sold is worth a lot more than it was 20 years ago the house I am going to buy is likely to have had a similar increase in value, however if I buy in another country where the economic climate moves differently I could make a profit.

    ISA’s are now looking like a more profitable investment from a few years ago .Has this anything to do with the squeeze ?

    1. mancunius
      June 21, 2018

      I never understood why ISAs weren’t regarded by all as an automatic no-brainer must-have. The contents of an ISA are not only tax-free, but its very existence is unknown to HMRC, and you can even use it as a piggy bank if you so choose – should borrowing rates ever rise again. 🙂
      A SIPP cannot be tapped at will, and it is fully taxable at the point of income-taking in old age: and we cannot predict what tax rates will be 20-30 years from now.
      Gordon Brown’s SIPP initial investment giveaway is rather like a driver beckoning you to cross the road, and when you’re halfway across, trying to knock you down.

  11. DUNCAN
    June 21, 2018

    The real national debt is of course all liabilities that have been foisted upon the productive by an unprincipled political class. I’d say the true taxpayer obligation figure is around £5 TRILLION.

    Public sector pension liabilities are a classic example where government simply capitulates to another state vested interest and decides to abuse the taxpayer because it can

    Debt allows government (politicians in government) to circumvent-avoid difficult spending choices.

    The taxpayer is openly abused and is expected to finance state sponsored waste because to confront and reform the public sector and Labour’s client state is far too troublesome

    This is what happens when the Conservative party elects a leader that is not a conservative

  12. Sir Joe Soap
    June 21, 2018

    The NHS spending shouldn’t be happening at all. Listen to Prof Sir Brian Jarman on Today programme this morning and you will realise that the NHS isn’t fit for this century. Systems which the auto industry were using to improve performance in the 80s are being thrown away and denied by NHS managers. We should NEVER be throwing more money into this system, but instead shutting it down and starting anew.

    1. A.Sedgwick
      June 21, 2018

      Moral Maze R4 20/06/18 highlighted the problem between the sacred cow believers and the realists.

    2. Lifelogic
      June 21, 2018

      Indeed people need freedom of choice and not this appalling, dire (we have your money already mate so take it or leave it) state monopoly, delay & rationing system.

      Listen also to the Moral Maze last night on radio 4. Well listen to Portillo and the two sensible witnesses James Bartholomew and Dr Kristian Niemietz. Not the other lefty often religious dopes who clearly think the NHS is just fine but needs even more money to waste on killing people or letting them die or suffer in pain.

    3. libertarian
      June 21, 2018

      Sir J S

      Absolutely, but this is just another example in a list of many that shows that our governing class are not capable of governing in 21st century and aren’t fit for purpose . We need urgently wholesale reform of the whole apparatus of public service and leadership

  13. Peter Miller
    June 21, 2018

    Great news.

    Amazing how I have not read this anywhere or heard it on our left leaning media.

    The Tories are not doing a good job of getting this message out.

  14. JoolsB
    June 21, 2018

    John, could you please explain why Hammond gave the already overfunded devolved nations an extra £4 billion in the last budget when money being given to England is constantly being cut to the bone?

    1. Lifelogic
      June 21, 2018

      Well we know why. Because he is a fool and a tax borrow and piss down the drain economic illiterate.

    2. Capt. Fishy Fingers
      June 21, 2018

      Because in Scotland’s case they need to fund Scottish Parliament cruise ship ventures litter/plastic recycling efforts ( in America) and inspect certainly on a cross-party basis cruise-ship sleeping accommodation and in practice jump ship as it were and consort with the opposition leading to new exciting relationships and political retirements. Yeah it’s a scam.

    3. NHSGP
      June 21, 2018

      Each area should get the same per capita spend.

      Then its down to each area to make the most of the money

    4. Alison
      June 21, 2018

      As a Scot, I’m ashamed we’re taking the money, with no energy or drive in the SNP government/leadership. My brother is constantly bemoaning the public-sector dominated Scottish economic mentality, it makes his life as an entrepreneur up here really tough. Instead he focuses on northern England.
      It’s only going to get worse while Ms Sturgeon is in charge. unfortunately the Ian Blackford stunt worked quite well up here – normally sensible people think that we Scots are being done out of things to which we are entitled (rather than the powers returning not having been either Scottish or British for decades). I will work at correcting this up here, but I think it’s important to note just now.

  15. Drug Pusher OBE MBE
    June 21, 2018

    Mrs May confidently speaks of increased money for the NHS and tax rises.Yet….

    Nine months to go to Brexit.
    No deal on the table.
    No external trade deals.

    How can Mrs May say what is going to be in her national purse?

    1. Lifelogic
      June 21, 2018

      True, but do not worry we will get the vital things of gender pay gap reporting, yet more tax increases and another more specific law against upskirting. T May clearly has her clear priorities!

      1. Chris
        June 21, 2018

        That is one of the reasons Obama/Clinton were rejected. As one young black female radio show host said (paraphrased) at the time: We want jobs, not a government that focuses on body parts.

        President Trump has brought jobs back to the US and is boosting prosperity very significantly. If you are in any doubt as to his popularity watch the videoclips of the rallies that he is staging across the country. Yesterday at Duluth, Minnesota, the atmosphere was on fire apparently. People queued for hours to get into the venue, the venue had to be changed to accommodate the huge numbers and even then many thousands had to watch from outside. See the Conservative Tree House website for link to videoclips or Gateway Pundit website.

    2. Denis Cooper
      June 21, 2018

      For the past 45 years our trade deals have been those negotiated by the EU and its antecedents on behalf of all member states, and that must continue to be the case until we are free of the EU customs union.

      “The European Union created a Common Commercial Policy to govern its trade relations with non-EU countries. The creation of a common commercial policy followed as a logical consequence of the formation of a customs union among its Member States. The European Union’s trade policy therefore establishes common rules including, among others, a common customs tariff, a common import and export regime and the undertaking of uniform trade liberalization measures as well as trade defence instruments.

      The Common Commercial Policy is explicitly placed under the exclusive competence of the Union (Article 3 of the Treaty of Lisbon). This confirms existing case-law of the European Court of Justice and means that the Union alone is able to legislate and conclude international agreements in this field.”

    3. Edward2
      June 21, 2018

      There are numerous nations ready to sign up to trade deals but these cannot happen until we actually leave the EU.
      Trade carries on between many countries with no deals.

      1. Mark B
        June 21, 2018

        Nonsense. You cannot sign a trade deal until you have concluded negotiations. And since we cannot begin negotiations until after we have left how can countries be lining up to sign ?

        Sometimes Leave people can be as deluded as Remainers.

        1. Edward2
          June 21, 2018

          Mark, there have been many visits by Boris and Liam Fox to nations who have said they look forward to signing trade deals with us.
          You can begin negotiations whilst in the process of leaving and we have.
          You just can’t sign the actual deal.
          I’m not deluded.
          You are mistaken
          Try to be little less aggressive and check your facts.

        2. Narrow Shoulders
          June 22, 2018

          Just because the very left leaning Metro published your letter yesterday does not make your EFTA demands correct.

          As Edward says a little less condescension and aggression would make your cause slightly more appealing.

  16. Sir Joe Soap
    June 21, 2018

    As Allister Heath says today, your party is heading into the next election on the back of new tax rises which out-tax your electoral base even more than under Cameron, which itself out-taxed Labour under Brown-Blair. This is not only unnecessary, but totally contrary to what is needed for us to succeed out of the EU. It is almost as though your leadership shares the will with Labour, Libdems and EU to economically drown the successful and sacrifices the poor and unhealthy in this country on the altar of the NHS. People will only put up with this for so long, and without an alternative Trump-like outlet, trouble must ensue.

    1. Lifelogic
      June 21, 2018

      Indeed A Heath is spot on today as usual.

  17. Richard1
    June 21, 2018

    I just listened to the interview with Mr Paul Johnson of the IFS on the Sunday Politics. He was presented as being ‘independent’ but asserted that “the govt has accepted that Brexit will cost £15bn pa” (ie there is no brexit dividend), also that “the economy has shrunk as a result of Brexit”. Unfortunately the BBC interviewer did not ask in which quarter the economy is shrunk, did not ask for evidence for the assertion that Brexit has been negative, did not point out that many other economists think Brexit is positive, did not ask who in the govt has accepted that Brexit will cost a net £15bn etc. Nor was he challenged on the IFSs previous wrong forecasts on Brexit and other matters such as child poverty.

    So many of these supposed ‘independent’ experts are in fact partisan & have a political axe to grind.

    1. Jagman84
      June 21, 2018

      The IFS? Institute of Fiscal Studies or Institute of Fabian Socialists?

  18. Sakara Gold
    June 21, 2018

    Whilst I agree that the public finances have improved, the national debt is only sustainable at current, low interest rate levels

    Should the BoE be forced to raise interest rates rapidly in respond to a serious run on sterling – or another derivatives-based financial collapse – servicing the national debt will become onerous in the extreme.

    The Chancellor could consider printing a few billion to buy gold/silver for the national reserves. Beginning in 2010, central banks around the world turned from being net sellers of gold to net buyers of gold. Last year (2017) they collectively added 483 tonnes – the second largest annual total since the end of the gold standard – with Russia and China accounting for most of the activity. The second half of 2015 saw the most robust purchasing on record, according to the World Gold Council:-

    2010 began the hugely profitable rise in the gold, (priced in US $) as producers bought back short hedges and sensible central banks accelerated their purchases. etc ed

    This position is clearly a hedge against another collapse of the fiat currency system.

    1. Mitchel
      June 22, 2018

      Russia dumped almost half of it’s holdings in US Treasuries in April it was revealed last week.

  19. Ian wragg
    June 21, 2018

    What’s betting that by the time May has finished non negotiations we will be paying something remarkably like our net contribution to Brussels.
    Just what concessions has she given to win the latest vote.

  20. fedupsoutherner
    June 21, 2018

    We are all listening to the problems of the hospital in Portsmouth where hundreds of patients were allowed to die unnecessarily because of over use of pain killers. What a mess. Surely until the fundamental problems in the NHS are looked at and dealt with it should receive no more money.

    There are many ways things can be funded in this country without raising taxes. Indeed, L/L raises them nearly everyday and he is quite right to do so. The waste that goes on in government is beyond belief and as others have said, it is as though they want us to fail once out of the EU. What a betrayal of the people. Where have the ethics gone in your government John? We are being taxed out of existence and that is not what most people think the Conservatives are about. I know the money has to come from somewhere but it doesn’t have to be through tax when we are wasting so much on failed policies. By the way, I would like to see the Labour governments ideas for raising the money they would need for nationalisation and their big giveaways to the NHS and Universities.

  21. Drug Pusher OBE MBE
    June 21, 2018

    China and India are slapping tariffs on the USA…which will of course also hit British firms selling in the USA . Americans cannot spend money on our goods if they pay more to 2.7 billion people in China,India . Of course the UK is joining in the EU frenzied tariff attack on 232. 6 million Americans too.
    Where does Mrs May get her projected figures about our economy?
    Parliament yesterday was supposed to be discussing “The greatest bill in our history” Mrs May an Opposition parties spent a large measure of time attacking our exports to the USA via attacks on their Head of State.
    It is a valid question…due to their bizarre behaviour lacking focus and priorities … What are they on?

  22. Adam
    June 21, 2018

    Smaller units of the UK, individual citizens, borrow personally at rates of up to 4.5 times annual income. If the UK is expected to remain alive to repay its debts, perhaps 100% of annual income might be an affordable level of borrowing to cover essentials.

  23. David D
    June 21, 2018

    I note the figures do not include bank bailout liabilities. How many years ago was it that a Conservative chancellor promised a “balanced budget”? Oh those halcyon days when politicians at least pretended to believe in sound money and fiscal probity. Now of course that’s as dead as any free speech that doesn’t follow government edicts. We instead have to look forward to large tax rises, wholesale destruction of the value of sterling, a Brexit sellout, continued mass immigration and the stamping out of indigenous British culture. Sadly although I’m old I still may live long enough to see the resulting ruination of a country that was once reasonable to live in.

  24. Turnip Townshend
    June 21, 2018

    Have, for they are legion

  25. MIke Stallard
    June 21, 2018

    Good for the government! Something has been done with success and not boasted about. top marks there.

  26. Anonymous
    June 21, 2018

    For goodness sakes.


    Charges for:

    – missing appointments

    – being drunk in A&E

    – uninsured visitors to the UK

    Recycling of equipment which is currently scrapped such as crutches, frames etc.

    Finally. Stop rip of pricing on paracetamol, light bulbs, latex gloves… whatever it is the NHS pays over the odds on and ban the pharmaceutical junkets where a HND grad with two years training buys a room of consultants with ten years training apiece bottles of fizz and prawn sandwiches to persuade them to take on their brand of wonder drug… at stupendous cost to the taxpayer.

    Chucking more money at the NHS is not the answer. It is a bottomless pit and is now the industrial wing of the Labour Party since the pits were closed.

  27. Newmania
    June 21, 2018

    The state net debt is £1365bn or 64.5% of GDP. This is a relatively low figure for advanced nations, and eminently sustainable.

    This is printing money, if we can write off QE then why not simply throw new cash out of a helicopter of just print more to pay for the NHS , it would be exactly the same thing
    Mugabe economic and Mugabe politics , no wonder Corbyn is such a fan .

  28. stred
    June 21, 2018

    This ‘Conservative’ government, that I voted for until Cameron revealed his true loyalty, had a reputation for economic competence. That is until the ERM disaster when Mr Soros cleaned us out. Now we have small businesses being driven out because the huge rise in business rates was waved through without moderation. We have rail companies giving up their franchise because they had to pay too much to the Treasury to win it. The fares increased to pay for it and the passengers went elsewhere. They took away the inflation allowance for CGT so that long- term investments are taxed at unreal rates higher than ever and as a result owners cannot afford to sell. When they die, the Treasury will be happy to collect 40% of the remains and their children will have to pay for a house which has a value hugely inflated because of Treasury money printing. Hard working middle- income couples are taxed to a point where, after losing child benefit, it is pointless working and part- time is the solution.

    Now they need to find £39bn and more to bribe the EU, to please big business while they refuse to reform the obscene mess that is ‘our national treasure’. The NHS is an excuse to raise taxes to match Labour and take the moderate Labour vote. Yet they expect ‘conservatives’ to vote for them next time because Labour is even worse. A lot of us have memories and there will be an alternative in 4 years time. For the first time, I am thinking of joining a political party which will replace the false Cameroon shysters that dominate the Tories and barracked honest MPs like Philip Davies yesterday. Hopefully the local membership will clean the stables, otherwise, it looks like UKIP has a better leader at last.

  29. acorn
    June 21, 2018

    If we were to exclude the activities of the BoE in the estimation of public sector net debt (excluding public sector banks), then public sector net debt (excluding both public sector banks and BoE) would reduce by £194.1 billion, from £1,777.3 billion to £1,583.2 billion, or from 85.1% of GDP to 75.8%. (PSF UK 04/18.)

    PS. The BoE owes the Treasury; hence, you do not deduct £435 billion. Also, the BoE did not “buy” Gilts, it swapped them back into the “reserves” (Treasury original spending), that bought the Gilts when they were first issued. That “cash” is now propping up share prices. There was no change in the net fiscal assets in the economy; apart from the interest on the Gilts which the Treasury is now paying to itself and not the private sector.

    1. Denis Cooper
      June 21, 2018

      Well, the Bank thinks that it does “buy” or “purchase” gilts:

      And once the Bank owns those gilts the Treasury owes the Bank in the same way that it owes all other holders of gilts.

      However I don’t accept that the £435 billion doesn’t matter, not while the Treasury continues to maintain its January 2009 guarantee that the Bank will not incur any losses as a result of its quantitative easing programme:

      While the Treasury continues to indemnify the Bank against losses it has to pay the Bank whatever falls due on the gilts owned by the Bank.

    2. acorn
      June 21, 2018

      Redwoodian Brexiters, should try and educate themselves on how the economy actually works. Otherwise, you will always and ultimately will be, defeated by remainers, who have a considerably greater level of educated understanding of these macroeconomic matters.

      Can I suggest that you have a read of:

      1. Edward2
        June 21, 2018

        Should we study widely or just become obsessed by one particular theory?

        1. acorn
          June 22, 2018

          Study widely; you are already obsessed with the one Brexit theory.

          1. Edward2
            June 22, 2018

            I voted to leave, as is my democratic right as a citizen after listening to the debates and reading widely.
            I will continue to argue for the decision in the referendum vote to be honoured, as was promised to us by the Prime Minister.
            It isn’t an economic theory.
            There are hundreds of those.

      2. Denis Cooper
        June 22, 2018

        Remind me which side lost the EU referendum.

  30. Groundbased
    June 21, 2018

    If taxes have to rise to fund healthcare, whether the NHS or some new equivalent of, I would prefer to see an increase in VAT (or HAT, Health Added Tax), which could be targeted specifically against expenditure that results in greater use of NHS resources, such as alcohol, tobacco and sugar.

    At least this is across the board as opposed to asking the minority of working taxpayers to subsidise the rest to a greater extent than they already do. Lifestyle changes have to be part of the equation if we want to have any chance of keeping a universal healthcare system.

    1. NHSGP
      June 21, 2018

      What about fois gras?

      1. margaret
        June 21, 2018

        you are just ducking the issue.

      2. hefner
        June 22, 2018

        Il etait une foie?

  31. Peter
    June 21, 2018

    Can somebody explain what happened on the Brexit vote yesterday please?

    I understand Grieve relented because of a concession. The concession seems to be that the Speaker, Bercow, gets a say on whether MPs have a further vote. Some say this is just a ‘technicality’. However, Bercow is a rabid Remainer and may not be impartial. Nobody seemed to be able to clarify the procedure.

    Either way, it is more fudge from the May government.

    1. Helen Smith
      June 21, 2018

      My understanding is that provided the motion is correctly drafted Bercow, or whoever the speaker is,will have to follow procedure in which case he/she will have to declare it a neutral (non amendable) motion. Hilary Benn and JRM think so anyway.

      1. stred
        June 22, 2018

        It is a mistake to involve that obnoxious little puffer. He thinks he owns the place, living it up in his posh flat with his socialist wife and banning the US president while parking his big car outside with his F the voters sticker.He is the EU opposition.

    2. Peter
      June 21, 2018

      “It might be a concession that only really parliamentary lawyers understand, but the PM had to move, again, despite not wanting to.
      And despite the fact that she did compromise even in a meaningless way (yes I can’t believe that I did just write that sentence, but it is relevant)”

      Laura Kuenssberg BBC

      No Deal effectively off the table now – The Times

      “International trade secretary Liam Fox said nothing had really changed and the option of a no-deal Brexit had been left firmly on the table.” BBC


      No justifications offered for any of these statements above either.

  32. ian
    June 21, 2018

    Leave it to the professionals, I hear the chancellor is going make a speech about lending more money to overseas countries and companies.
    No doubt the BOE, UK Treasury, city of London and all the bankers will be over the moon on his plans for Brexit, still, if they nick a bit more from England to lend out elsewhere which they doing at the moment, they have always got the British people to fall back on, if things go wrong.

  33. NHSGP
    June 21, 2018

    208 bn a year going on the debts, both on and off the balance sheet.

    30% of taxes.

    How much better would the public be if they took home 30% more?

    What would 30% extra on state services mean to the quality and quantity of provision?

    We can’t have it because of the debts.

  34. Ron Olden
    June 21, 2018


    It’s still too high but annual State borrowing, is now down to less than it was before the Financial Crisis in 2008.

    But what an ordeal it’s been, and all this borrowing has left us with a huge National Debt that will be there forever, with permanent large amounts of interest due on it year in year out.

    In fact the interest we are paying on the National Debt now, is more than the amount of borrowing that we’re adding to the debt every year, and more than we spend on Defence and some other vital public services put together.

    How different it could have been if we’d had politicians with a a shred of common sense in power, 15 years or so, ago

    What a colossal waste of money. And all because the Blair /Brown (remember them?) Labour Government went spending mad in the noughties and failed to regulate the banks.

    And what do we have to show for all that wasted money?

    Absolutely nothing!!!

    But thank heavens for small mercies. The ‘crisis’, at least, is over.

    We must NOT go through that again. Another fiasco like Labour’s overspending in the early to mid noughties and its’ failure to regulate the banks really will bankrupt us.

  35. Ron Olden
    June 21, 2018

    I don’t want to nit pick but I think about £10 Billion of the £435 Billion is Corporate Bonds.

    Therefore the Bank will have to sell them count against a Net National Debt.

    Not that that’s a bad thing though. Corporate Bonds have a been better investsment than buying in Gilts.

    Another asset hanging over from the past years are all the Bank Shares the Government ownes, which they’ll sell in due course.

    It’s also forgotten that the Government took over the Bradford and Bingley and Northern Rock Loan Books and other assets and which have been gradually disposed of.

    The Bradford and Bingley Nationalisation has been particularly profitable.

  36. Ed Mahony
    June 21, 2018

    Great news. Well done the government. Keep up good work in bringing down borrowing / debt.

    1. stred
      June 22, 2018

      They are bringing down the rate of increase of debt- not debt.

  37. Kenneth
    June 21, 2018

    Mr Redwood, your socialist government wants to raise taxes.

    I urge you and your colleagues to do all in your power to take back control of the Conservative Party

  38. Richard
    June 21, 2018

    And then there’s Sizewell C and Whitehall’s role in protecting the public purse:
    “The latest forecasts have revealed that EDF’s bid to build the first new nuclear plant in a generation could cost energy bill payers £50bn over the life of the project, well above the £6bn bill estimated in 2013.”

    1. Richard
      June 21, 2018

      meant Hinkley Point C (in Somerset)

      1. stred
        June 22, 2018

        And all the offshore windfarms being built or to be built in the next few years will be subsidised at 150% more than Hinkley plus inflation. While the companies can walk away from the halved amount tendered recently if it turns out that the savings are BS.

  39. Narrow shoulders
    June 21, 2018

    EU citizens to be granted settlement rights by default says Home Secretary

    Three questions to answer:
    They will be asked to prove their ID, whether they have criminal convictions and whether they live in the UK.

    What about “how are you supported and has this been consistent during your time in the UK?”

    1. hefner
      June 21, 2018

      According to various news published today, one being a message sent by Savid Javid to EU people registered with the Home Office, as part of a previous HO process for them to get the so-called “settled status” they will also have to provide their NIN and their HMRC coordinates, so I would guess your last question is implicitly answered.

  40. Gina Dean
    June 21, 2018

    I thought that all bands of taxes were to be over hauled and amalgamated. What had happened with that promise by treasury! Surely putting it on national insurance and ring fencing the money woukd be a better option. Then people could see where the money is going rather than being absorbed in general tax.

  41. mancunius
    June 21, 2018

    I’m sure Mrs May has looked at stats that show the large section of the population that supports the NHS *because* it is ‘free’ – and because they see themselves stuck with it.
    Very few polls lay out the European-style tiered personal insurance alternatives to the current system.
    But has Mrs May worked out that all those people who say they are happy for taxes to rise to pay for the NHS do not
    a) pay much if any net tax themselves, (or adroitly avoid it)
    b) do not vote Conservative, and probably never will?

  42. a-tracy
    June 21, 2018

    Hammonds threats on higher rate taxpayers would really hurt those higher paid graduates with their 9% graduate tax already. There should be a maximum % tax grab from all your combined multiplicity of steals, otherwise, the brightest just won’t bother shining bright in this Country.

  43. hans christian ivers
    June 21, 2018


    Interesting observations but we have been here before and your interpretation of the net debt as oppose to the gross debt is flawed as this is still debt and if it is configured any other way, it could have implications for the long-term value of the Pound Sterling.

  44. Andy
    June 21, 2018

    I read today that Brexit means effectively staying in the single market for goods – but not for services.

    Apparently we’re heading for a ‘Ukraine style’ associate agreement with the EU which would entail us accepting freedom of movement but with a different name.

    I thought you all wanted the Swiss model? Or was that just Daniel Hannan? Or the Norway model? Or maybe that was just Owen Paterson until he figured out what a Norway model actually meant? Or a Canada model? Considering you all knew what you voted for it’s pretty hard to figure out what you voted for as even you don’t seem to know.

    How about a Narnia model where you can only access the EU through a wardrobe?

    1. Fedupsoutherner
      June 21, 2018

      Andy, why do you persist on being an uneducated ignorant individual, or at least that is how you proudly portray yourself to be. We know what kind ofBrexit we want and it is not a Norway, swiss, Icelandic, Canadian or even, lovely as it might seem, a Narnia one. All we want is a British Brexit. Out of everything. It really doesn’t take a lot of brain matter to see that and it is the remainiacs like yourself that are mess*ing it all up. Why don’t you take your hard done by children and go and live in the EU where your brain might defog and you can live happily and let us do what we want?

    2. Anonymous
      June 21, 2018

      Incase you didn’t notice Remainer May got put in charge of it and threw away all our Brexit aces.

      I’d say Blunder Woman but she’s fulfilled her brief, which was to hobble Brexit.

  45. Narrow Shoulders
    June 21, 2018

    Mr Redwood

    You gave been (rightly) highly critical of Labour’s deficits in the past at a time when the national debt was considerably less than £1.3 trillion.

    What circumstances have changed that allow you to call for an increase in our deficit and borrowings?

    Is this not just political posturing to suit the prevailing wind?

    Before government taxes or borrows more I would like to be sure it is spending every penny wisely.

  46. margaret
    June 21, 2018

    We have two social/financial gaps.The first is between those who are on a moderate income and can buy up to a point, but real lifestyle changes where money could be spent on more expensive cars , more expensive household items and generally more upmarket products is out of reach. The second gap is between those whom it pays to work less hours subsidised and scrape a reasonable living using budget stores and cheap produce.It is not worthwhile to work full time and involve themselves in the stress of many more hours for a few pounds more and they get on well with budget holidays , cheap booze and are happy as they are.They cannot become upwardly mobile, just as the moderate incomes cannot and so there is a permanent social stasis.

  47. Freeborn John
    June 21, 2018

    Why are you still propping up that incompetent in No. 10? She has to go.

  48. Iain Gill
    June 21, 2018

    vote conservative getting wishy washy liberal nonsense

    is it any wonder the party couldnt even get a majority against the worst labour leader in living memory (and thats saying something considering how bad blair and brown were)

    you are correct john but nobody at the top of your party is listening

    would be so easy for a mrs T type to state the obvious and win a landslide, but dont see any potentials for that role

    retire abroad get out of this mess, thats my advice to you


  49. Me
    June 21, 2018

    I am British. Born here. My ancestry is entirely British going back hundreds of years, which I can actually prove if asked.

    If I prove my identity to the government who should know who I am anyway and,

    If I prove I live here to the government who should know I live here anyway and,

    How do I prove I do not have serious criminal convictions to the government who should know I do not anyway?And,

    Government should try being a proper government for once then it would not ask darned silly questions.

  50. Simon
    June 21, 2018

    Any suggestion that there will be any kind of Brexit dividend is frankly a lie – an absolute whopper.

    1. Edward2
      June 22, 2018

      And your reasons for your pithy one liner are…..?
      Gut feeling?
      The reports by remain biased organisations?
      Crystal ball?

  51. Peter Martin
    June 21, 2018

    “The Treasury also say they need to reduce the outstanding debt, which is at £1800 bn. or 85.1% of GDP. They need to remember this is a gross figure. The UK state has bought in £435 bn of debt which it therefore no longer owes. The state net debt is £1365bn or 64.5% of GDP”

    So why doesn’t the UK Government ‘ask’ the BoE to buy back even more gilts and reduce the debt even more?

    But before we do that maybe we should ask why the BoE can create as many ££ as they like which isn’t counted as debt? So, naturally, if you swap one form of Govt IOU which isn’t counted as debt for another form that is then it does appear the National Debt is decreasing. But in reality, it is just a quirk of the accounting rules.

  52. Lindsay McDougall
    June 25, 2018


    As I was walking down the stair, I saw State debt that wasn’t there,
    It wasn’t there again today, I wish that it would go away.

    Poetically, that is how Mr Redwood perceives at least part of State debt. A more apt description of State debt is that it is:
    “Of vast proportions and painted red
    And tied with string to the back of our heads”

  53. a-tracy
    June 25, 2018

    John, I was wondering over the weekend, how do the UK get back the 9% graduate tax from EU students that studied in the UK and took on British tuition fee loans, does the British government have agreements with the other EU Countries to attach the same attachment of earnings PAYE requirements?

    How much has been issued to EU students since 2012 when the fees rose to £9000pa? Or as well as the Scottish, Welsh and Irish are English students the only ones paying for their full tuition fees and is the UK government is funding everyone else’s education, how much?

  54. Lear's Fool
    June 25, 2018

    Nuncle, I think you’ve got this seriously wrong. The gilts owned by the Bank of England cannot just be cancelled. If it was that easy, every central bank could just buy up the entire public debt, cancel it and whoo hoo, the country is debt free and the treasury doesn’t need to pay any interest any more.
    What you fail to consider is that the gilts have been paid for by newly created reserves and the Bank of England pays interest on those reserves. The interest income received under the gilts services the interest that the BOE pays to holders of central bank reserves (i.e. commercial banks). If the BOE no longer receives interest because it has cancelled the gilts, it will have to print money to pay interest on money that it has already printed… i.e. it becomes a spiral and leads to hyperinflation. This is how many hyperinflations occur…. the CB starts printing money to pay interest… the interest rates demanded by the market for holding central bank monetary issuances keeps increasing and it becomes a spiral where the issuance of money goes out of control.
    Nuncle, you really do need to read up on central banking theory a bit more.

    Reply This is not true. The Bank pays tge interest on the gilts they hold back to the govt as a dividend. The US is currently cancelling the Treasury bonds it bought in.

    1. Lear's Fool
      June 26, 2018

      It only pays the NET INTEREST (i.e. interest income received from gilts MINUS interest paid on commercial bank reserves) as a dividend to the treasury. That is a critical difference from paying the entire interest income received.
      The Fed is not cancelling treasuries. It is simply ceasing to re-invest the principal from redemptions in treasuries. Here is the info:
      Nowhere does it say that the Fed is cancelling the treasuries it holds.

      Reply It repays itself to cancel them!

Comments are closed.