More bad news from a car industry damaged by higher taxes, and lower Stamp Duty receipts from higher rates

I do wish the government would reverse the damage it has done to the UK car industry through its higher VED, its attack on diesels and the credit squeeze. Last month car sales were very weak in what should be a good month, with the biggest hit predictably taken by diesels. The latest credit and money growth figures from the Bank of England show that last month there was no money growth at all, with a big fall in car loans.  This  left the yearly rate of money growth  at a new low level below the current rate of inflation. Domestic policy continues to slow the UK economy, with the car sector and dearer properties bearing the brunt of the tax attack.

It is especially strange that the Business department, ever vigilant of alleged and often implausible problems for the car industry from Brexit, says nothing about the obvious damage to car output and car sales by the tax and credit policies currently being pursued. Indeed, with diesel car sales down more than 4o % now, it is difficult to understand how they have not observed this and not done something about it.

Returning VED to the levels prior to the 2017 budget would be a good start. Allowing more car loans, one per person in employment at sensible levels would also be a good idea.

Cutting Stamp Duty to 2016 levels where it is currently higher would help unblock the homes market. The Treasury had to admit in the budget that Stamp duty receipts will be £1bn lower this year than forecast owing to the decline in transactions and their model forecasting errors from the higher rates, with a loss of nearly £4bn over the five year forecast period.

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98 Comments

  1. Newmania
    Posted November 1, 2018 at 6:23 am | Permalink

    You do not stop driving because you don`t want a Diesel.The motor industry blames Brexit.
    Monetary and Fiscal Policy cannot be used as an anti Brexit bazooka forever. Carney was cut off the normalisation when the country showed signs of going into recession. Mr Redwood, argued this was an insult to Brexit……
    The OBR have calculated the loss of growth due to Brexit as significant and the National debt is far from where it would have been if it had topped out at 80% . This goal also had to be dropped due to the post referendum recession
    We are now headed full speed for a brick wall, Debt is still 84% of GDP and interest rates cannot go more than fraction lower. Investment is dropping fast and the engineered consumer boom has run its course. The guilty men will be nailed for every cut to services every lost job and every diminution of the country. I would emigrate John , when Das Mail runs for cover you know the rats know something

    Reply The Bank has lurched from too easy to too tight on its money policy.

    • Know-Dice
      Posted November 1, 2018 at 8:59 am | Permalink

      90% of JLR’s sales last year were diesels, they [JLR] have acknowledged that the fall in sales is due to their poor mix of diesel vs. petrol vehicles…

    • Richard1
      Posted November 1, 2018 at 9:03 am | Permalink

      See Patrick Minford’s article below your post yesterday, which in particular explains where and how the OBR has been so wrong

    • Newmania
      Posted November 1, 2018 at 9:04 am | Permalink

      Never mind all that, has Theresa May got a deal on equivalence or is this more lies ?

    • JOHN FINN
      Posted November 1, 2018 at 9:22 am | Permalink

      Carney was cut off the normalisation when the country showed signs of going into recession.

      Are you referring to the interest rate cut in August 2016 following the “signs of recession” from the PMI Markit readings.

      This would be the “signs of recession” from July 2016 – a month which experienced particularly robust growth. Give it a rest. You’re allowing these people to rewrite history and swallowing it whole.

      JLR sales were down by 44% in China – JLR’s largest market.

      • Newmania
        Posted November 1, 2018 at 12:31 pm | Permalink

        You think the B of E should wait until we are in recession and then do something …. my you are an expert aren`t you , we just have to work out at what .
        As Mr Carney said at the time indicators that had always in the past been indicators of recession were flashing . I don`t think myself that that was the main point. Households had been waiting for interest rates to start a climb back up to 2% plus and this had been trailed many times
        The Brexit recession meant that this was put on hold perhaps indefinitely which was in effect a massive boost to consumer confidence
        That is why we had such a bouncy consumer boom but its over now and the Brexit drag is really starting to show

        • libertarian
          Posted November 3, 2018 at 6:00 pm | Permalink

          Newmania

          Wrong as usual

          The UK economy is growing and its growing faster than the Eurozone

          Interest rates have nothing what so ever to do with Brexit, or indeed anything other than the government fixing the rates for their own benefit

          Carney has been making excuses various for not raising interest rates since 2013 long before the referendum

          You know nothing about finance

    • Lifelogic
      Posted November 1, 2018 at 9:30 am | Permalink

      “The Bank has lurched from too easy to too tight on its money policy”. It certainly has and with idiotic central controls over the banks, misguided stress testing and other daft rules that force the costs of pointless regular valuations onto property owners.

      We have banks that give you 0.4% or even less on deposits but charge you 68% APR on overdrafts even to solid clients more credit worthy than the bank. Quite some margin, where is the competition authority. These are banks that were bailed out by the tax payers.

    • Denis Cooper
      Posted November 1, 2018 at 10:03 am | Permalink

      “The OBR have calculated the loss of growth due to Brexit as significant”

      Only fools believe anything the OBR says about anything, including that:

      http://johnredwoodsdiary.com/2018/10/12/my-speech-during-the-debate-on-the-agriculture-bill-10-october-2018/#comment-966111

      Just because an official body is described as “independent” that does not mean that it is necessarily “independent”, let alone that it is a reliable source.

      • Newmania
        Posted November 1, 2018 at 12:36 pm | Permalink

        When it was the IFS and established a reputation by pulling Gordon Brown`s hem hem …”presentational budgets” to pieces Mr Redwood was ever so impressed by it
        I suggest you get back to doing your own roof Denis , you probably know how to that better than a professional as well …
        If you did by any chance fall off you last words would be something like ” The rate if fall is less severe than that experienced in the EU ..” (splat)

        Reply I do not recall praising the IFS I do remember making my own analysis of those budgets.

        • Denis Cooper
          Posted November 1, 2018 at 4:17 pm | Permalink

          And I suggest you look at the record of the OBR before taking what they say as gospel just because it agrees with your mistaken ideas.

      • Rien Huizer
        Posted November 1, 2018 at 4:42 pm | Permalink

        Are you suggesting they lack expertise? Or are they lying? Ans who are you to criticize experts hired by the British government?

        • Edward2
          Posted November 2, 2018 at 7:05 am | Permalink

          Just looking at their predictions versus the actual outcomes.
          Strange how that offends you Rien.

        • Denis Cooper
          Posted November 2, 2018 at 11:24 am | Permalink

          I am somebody who can look at an OBR report and see straight off that it is nonsense:

          http://johnredwoodsdiary.com/2018/10/12/my-speech-during-the-debate-on-the-agriculture-bill-10-october-2018/#comment-966111

          While you are somebody who is willing to uncritically parrot any such anti-Brexit nonsense, we know; but beyond that we do not even know whether you are a British citizen.

        • libertarian
          Posted November 3, 2018 at 6:03 pm | Permalink

          Rien

          Yup they lack any expertise, they are talking heads, who use a bunch of manipulated statistics to arrive at the conclusions they wanted in the first place

          They, risk analysts, ratings agencies, economists, and “finance experts” can all safely be totally ignored as they all talk out of their backsides

    • Hope
      Posted November 1, 2018 at 10:24 am | Permalink

      JR, your blogs consistently evidence and demonstrate what your bloggers already know: May and Hammond are not fit for purpose, do not have any conservatives values, conviction or strategy to help the public who have been crying out and voting for sensible right of centre conservatism. This is about the fourth of fifth time you raise this point, but you do not do anything. Are you going to vote against the budget? If not why not? May delayed her capitulation as a vassal state deliberately until after the budget. It is your chance today to vote it down.

      This week the deadly duo failed an with year promise,mrestated last year by Hammond, to balance the structural deficit, albeit ten years later than promised. Instead May lied to say austerity was over and Hammond fiddled at the edges to try to show this. The central economic plank that your party has used to get elected in the last three elections abandoned! Unfounded spending sprees by higher taxes and a never ending £20 billion deficit while the debt and interest payments increase each year. To try and deceive people she is acting, May claims the debt will be smaller as a percentage of GDP!

      Tell us why you and your MPs are supporting an effectively Labour govt policy agenda and why you at all still allowing May to betray the nation? Is it time for the people to rise to rid the traitorous MPs who are acting without a mandate from parliament?

      Holland might think it is acceptable for the govt to,act against the public vote over Ukraine, it is not acceptable here, nor should it be copied. That is not democracy and the politicians have no mandate to act against the public vote.

    • Mockbeggar
      Posted November 1, 2018 at 10:26 am | Permalink

      Oh! So you DO stop driving because of Brexit do you?

    • VACANT
      Posted November 1, 2018 at 2:08 pm | Permalink

      “I would emigrate “. I’m just waiting for the Blue passport before renewing mine, However with dopey Trudeau in charge in Canada I may sneak via there into North USA whilst Trump’s troops are manning the southern border against…well the rest of the planet! I could claim asylum Everyone in the UK knows I’m insane. I know I am which, proves I’m not, just mistaken (!)

    • libertarian
      Posted November 1, 2018 at 2:14 pm | Permalink

      Newmainia

      You’ve been told so many times, you’ve had links to car firm websites and SMMT as well as German car makers and news sites.

      Stop posting false allegations. EVERYONE in the car industry says the biggest issue is diesel , not just here but in France and Germany too.

      I couldn’t care less what the OBR made up in their forecasts.

      Show me in real terms which goods and services will not be sold totally and only because of Brexit , tell me a good factual reason with examples of why we will be hit.

      Job losses? Job losses? Where ? there are 860,000 unfilled full time jobs available right now, this isn’t the Eurozone, its them with the job losses

      At my regular meeting with the Bank of England I challenged the economists there to explain where they get their forecasts from.

      This was the response

      ” Its impossible to forecast what will happen with Brexit”, there are far too many different scenarios, options, and variables. At best we can just guess”

      Equivalence you ask

      European Commission Vice-President Valdis Dombrovskis told the UK’s financial sector on Tuesday (24 April) that the EU and UK regimes could co-exist together after Brexit.

      Speaking to the City of London, Dombrovskis said that “equivalence has proven to be a pragmatic solution that works in many different circumstances, and it can work for the UK after Brexit as well”.

      Behind the curve as normal chap.

  2. Nig l
    Posted November 1, 2018 at 7:04 am | Permalink

    The Business Secretary has proved to be neither knowledgable nor competent which is good for the Treasury because he depends on them for his job so is malleable and compliant parroting whatever message or policy they give to him.

    • Lifelogic
      Posted November 1, 2018 at 9:47 am | Permalink

      He was president of Cambridge University Social Democrats according to WIKI. Another big government, climate alarmist, interventionist lefty pretending to be a Tory.

      • Andy
        Posted November 1, 2018 at 12:37 pm | Permalink

        Better than a Kipper in blue – which is what most of you lot are.

        • Rien Huizer
          Posted November 1, 2018 at 4:44 pm | Permalink

          Indeed. But why mentions the obvious?

        • John Hatfield
          Posted November 1, 2018 at 8:24 pm | Permalink

          Erudite comment, Andy.

        • libertarian
          Posted November 3, 2018 at 6:07 pm | Permalink

          Andy

          More childish gibberish ( ably supported by Rein) .

          My analysis of the posters on here would be around 3 or 4 UKIP, half a dozen to ten Tories, then some socialists and Lib Dems. The bulk of people posting here are disenfranchised free marketers

    • Hope
      Posted November 1, 2018 at 10:26 am | Permalink

      He was a socialist democrat. He was going to provide notes of his meetings with the car companies- the one which produced scare stories to leave the EU. Again, by doing so he is acting against govt policy to leave the EU. Yet no sanction or rebuke from May!

  3. Duncan
    Posted November 1, 2018 at 7:11 am | Permalink

    There’s only piece of bad news I can see and that’s May as Tory leader and PM for the foreseeable future and no doubt for many years to come. This guarantees the UK’s vassal status and condemns the British population to a form of politics that I have not seen in all my time watching British politics.

    I couldn’t care less about car production. I only care for direct democracy, individual freedoms and holding to account a political class that’s become unaccountable, detached and fascistic

    • Peter
      Posted November 1, 2018 at 8:44 am | Permalink

      David Davis stating that May would get Brexit through Parliament was very bad news.

      His retraction was insufficient.

      The seeds of doubt had already been sewn.

      • Andy
        Posted November 1, 2018 at 12:38 pm | Permalink

        David Davis could state that today is Thursday and it would not be worth listening to him. I am sure he is a jovial chap. But he was one of the least competent ministers we have ever had.

        • libertarian
          Posted November 1, 2018 at 4:28 pm | Permalink

          Andy

          Davis achieved more in a year than you’ve achieved in your whole miserable, daddy funded life

          Have your sacked workers found jobs yet or are you still waving your wad at them?

    • Yorkie
      Posted November 1, 2018 at 2:18 pm | Permalink

      The best of them advocate Free-Speech bu’ then let themselves down by adding “But not in the case of…” It is one or the other. Free-Speech means Free-Speech. Mrs May said “Brexit means Brexit” She does not appreciate English or England. ..and especially in one case Nor’ England

  4. Richard1
    Posted November 1, 2018 at 7:12 am | Permalink

    Osborne’s stamp duty policy – which, let us remember, was a virtue signalling ‘look how we are taxing the rich’ policy – has been a terrrible failure, leading to lower receipts and gumming up the housing market. It is not only yet another illustration of the Laffer Curve effect, but an example of the pernicious effects of too high taxes on economic activity. It’s extraordinary that Hammond hasn’t reversed it.

    • Lifelogic.
      Posted November 1, 2018 at 8:47 am | Permalink

      This was all entirely predictable. Just as predictable as John Major’s ERM fiasco or the EURO disaster or the attack on Diesels. Why do we end up with only people lacking vision, intelligence, economic competence and common sense at No. 11 and in Treasury.

      Also the tax hits poorer tenants anyway. The extra 3% on second home purchases (for renting out) pushes up rents very significantly and reduces the number of properties available to rent. Rental properties are important for job mobility and the economy in general so he is inflict further damage.

      He has also killed letting relief (up to £40,000 CGT) which was a sensible measure to encourage people to let out part of their main homes without incurring large CGT bills on any later sale. No many will not let part out and it will sit vacant as it makes no sense if you trigger CGT. It is also in effect retrospective so he has cheated people who did. Hammond is a total menace to the economy get rid. Who in the treasury is pushing these damaging policies too. Is there another misguided Ollie Robbins/Oxford PPE type.

    • Peter Parsons
      Posted November 1, 2018 at 4:45 pm | Permalink

      Osborne’s changes cut stamp duty for 98% of all transactions (all those under £937,000). How will putting up tax for the 98% will make things better?

    • Richard
      Posted November 1, 2018 at 5:52 pm | Permalink

      Totally Agree. Stamp Duty is on the wrong side of the Laffer curve. As our host pointed out: “Let’s go back to pre 2016 rates of Stamp Duty …to allow more people to afford a home, and to allow the market for homes to clear better. Why do we want to prevent people trading down to a smaller property, or moving to a place closer to their work? Why did Mr Osborne want to reduce work for estate agents, conveyancers, removal firms, renovators” http://johnredwoodsdiary.com/2018/10/26/the-uk-budget-do-no-harm

      Where reducing tax rates increases HMT’s tax receipts, this should be a no-brainer! (Reducing tax rates always boosts GDP growth & economic efficiency; & a larger economy will more easily support future government spending.)
      How can an entirely beneficial policy be at all controversial?

  5. Lifelogic
    Posted November 1, 2018 at 7:13 am | Permalink

    Well we have an economic illiterate in No 11 please remove him and Appeaser May too. He is damaging the rented property industry, killing supply, limited choice and pushing up rents too. Absurd bank lending restrictions, double taxation of landlord interest, stamp duty rises, insurance tax rises and a lack of competition in banking is hugely damaging to housing and the economy too. The main problem is the government is just spending far too much and delivering very poor (often zero or negative) value in return. Nearly 36% of government spending is on the dire (heavily rationed, delayed, incompetent & unworkable as currently structured) NHS for example. A huge sum is spend putting students in £50K of debt for worthless degrees (at least half of them have 3 Ds or less at A level). Plus we still have the pathetic pension pot limit of just £1,030K and a 55% tax on the surplus and he is still cheating on the £1M IHT threshold promise too.

    The tax system says spend and be feckless or the government will just take it off you anyway.

    It seems that the increase in the 40% tax threshold is nearly half taken back by the increase in the NI cut off threshold. Needless to say the disingenuous man failed to announce this in his speech. Reduce one income tax and then claim the credit while increasing another income tax on the same person (but do not bother to even mention it). Is it any wonder Hammond (and many politician) are held in such total contempt?

    Get Prof. Minford and similar ins as economic advisers instead of the current dopes.

  6. Mark B
    Posted November 1, 2018 at 7:14 am | Permalink

    Good morning

    So, not for the first time government policy damages the private and productive sector in favour of the unproductive public sector which, taking into consideration the losses in revenue, has once again got away with it.

    There was a time when governments and Chancellors would see a loss in revenue from the private sectors and make up or balance the shortfall but cutting spending to the public sector. But the Whitehall mandarins and their unionised foot soldiers anger must be quelled.

    Gutless !

  7. Nig l
    Posted November 1, 2018 at 7:19 am | Permalink

    HSBCs navigation report states of its U.K. businesses, 40% are positive of the future and 22% think nothing will change post Brexit.

    Anna Soubry s constituency must be an unfortunate concentration of those that are negative. But then as a lawyer she is practised in the art of carefully choosing and advocating those ‘facts’ that suit her clients, in this case herself and the EU.

    Normally one would expect such advocacy to counter the specifics put by the other side, as set out in your regular postings.

    Her failure to do so speaks volumes about the paucity of her case or her political amnesia.

  8. Anonymous
    Posted November 1, 2018 at 7:20 am | Permalink

    We used to run old cars (fix them every weekend) and put our money into pensions and mortgages. The PCP schemes are a way of making people pay the drive-off-forecourt depreciation every three years.

    I own two cars for £1000 a year buying second hand and running them a long time.

    In itself, making borrowing more difficult is no bad thing but blaming it on ‘Brexit uncertainty’ as the BBC does most definitely is. People who use PCP don’t tend to think that deeply or long term about things.

    • Peter
      Posted November 1, 2018 at 8:39 am | Permalink

      The company car market inflated the price of new cars. Many private buyers bought second hand to avoid a big depreciation hit.

      In earlier times, cars were simpler and easier for owners to work on. That is not the case these days.

      It cannot be a surprise that the market for diesel cars has now plummeted.

    • libertarian
      Posted November 1, 2018 at 4:33 pm | Permalink

      Anonymous

      Er company cars are taxed at their new list price whatever you paid for them !

      PCP’s work very well , I have mine on two year deals Paying £9600 over 24 months for a brand new Merc is pretty reasonable I think. No MOT, no maintenance , no service costs, I get one set of new tyres too so basically apart from fuel theres no other running costs

      • Anonymous
        Posted November 2, 2018 at 10:50 am | Permalink

        5k a year on a car

        Unthinkable.

        • David Price
          Posted November 3, 2018 at 7:03 am | Permalink

          A standard 12 month rail season ticket from Reading to Paddington (GWR) costs £4,464, so why is £5k pa for personal transport unthinkable.

          Secondly, where would you get your cheap second hand cars if someone doesn’t buy them new in the first place?

        • libertarian
          Posted November 3, 2018 at 6:18 pm | Permalink

          David Price

          Exactly.

          Anonymous

          You dont have to lease a top of the range luxury merc if you can’t afford it .

          Volvo dealer is offering a V40 at £189 per month ( £2268 per year )

          Annual travel card on London Underground £2492

          Meanwhile you are buying cheap old bangers and spending time maintaining and repairing them and thinking that you’re being smart with your money. Broken down recently?

  9. Lifelogic
    Posted November 1, 2018 at 7:21 am | Permalink

    Is some sense finally breaking out in the Police Service at long last? In my experience of reporting several crimes the police have almost totally given up on doing anything at all beyond issuing a crime no. They do not even like recording it where they can avoid doing so.

    “Police must focus on burglaries and violence instead of ‘hate crimes like misogyny’, says one of Britain’s most senior officers.” Reported in the Mail today.

    • Lifelogic
      Posted November 1, 2018 at 7:25 am | Permalink

      Theresa May’s personally and her government is, once again, largely responsible for the shift to “hurt feelings crimes” rather than violence, burglary, fraud & thefts.

      • Timaction
        Posted November 1, 2018 at 8:58 am | Permalink

        Agreed. She has been on a mission to damage, hurt and harm the police as the worst Home Secretary in living memory. Cutting budgets and refusing them pay rises for 8 years whilst allowing those in the bubble to get their increase in pay and allowances and protecting their own pensions! Maybot is frankly just………….awful. The Tory’s deserve to be banished from office forever!

      • Zorro
        Posted November 1, 2018 at 9:20 am | Permalink

        Let’s face it T May is first to run for cover for ‘hurt feeling cimes’ at the first sign of any valid criticism/challenge as in the case of Andrea Leadsom during the leadership challenge and when these alleged comments were made about the need to end her leadership more recently.

        As I have said, someone needs to tackle her head on and she will wilt or melt!

        Zorro

      • Hope
        Posted November 1, 2018 at 10:29 am | Permalink

        It should be demanded to be made public how many officers work in offices working office hours and how many are in uniform working 24/7. The public would be outraged if the true facts were produced.

        • Martin
          Posted November 1, 2018 at 12:06 pm | Permalink

          Come on, be reasonable. The country is now so lawless under May that the police dare not even travel to work from their homes and back wearing police uniforms.

        • Posted November 1, 2018 at 1:26 pm | Permalink

          And work from home monitoring internet thought/hate crime. Officers do work from home in the London area.

          • stred
            Posted November 1, 2018 at 6:55 pm | Permalink

            Nice n’safe. Join the Met for a home job and great pension.

      • Mitchel
        Posted November 1, 2018 at 10:51 am | Permalink

        It was underway before but it was a key part of the Blair modernisation project-that was when the sinister,manipulative emotional intelligence/hurt feelings agenda was thrust upon us.

        I can well remember how awkward seasoned TV journalists-used to serious fact gathering and investigating-appeared when they had to self-consciously start asking respondents about their “feelings”.

  10. Alan Jutson
    Posted November 1, 2018 at 7:22 am | Permalink

    Opportunity now gone John, at least for another year as the Budget has already be set !

    So many opportunities, but as usual the Government is clueless as to what is really needed and how human nature works with regards to purchasing decisions.

  11. Stred
    Posted November 1, 2018 at 7:27 am | Permalink

    The attack on BTL, the only way left to provide a private pension sufficient to live on, is resulting in a lot of landlords selling and more houses for sale than buyers. Allowing councils to licence rentals in so called problem areas is resulting in councils like Brighton declaring most of the city a problem area. 17000 small houses will have to pay £700 and be subject to onerous standards and bureaucracy. A glance at Zoopla shows the areas stone cold with prices falling. The Tories are as unfriendly to investment by individuals as Labour.

    • Timaction
      Posted November 1, 2018 at 9:00 am | Permalink

      Indeed. Not a fag paper between them. The Brexit debate has shown that party labels are meaningless as the Maybot is left of Nu labour

    • Lifelogic
      Posted November 1, 2018 at 9:35 am | Permalink

      This is indeed massively damaging and costly for landlord and tenants. A pointless job creation scheme for bureaucratic parasites that will harm both tenants and landlords.

  12. Stred
    Posted November 1, 2018 at 7:30 am | Permalink

    The house price fall will of course be blamed on Brexit in time for the second people’s or Remoaners vote.

  13. Adam
    Posted November 1, 2018 at 7:34 am | Permalink

    Perhaps the Chancellor is maintaining Stamp Duty at its high level as his means of being able to boost home purchase in the event of needing more force later. He seems to be acting similarly frightfully with other levers. It may be his preference for maintaining personal control as a reputation protector instead of doing what is best for the nation.

    The more effective way of changing the economy for the better would be to change the Chancellor for a higher quality stimulating operator.

  14. Lifelogic
    Posted November 1, 2018 at 7:53 am | Permalink

    Strangling the Golden Goose that lays the eggs seem to have been the aim of treasury for years under Major, Brown, Darling, Osborne and now Hammond. We have the highest and most complex taxes for nearly 50 years and generally abysmal and declining public services too.

    Some see private enterprise as a predatory animal to be shot, others look on it as a cow to be
    milked but a few see it as a sturdy horse pulling a wagon. – Winston Churchill

    Please can we have a proper Tory leader.

    • Martin
      Posted November 1, 2018 at 12:50 pm | Permalink

      It seems the Party has retreated so far from the real world that the Cultural Marxist Greens, May and Hammond and their camp followers are now its idea of proper Tories. Heaven help the lot of us because it looks as though nothing else will, as things stand.

  15. Roy Grainger
    Posted November 1, 2018 at 7:55 am | Permalink

    Cutting Stamp Duty will simply increase house prices.

    • Lifelogic
      Posted November 1, 2018 at 9:39 am | Permalink

      It will tax people who move less and activate the market again. Turnover taxes are very damaging indeed to the economy especially ones that go up to 15% on expensive assets. You should tax profits but at sensible rates not turnover. Why should someone who moves house a lot pay far more tax than someone equally wealth who does not move? Perhaps they are moving for job reasons or divorce it hugely harms the economy.

      • Martin
        Posted November 1, 2018 at 1:01 pm | Permalink

        Just one of the drawbacks of the stamp duty thieving is the barrier it raises to workers moving home to be nearer a new job. Whatever financial benefit they gain from their new employment can easily be more than wiped out by the huge hit they have to take if they move house to live nearer to work. Hence roads are needlessly clogged with unnecessary commutes and people while away many hours of their lives on the roads that they can ill afford to waste.

      • Richard
        Posted November 1, 2018 at 6:54 pm | Permalink

        Agreed. Stamp duty is a tax on property transactions – we mugs trying to make better use of existing UK housing by matching up changing family sizes etc.

    • Mark B
      Posted November 1, 2018 at 11:36 am | Permalink

      Why are we charged this tax ? What possible reason does the government have to involve themselves in a private transaction ? Remember. The tax is paid by the buyer, not the seller and the gains they may have made.

      • Know-Dice
        Posted November 2, 2018 at 8:29 am | Permalink

        If its a seller’s second home or rental property then capital gains tax would be due on any “gains”…

        At the moment we don’t know if the stamp duty hike was to raise revenue or to have more control over the housing market in one way or another

  16. oldtimer
    Posted November 1, 2018 at 8:14 am | Permalink

    This is not the first time the Treasury has done serious damage to the industry through tax policies intentionally targetted at it. It has a history of doing so going back decades. It is still at it. Having offered incentives for hybrid vehicles it has now pulled the plug on these. Doubtless we shall, in due course, hear fanfares and more subsidies for all electric vehicles only for the plug to be pulled on these when the cost to the public finances gets too high. They will never learn.

  17. Fedupsoutherner
    Posted November 1, 2018 at 8:19 am | Permalink

    Jlr was a successful company until diesel was branded toxic and the luxury car market was unfairly taxed. Driving a cleaner diesel shouldn’t mean being penalised. This chancellor is no friend to business. As LL says, its all about green crap and raising money from the car owner as usual. If JLR now have to shed staff that won’t help the balance of payments and the economy. Does he care? Obviously not.

  18. Pete Else
    Posted November 1, 2018 at 8:29 am | Permalink

    I welcome the reduction in new cars. The vast majority of pollution from a vehicle is created in the manufacture not the running. This means old cars are far more eco friendly than new ones (particularly ones with batteries made of extremely toxic materials). More effort should be put into an industry to upgrade old vehicles and keep them running. Of course this would hit tax income and that, in the end, is all government actually cares about.
    Why is it up to the government to “allow” car or any other loans? It is a commercial transaction between two parties. The government should simply make it clear that no bailouts whatsoever will be given to banks and that any bank that indulges in risky practices will be subject to market forces. This is a good policy and should be policed by independent audits so that the public can see which banks might go under and place their money accordingly. No government interference is required and banks would have to severely curtail their criminal activities.

    • David L
      Posted November 1, 2018 at 12:37 pm | Permalink

      Agreed, Pete Else. My newest car is 11 years old, gets thoroughly maintained and is driven gently. I look at the many up-to-date vehicles in the substantial congestion in the Wokingham/Reading area and try to comprehend the total depreciation they have cost the proud owners, not to mention the pollutants we drivers are all pouring into the atmosphere as we go nowhere! As a transport system it’s crazy.

  19. A.Sedgwick
    Posted November 1, 2018 at 8:31 am | Permalink

    Unannounced in his speech but VED is going up again for all vehicles and reading between the lines older diesels up £15 per year. No one who knows the facts is going to buy a diesel unless for high mileage and short ownership.

    Like it or not the car has become an enemy for the do gooders, global warmers, sea risers, pc fraternity.

    As to battery cars, Clarkson’s recent car test ridiculed the logistics as have others in trials. Running out of petrol is daft but quickly resolved, getting electricity reliably on the roads is currently highly unlikely.

  20. Kevin
    Posted November 1, 2018 at 8:34 am | Permalink

    You write of “damage…done to the UK car industry through…the credit squeeze”, and make the following remark:
    “Allowing more car loans, one per person in employment would…be a good idea.”

    Let me see if I understand this model correctly. In order to obtain a car, a person has to compete for a job that pays a wage or salary. Presumably, this wage will only be paid if he has acquired the necessary skills to add value to the business, enabling it to provide goods or services that customers want. In other words, if he does not work to increase economic satisfaction – i.e. grow the economy – he will not get any money. His money is therefore directly related to that growth in satisfaction.

    Surely industry is subject to the same laws? It has to acquire the necessary skills to provide economic satisfaction in order to obtain, in return for its goods, the money that the above person worked for.

    How does credit fit into this model? Where does the growth in economic satisfaction come from to produce the money that forms the loan? Money that surely devalues the wage that the person earned through skilled work?

  21. Sir Joe Soap
    Posted November 1, 2018 at 8:38 am | Permalink

    This is more to do with China and export market downtown surely?
    We don’t need new cars every year. We do need to export more cars to support our economy, and the falling pound of course supports this. If JLR snd others have been relying too much on the home market when they’re NB capable of exporting more,vmore fool them.

  22. Bob
    Posted November 1, 2018 at 8:42 am | Permalink

    “Police must focus on burglaries and violence instead of ‘hate crimes like misogyny” says one of Britain’s most senior officers

    One of Britain’s most senior police officers could be heading for a Common Purpose refresher course.

  23. Iain Moore
    Posted November 1, 2018 at 9:27 am | Permalink

    Jaguar Land Rover blames some of its losses on Brexit. The Brexit derangement syndrome that the management of some companies are suffer from is going to cost them quite a bit , for there is Jaguar Land Rover cashing in on its English heritage to sell cars, yet the message from the management is one of a bunch weeping wailing wet EUphiles. It’s becoming something similar to a Gerald Ratner foot in mouth.

  24. Turboterrier.
    Posted November 1, 2018 at 9:32 am | Permalink

    Well it does not come s an surprise thanks to the efforts of Gove and the green lobby

    Typical knee jerk reaction making destructive comments and decisions with no consideration to their effect, when are politicians going to show they have thought a decision through with attention to the cause and effect of their actions?

    Electric vehicles are not and never will be the panacea of what is wrong with the worlds transport and pollution problems.

    Gove ably supported by Sturgeon have not even thought outside the box to consider new or even old proven technology like hydrogen which only produces water out of the exhaust. Has any one asked JLR would it be more cost effective to them to invest and change to hydrogen powered vehicles than completely have to re tool for electric? If diesel engines can be reworked to burn hydrogen then there surely must be some cost benefits.

    They cannot think outside the box as they are not in the box in the first place.

    The existing fuel distribution system could with some thought I would assume be quite acceptable to the storage and marketing of Hydrogen. On the continent fuel stations sell LPG and seem well operated.

    But the biggest fear for many is what happens to the batteries, associated motors, even related wind turbine blades and solar panels when they become obsolete and require disposal as none are eco friendly. It is estimated that there will be 50k tonnes of turbine blades alone will be going for scrappage by 2020 and carbon fibre in them presents a real problem. Veolia a German company have the only blade disposal plant in Europe that can safely recycle blades for safe disposal. What has the UK got? A plan to send them to land fill in third world countries as a last resort. Save the World? All stuff and nonsense.

    Year on year the diesel engines have got more efficient and less polluting so consideration should be given to encourage the production of new models by reducing the tax burden on new registrations and raising the tax levels on the older less efficient higher polluting models. Mile for mile the new diesels give more mpg and less pollution than older vehicles so they by modern efficiency are burning less fuel anyway for the same distance travelled.

  25. JOHN FINN
    Posted November 1, 2018 at 9:33 am | Permalink

    Cutting Stamp Duty to 2016 levels where it is currently higher would help unblock the homes market.

    It’s not just stamp duty, John. Two of my grown up children bought houses recently. Both of them had healthy (10%) deposits. However, the lenders’ surveys valued both houses at 5% (coincidentally) below their very reasonable (not inflated) offers. This seems to be commonplace as this practice was experienced right along the chain.

    The lenders were effectively looking for a 15% deposit.

    • Fed Up
      Posted November 1, 2018 at 12:34 pm | Permalink

      John – that tells me the lenders are expecting a price drop shortly.

  26. English Pensioner
    Posted November 1, 2018 at 9:43 am | Permalink

    I don’t believe that the VED has anything to do with the sales of new cars. In a way, manufacturers are responsible themselves because cars now are generally so reliable. Looking back to the days of my first new car, it lasted about three years by which time the rust was setting in and its reliability getting suspect. I used to have to spend time most Saturdays trying to fix the latest problem. Few who could afford it kept a car for more than 2-3 years.
    Contrast that with my last car which I had for eleven years; it was still totally reliable but was belonging to look a bit tatty and we wanted something a bit smaller. I’ve now bought a hybrid which is quiet and smooth and is returning about 60 mpg, more than twice that of the previous vehicle which is doing my bit towards reducing emissions.
    If it lasts as long as my previous car, it will see me out as I can’t visualise myself still driving as I approach 100!
    Car makers are victims of their own success!

  27. Chris
    Posted November 1, 2018 at 9:55 am | Permalink

    Meanwhile, Theresa May ploughs on, and in a closed door session has apparently briefed business leaders to lobby MPs to support her Plan. See FTimes.

    “Lobby MPs to back Brexit deal, May urges business leaders”
    https://www.ft.com/content/9c9dbbf0-dd3d-11e8-8f50-cbae5495d92b

    • Mark B
      Posted November 1, 2018 at 11:39 am | Permalink

      As I have been saying all along.

      😉

    • Denis Cooper
      Posted November 1, 2018 at 11:58 am | Permalink

      The CBI and similar pro-EU bodies lobby the government; the government changes its policy to give the interests or convenience of 6% of UK businesses priority over the other 94%, using the red herring of the Irish border as a pretext; it then quietly urges the lobbyists to move on to lobbying its own MPs to accept that new, eurofederalist, policy reneging on its previous pledges that we will no longer be subject to the rules of the EU Single Market and the EU Customs Union and we will be able to run our own independent trade policy. And that is its EU-style idea of democracy …

      Well, I’ve already said that I made a mistake trusting Theresa May and giving her my vote at the last election, and I will never make that kind of mistake again with any Tory candidate in any election.

    • Richard
      Posted November 1, 2018 at 6:44 pm | Permalink

      Mrs May is simply repeating Clark’s summer campaign: “by urging firms to keep using their influence to soften Brexit. Speaking at a London summit, he insisted it had been “facts” from business that helped secure an implementation period and a commitment to seek “frictionless” trade with the EU.” https://www.thesun.co.uk/news/6632072/business-secretary-greg-clark-deepens-cabinet-civil-war-by-urging-firms-to-keep-using-their-influence-to-soften-brexit/

      CBI lobbies Downing Street, which then lobbies CBI. The Circle is complete! http://johnredwoodsdiary.com/2018/10/31/leaving-with-no-withdrawal-agreement-will-be-better-for-the-economy-than-signing-it/#comment-970236

  28. Student
    Posted November 1, 2018 at 10:40 am | Permalink

    Liz Truss on Andrew Neil after the budget was very disconcerting… it seemed like she had no idea what she was talking about and couldn’t answer simple questions about balancing the budget, transition period, tax/welfare cuts etc

    • Alan Jutson
      Posted November 1, 2018 at 12:42 pm | Permalink

      Student

      “Liz Truss…….”

      Does that surprise you !

      I think we would all be surprised if more than half of Mp’s had any REAL Financial, Commercial and Economic knowledge at all, given the rather silly and confused statements many of them make.

      I exclude our host of course.

  29. ian
    Posted November 1, 2018 at 12:18 pm | Permalink

    This proves that the UK should have left the EU back in 2016, right away, instead, the sadistic nutters at the top who run the country decided on a revenge campaign on it own people through the media and monetary policy, the majority of people on this mad island are totally switched off from what going on around them due to voting to leaving the EU and even before, Even the police are coming out and speaking up about laws coming out of parliament against the people, made by, as they now consider, lawmakers and others who have gone completely off the rails and are living in their own bubble.

    You only have to look at the number of people now committing suicide and needing mental health treatment to know what they are doing and have done, homelessness, food banks coupled with nothing jobs, oh how people wish to return to normality and leave these dark days behind made by their betters that they have to toil in for the good of the elite and their dark ideas.

  30. Andy
    Posted November 1, 2018 at 12:30 pm | Permalink

    The only thing worse for the next generation than your pathetic Brexit is the immense damage your generation of climate change deniers has done to the planet.

    Diesel cars need banning. They poison children – and their noxious fumes frazzle brains. They need banning immediately.

    • libertarian
      Posted November 1, 2018 at 4:37 pm | Permalink

      Andy

      “Diesel cars need banning. They poison children – and their noxious fumes frazzle brains. They need banning immediately.”

      Whoops, thats down to you and your idiot friends , as the move to diesel was mandated ( based on corporate lobbying by VW) by the EUROPEAN UNION .

      Any thoughts on Germany and their dirty brown coal ( lignite ) power stations?

    • Edward2
      Posted November 1, 2018 at 4:44 pm | Permalink

      Getting a bit confused here andy.
      The EU encouraged diesels as they create less CO2 than petrol vehicles as they were most concerned with global warming.
      Now they have reversed their policy.

      ps
      They don’t poison anyone.
      Modern car diesels are very clean.

      The pollution you alude to comes from other sources.
      Ships, boats, trains, planes, log burning fires, BBQs buses, generators, bonfires and more

    • Glenn Vaughan
      Posted November 1, 2018 at 6:29 pm | Permalink

      “…and their noxious fumes frazzle brains.” Andy

      The quality of your contributions to this website provide the most convincing evidence to support your assertion.

    • Anonymous
      Posted November 1, 2018 at 8:04 pm | Permalink

      So if our generation’s exploration of space leads to technology for the protection of our planet from asteroids will we be forgiven ?

  31. Martin
    Posted November 1, 2018 at 12:32 pm | Permalink

    Politicians’ latest fun obsession with dealing a death blow to the diesel engine as fast as they possibly can is the latest manifestation of the foolishness of the state trying to pick winners and losers. Diesels are inherently much more efficient than petrols and average about 70% or 80% of the fuel consumption of petrol engined cars. Consequently switching a large proportion of the privately owned car fleet from diesel engines inevitably entails increasing even further our dependence on imported petroleum. The nonsense about diesels killing people is ludicrous. Modern i.c. engines have been refined to such a degree that one university’s research shows that more pollution is caused by particulates from brakes and tyres than car exhausts. Electric cars are hundreds of kilos heavier than proper cars and so are actually more polluting in that respect due to their increased mass. Of course none of this latest hysteria would be happening if market forces led the way in automotive choice. Indeed if that were the case there wouldn’t even be a single electric car on the roads at all. But the beauty of the operation of the market is entirely beyond this Tory government and probably any Tory government to come, that is if May fails in her current determination to get Corbyn elected as the next Prime Minister of what remains of the UK.

  32. Fed Up
    Posted November 1, 2018 at 12:33 pm | Permalink

    I own a diesel car and would be looking to replace it with a new car in 2020.

    However, because my perception (I’ve not checked at this point) is that its resale value has been hammered by Government policy, my attitude is very likely to be that I will delay replacing it and keep it for several more years. The reason being that I feel somewhat cheated and want to get my money’s worth out of it and secondly the delay in replacing it allows me to put more money aside towards the deposit (and I now probably need more money due to the drop in the re-sale value).

    If a lot of other diesel car owners are thinking like me, then it’s going to take several years before car sales recover.

    • stred
      Posted November 1, 2018 at 7:04 pm | Permalink

      I bought a cheap E6 diesel so that I could go into cities but don’t use it much. My 14 year old jag diesel is much simpler, more comfortable and faster. It was valued at £400 last year despite being in near new condition. I am keeping it to do the long journeys. It has heated seats for the winter. Also, it won’t make any noticeable difference to lifespans.

  33. Ron Olden
    Posted November 1, 2018 at 3:04 pm | Permalink

    This car situation is the same in Europe, and is much more to do with a spate of model changes and emissions rule changes than credit conditions.

    The slump in car production in Germany has been very marked indeed. They’ve had three successive months of wider, sharp industrial output falls and it largely explains why Eurozone output growth in the past quarter has fallen to 0.2%.

    Depending on how they define it, Germany might already be in a technical recession.

    I doubt if UK third quarter growth will exceed 0.4% and could be lower.

    We’ll need to wait till the first quarter of 2019 to see a clear picture. But it might not all unwind until the end of 2019.

    We’ve already had a fiscal loosening in this budget which borders on the risky. We don’t need any more.

    And the Bank of England has already stopped further tightening monetary policy.

    The time for urgent action will be if anything untoward happens closer to, and after Brexit.

  34. Lindsay McDougall
    Posted November 2, 2018 at 1:24 am | Permalink

    Why are car loans being rationed at all? That’s an odd mixture of a monetary squeeze and Socialism. I’m surprised at the contraction of the money supply after all that QE (as a proportion of GDP, UK QE was greater than USA QE). Perhaps the banks spent the money abroad, buying assets in South America and China, pushing up asset prices and annoying business in those countries.

    If diesels are banned from cities, it is bound to lead to a reduction in the sale of diesel cars in the long run. Incidentally, it’s about time we had an audit of the source of harmful particulates in cities. My information is that in London buses issue double the amount of harmful particulates that cars do. Clean city air is a goal worth striving for.

  35. rose
    Posted November 2, 2018 at 9:00 pm | Permalink

    Another thing Mrs Burning Injustices should remove is the unfair tax burden on the married family, indeed all families.

    https://www.conservativewoman.co.uk/families-pay-the-price-of-an-unfair-tax-system

  • 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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