The need for new thinking at the Treasury and Bank

I have written many times before about the way the UK economic establishment has been wedded to the EU rule that we must bring state debt down to 60% of GDP. This has been the main constraint and guide on economic policy for the last decade. We need instead a new central aim of promoting faster economic growth whilst keeping inflation low.

I have also drawn attention to the Establishment’s unhelpful use of two pieces of economic theory, the Phillips curve and the Laffer curve. The Phillips curve which says inflation rises when unemployment falls has not been adjusted for the global economy we live in, failing to understand how inflation has been kept down by large inward movements of low wage labour and by importing substantial quantities of cheaper goods and services. As a result money policy has been tighter than needed.

The Treasury used to deny the Laffer curve, which states that if you raise a tax rate above an optimum level revenue falls. Now they accept the theory but choose to assume the optimum rate is much higher than experience tells us it is. As a result they have had bad shortfalls on taxes like Stamp Duty and have failed to maximise tax on higher incomes.

Since the 2016 referendum the Establishment wrongly forecast an immediate recession, and then has gone on and on about an alleged hit were we to leave without a trade deal. Meanwhile they have continued to tighten the fiscal policy of the UK and keep money tight , which has predictably slowed our performance whilst still in the EU single market.

The government has added to the difficulties by successive Chancellors making a tax raid on property through higher Stamp duties, and on new car purchase through higher VED. This has predictably hit both the housing and car markets, the two largest purchases people make.

It is time to relax policy to promote growth, and to set tax rates that allow enterprise and activity to flourish. The external shock of the virus means the case for tax cuts is even more urgent now. There is both a demand and a supply shock. Tax cuts can help a bit on the demand side. Lower interest rates are less useful. We are getting lower rates for government borrowing anyway.

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160 Comments

  1. Peter Wood
    Posted March 1, 2020 at 5:53 am | Permalink

    Good Morning,

    This issue is connected with your earlier post on civil servants; how do you get rid of those whom you consider not up to the task or are not supporting your objectives and methods. The departure yesterday of the senior civil servant at the home office appears to be an example of how NOT to remove a senior employee. If you can’t reasonably remove those advisors, how will you change your actions and results?

    • Lifelogic
      Posted March 1, 2020 at 8:36 am | Permalink

      Easy hire and fire with a standard set pay off for all employers private or public is the best solution. Abolish legal claims for dismissal. It help no one to keep poor employees in the wrong job and damages the economy hugely.

      • Hope
        Posted March 1, 2020 at 11:13 am | Permalink

        Crown servants i.e. Civil servants never used to be covered by Employment Acts. Then police, military and crown servants became covered. Change it back. There are some jobs of national importance where such legistaion should not apply. Also scrap Equality Act, Human Rights Act, and all those left wing acts designed to change our society to become a socialist model for Blaire.

        Let us have the bonfire of left wing quangos, promised by Cameron never delivered, designed to implement EU rules, directives and legislation to bypass parliament. Not wait for similar grandstanding court cases where left wing judges and tribunals will give inevitable left wing outcomes.

        The grandstanding yesterday showed me this was about remainers targeting a leave govt. Preemptive action required at Defra, MOD, HO all of whom block rather than implement leaving EU.

        Cummings give me a call!

        • Martin in Cardiff
          Posted March 1, 2020 at 3:15 pm | Permalink

          You are saying that no one should be able to contest a Breach Of Contract by an employer.

          In which case, what is the point of any contract?

          Do you ever think though anything properly?

          • Lifelogic
            Posted March 1, 2020 at 4:42 pm | Permalink

            The contract should say you can be fired at any time for a standard pay off of say 1 weeks pay for every year worked regardless. The courts should have no power to overrule this. They can get a new job if they are any good. They get a huge index linked pension anyway.

          • Fred H
            Posted March 1, 2020 at 5:04 pm | Permalink

            MARTIN – – ever heard of a compromise agreement?
            Often used to silence a possible legal action by handing over a sum higher than compensation which might be awarded in court.
            Contesting is likely to be more painful for the plaintiff and have far-reaching future employment effects than taking the money. So, sometimes the court is an approach to publicise wrongful behaviour by employers, but not necessarily beneficial.

          • NickC
            Posted March 1, 2020 at 5:21 pm | Permalink

            Martin, Given your fake predictions of economic doom for the UK because we’re leaving your EU empire, it seems you do not think though anything properly.

          • Martin in Cardiff
            Posted March 1, 2020 at 6:48 pm | Permalink

            The snag for you is that I never made such a prediction.

            I think that there will be adverse effects, probably serious, but I’ve never written of “doom”.

          • Martin in Cardiff
            Posted March 1, 2020 at 6:49 pm | Permalink

            LL. Never mind what you think the contract should say.

            The existing ones say what they do.

          • NickC
            Posted March 2, 2020 at 1:02 pm | Permalink

            Martin, The snag for you is that you have continuously predicted, or endorsed other’s predictions of, doom.

            For example, in reply to Garland who advocated the supposed advantages of cancelling Brexit (21-11-19), you said: “Not just for its economy, but for its standing in the civilised world as a rational, balanced country.”

            You thereby claimed that Brexit would damage the nation’s economy, stability, and civilisation; and was irrational. Your view seems doom-laden to me.

        • Lifelogic
          Posted March 1, 2020 at 4:42 pm | Permalink

          Exactly.

          • Hope
            Posted March 1, 2020 at 7:20 pm | Permalink

            MaC, utter dross again. Some Employment Legislation should not apply to crown servants because they are/were different to other employees. Look it up have read and come back with an informed view for once.

      • Lifelogic
        Posted March 1, 2020 at 8:56 pm | Permalink

        Coronavirus “likely to spread a bit more in the UK” says Boris. Somewhat of an understatement, but then perhaps he does not understand simple exponential mathematics. Not sure if they cover it in Oxford Classics? The Health Sec. PPE oxo. does not seem to have grasped it either.

        • Bob
          Posted March 1, 2020 at 10:05 pm | Permalink

          I read in the Sun that transgender men who identify as women are being invited for cervical smear tests even though they don’t have a cervix
          However, women who identify as male are not being offered crucial routine breast screenings or cervical cancer checks

          Meantime NHS treatment for will be restricted to those with the best chance of survival if they are overun with pneumonia cases as a result of a Covid19 epidemic.

          Time for the NHS to forget about political correctness and get back to their day job.

          • Martin in Cardiff
            Posted March 2, 2020 at 9:15 am | Permalink

            Which political party ordained those priorities for the NHS?

            If you can’t cite one, then it’s not “political” correctness, is it?

            Think up a better term.

          • Edward2
            Posted March 2, 2020 at 5:04 pm | Permalink

            The policy was made by the NHS not a political party.

        • rose
          Posted March 1, 2020 at 11:26 pm | Permalink

          I think he and the government are getting the balance right – not being alarmist but probably doing quite a bit behind the scenes. Panic would be as dangerous as the pandemic.

          There are plenty of hysterical women on the air who want HMG to take over everything and direct our every move, shutting down all economic activity. They don’t seem to realize their bread and butter doesn’t grow on trees.

    • Norman
      Posted March 1, 2020 at 11:45 am | Permalink

      People do not understand the pervasive power of the Babylonian Euro-cult, and how it has become entrenched in the Civil Service. Normally, one would expect a senior Civil Servant, as in the military, to fall on their sword rather than rise up against Queen and Country. But after the shenanigans in Parliament last year, we know that times are far from normal! This is a slow burning fuse, a new front in the (civil) war for UK independence. But will Britain prove worthy of her freedom as a sovereign nation??

      • Norman
        Posted March 1, 2020 at 12:19 pm | Permalink

        Now watch Defra – leaked e-mails, (possibly quoted out of context): ‘Farming and Fishery production’ not critically important to the economy’. If this is true, what utter folly!
        Solomon is prophetic (Proverbs 27:23-24):
        ‘Be thou diligent to know the state of thy flocks, and look well to thy herds. For riches are not for ever: and doth the crown endure to every generation?’
        ‘Riches’ = mercantile wealth; ‘crown’ = food security and sovereignty.

      • margaret howard
        Posted March 1, 2020 at 4:49 pm | Permalink

        Norman

        ‘Babylonian Eurocult’ entrenched in our civil service?

        Have just checked civil servant numbers.

        78.230 for London

        24.428 for the whole of the EU! (500m people)

        Reply Because EU makes MEMBER STATES administer its policies and laws

        • NickC
          Posted March 1, 2020 at 5:25 pm | Permalink

          Margaret H, UK civil servants used to go to Brussels to receive their instructions from EU civil servants. That’s how we were governed in your EU empire. Do you ever get anything right?

          • Fred H
            Posted March 1, 2020 at 8:02 pm | Permalink

            Nick C – – we get used to it !! 🙂

          • margaret howard
            Posted March 1, 2020 at 11:13 pm | Permalink

            Nick

            If that were so, and I doubt it, at least they didn’t have to resign and sue their masters for being abused and belittled.

            What a shambles.

        • margaret howard
          Posted March 1, 2020 at 11:04 pm | Permalink

          Reply to reply

          Those 78 plus thousand are for London ONLY!

          • Edward2
            Posted March 2, 2020 at 8:18 pm | Permalink

            Which is where all the major ministries of state are based.

    • John Hatfield
      Posted March 1, 2020 at 6:28 pm | Permalink

      Peter, I believe he resigned. He was not got rid of. Though clearly he should have been.

  2. mickc
    Posted March 1, 2020 at 5:59 am | Permalink

    Well, best of luck getting a modern Tory government to cut taxes.

    The recent kite flown was about destroying the Agricultural Relief for Inheritance Tax. A Tory government should abolish Inheritance Tax, not make it more punitive. Even John Major, the founder of Tory Blairism said he wanted wealth “cascading down the generations”. Of course, he did nothing….but even that was better than allowing IHT to embrace more and more of people’s wealth by not increasing the threshold.

    It very much looks like the Johnson government will be blue Labour…again. And I thought the Cameron/Osborne one was the worst the Tories could achieve.

  3. Henry Jailer
    Posted March 1, 2020 at 6:34 am | Permalink

    It’s astonishing that even now that we have left the EU you keep on telling lies about it. The UK never was for one moment bound by any EU rule that we must bring state debt down to 60% of GDP. Why do you keep doing this? Are you scared about how quickly the momentum for us to rejoin will build as all your Brexit promises unravel?

    Reply It was and it was the main driver of economic policy and the framework for austerity. read the Treaty anD read the OBR Reports and Red Books.

    • Edward2
      Posted March 1, 2020 at 7:58 am | Permalink

      Quite remarkable how fans of the EU like Henry are so completely uninformed about the organisation they love.

      • Lifelogic
        Posted March 1, 2020 at 9:02 am | Permalink

        Indeed.

        • Sir Joe Soap
          Posted March 1, 2020 at 9:39 am | Permalink

          EU are trying to tie us into rules on this and state iad that they don’t obey themselves.

    • Dave Andrews
      Posted March 1, 2020 at 9:24 am | Permalink

      All this about EU rules to keep state debt below 60% GDP is just mis-direction. For decades, UK governments have operated a policy of spend, spend, spend. When times are bad, they need to borrow to pay the bills. When times are good, rather than pay down the debt they use the leverage to borrow yet more.
      My compliant about George Osborne is that he didn’t go far enough – indeed he didn’t curb spending at all, rather than he tried to follow Maastricht rules.

    • dixie
      Posted March 1, 2020 at 5:05 pm | Permalink

      @H Jailer – You are wrong.

      The “Assessment of the 2017-18 Convergence Programme for the United Kingdom” dated 23 May 2018 is a European Commission Directorate General (Economic and Monetary Affairs) document. In it’s introduction on page 3 it clearly states in the second paragraph;
      “The United Kingdom is currently subject to the preventive arm of the the Stability and Growth Pact (SGP) and should ensure sufficient progress towards its Medium-Term Budgetary Objective (MTO). As the debt ratio was 86.7% of GDP in 2016-17 (the year in which the United Kingdom corrected its excessive deficit), exceeding the 60% of GDP reference value, the United Kingdom is also subject to the debt reduction transitional arrangements as regards compliance with the debt reduction benchmark during the three years following the correction of the excessive deficit (transitional debt rule). In this period, it should ensure sufficient progress towards compliance with the debt reduction benchmark. After the three-year period of the debt reduction transitional arrangements, Member States are expected to comply with the debt reduction benchmark.”

      If you are knowledgeable as you pretend to be then you are an outright liar. If you have made a mistake then perhaps you should research the topic thoroughly before calling our host a liar.

      Either way, you should apologise.

    • NickC
      Posted March 1, 2020 at 5:54 pm | Permalink

      Henry J, It is astonishing that you accuse JR of lying, when you are either ignorant or lying yourself. TFEU Article 126 paragraph 2 enables the EU Commission to monitor member states budgets and debts with regard to their limits stated in Protocol 26 (3% deficit; 60% debt; both wrt GDP). Failure to comply may result in the Commission bringing proceedings at the CJEU, as laid out in TFEU Art 258 (or another member via Art 259).

  4. agricola
    Posted March 1, 2020 at 6:50 am | Permalink

    You never seem to mention the predatory behaviour of the high street banks which goes unchecked. Not to mention their shrinking service to the general public. You write a constant message. I await the new Chancellors budget, then we can judge whether we have a change of direction or the same again in shorter skirts.

    Reply Yes I do need to look at the commercial banks again and will do so

  5. Dave
    Posted March 1, 2020 at 7:02 am | Permalink

    Cut taxes, cut foreign aid, cut HS2, thin out the civil service 10% every year, dispense with the ludicrous and distructive climate madness, close useless ministries, close the Bank of England and issue currency from the treasury, no bank bail outs, no industry bail outs, WTO terms with the EU and we might possibly be on the right track. Or at least we might if corona virus doesn’t entirely wreck the global economy as it appears to be doing now.

    • Javelin
      Posted March 1, 2020 at 8:30 am | Permalink

      Im a qualified banker who had worked in investment banks for 30+ years. I agree with all of these, and believe these are what the public voted for.

      • formula57
        Posted March 1, 2020 at 6:07 pm | Permalink

        @ Javelin – So yesterday when you erroneously told us that the 2007 recession was triggered by ” US left wing politicians passing the Acorn Act giving mortgages to Americans who couldn’t afford it and defaulted” you were not fooling yourself but just providing exculpatory cover for your greed-driven banking mates?

        Poor people defaulting on mortgages did not cause the GFC, rather the discovery that the repackaged mortgage-backed securities that were used as collateral in the repo market were mis-characterized as to credit risk.

      • forthurst
        Posted March 1, 2020 at 8:41 pm | Permalink

        Javelin, I’m intrigued to know, following your post yesterday, the precise mechanism by which the US government forced investment banks to purchase bundles of mortgages from mortgagees of loans to people unlikely to maintain repayments and sell them on as Colateralised Debt Obligations to other financial institutions? Of further interest would be how the investment banks managed to convince rating agencies that these derivatives were investment grade?

        • hefner
          Posted March 3, 2020 at 8:29 am | Permalink

          forthurst, +1
          Javelin is another ‘funny’ contributor to this blog. As if being ‘a qualified banker who had worked in investment banks for 30+ years’ was a proof of wisdom specially given the recent US and UK financial history. I thought everybody here ‘had had enough of experts’.
          One does not need any experience in investment banking to recognize a hard-right program.

    • Leaver
      Posted March 1, 2020 at 11:07 am | Permalink

      My family and I have just been flooded out of our house.

      A once in a hundred year flood apparently, except the same happened 20 years ago. Climate change isn’t madness when you have to live with the consequences. But I’m glad you’re okay there, Dave. Good for you.

      • Fred H
        Posted March 1, 2020 at 2:58 pm | Permalink

        how very sad – I’m sure millions are horrified when we see, rather than suffer, what has just happened to your home.

        • Leaver
          Posted March 1, 2020 at 3:39 pm | Permalink

          Thank you Fred H. To be fair, the community has been enormously supportive. But this climate change denial stuff is a bit of sensitive issue around this way at present. Things are definitely not the way they used to be.

          • NickC
            Posted March 1, 2020 at 6:27 pm | Permalink

            Leaver, The climate (and weather!) has always changed, and always will. We can see the evidence for that in the frost fairs on the Thames that used to occur occasionally during the “little ice age” around 300 years ago, but less so in the last 200 years.

            By its nature climate is something that varies over a century or more, not year to year. A severe and harmful flood one year is not “climate change”, even if it also occurred 20 years ago. There are many reasons for flooding, most of them man made – but not by “climate change” – more by overbuilding and poor drainage.

            Many of us are a bit sensitive to being sneered at as “climate deniers” with its overtones of holocaust denial. It is rude, unnecessary, belligerent, but above all irrational. There is simply no evidence that the warming (supposedly c 1 deg K) over the last two centuries is wholly, or even partly, man-made.

          • John Hatfield
            Posted March 1, 2020 at 6:36 pm | Permalink

            The point is Leaver that Britain as has done much to reduce to reduce emissions. Far more than most other countries, I believe. So bollicking those who are not impressed by climate change is a bit misplaced. Go and tell them in smoky Germany
            Perhaps, as some say, the rivers need dredging.

          • czerwonadupa
            Posted March 3, 2020 at 12:13 pm | Permalink

            John Prescott allowing developers to build on flood plains was one of many bad decisions he made as a minister.

    • glen cullen
      Posted March 1, 2020 at 11:31 am | Permalink

      fully agree, its not just sensible its what the majority of the public expected

  6. Fred H
    Posted March 1, 2020 at 7:41 am | Permalink

    Ah! Tax cuts! Perhaps we might finally ease the taxation burden on the very low paid, let alone the more comfortably off? Workers will perform better when money worries are removed, and self esteem rises. Housing and car purchase are all very well, but when the cost of fairly essential food, clothing, goods are out of reach we have failed as an advanced society (economy if you prefer). Given what goes on in our society I grow increasingly doubtful we are in an advanced society! Stop pandering to the millionaires and assist the essential workers – factory workers, transport workers, health practioners, education workers, public safety staff.

    Reply Yes tax cuts for all

    • BeebTax
      Posted March 1, 2020 at 8:42 am | Permalink

      Well said, though I would not just restrict the sentiment to those “essential” workers. Cleaners, shop workers, hospitality industry, call centres….poverty wages are quite widespread and if we can get some more money in their numerous pockets they are more likely to put it back into the UK economy by spending it here.
      But not on new cars – I earn £16k pa for a full time office job in the wealthy south east, so there’s no way I’m ever going to buy a new car!

      • Fred H
        Posted March 1, 2020 at 2:57 pm | Permalink

        Please note Sir John – – we are not all OAPs with new cars/multiple cruising holidays ! ‘just managing’ can be tough enough….

      • a-tracy
        Posted March 2, 2020 at 5:18 pm | Permalink

        You’ll be going right on up to £17,000 from April 1st BeebTax due to the national living wage increase. (£8.21 x 37.5 = £16009.24, £8.72 x 37.5 = £17004.00)

    • MPC
      Posted March 1, 2020 at 8:59 am | Permalink

      Tax cuts won’t offset the destruction of our economy via the government’s absurd net zero policy, something Mr Redwood studiously avoids criticising directly.

    • Narrow Shoulders
      Posted March 1, 2020 at 12:38 pm | Permalink

      Better than a tax cut would be lower housing costs.

      Unfortunately it is government interference in the housing market through help to buy, housing benefit payments and mass immigration policies that keep the costs high and unlikely to come down.

  7. Bryan Harris
    Posted March 1, 2020 at 7:54 am | Permalink

    A major revision to taxation is crucial to the health of the country and badly overdue.
    Taxation needs to be not only less painful, but transparent, fair and less personal. Time the government got this message.

    When you mention the establishment, as in: ‘Since the 2016 referendum the Establishment wrongly forecast an immediate recession’ who are you referring to?
    I often use the term to describe the power around government, not necessarily the government itself, but the invisible yet tangible driving force behind decisions and command thinking. Is there a better definition?

    Reply Treasury and Bank of England official forecasts

    • BeebTax
      Posted March 1, 2020 at 8:30 am | Permalink

      …commissioned, if not produced by Treasury and Bank of England officials to reinforce and confirm their “better judgment”.

      I hope the Gov stands firm in the Priti Patel affair, and doesn’t bow down to those in the Civil Service that believe their calling is to direct policy, and frustrate government when its policies don’t coincide with theirs.

    • Lifelogic
      Posted March 1, 2020 at 9:01 am | Permalink

      Indeed on top of the tax is the huge cost of compliance forced onto businesses and individuals. Plus the costs of the often irrational (but for tax reasons) actions they take to minimise tax. Deciding not to bother working for example or doing diy rather than employing a specialist.

      • Lifelogic
        Posted March 1, 2020 at 9:13 am | Permalink

        If you increase on tax you also cut the tax you take in other taxes as people have less to spend. It further cuts the tax you take in following years as they have less to invest and it cuts inward investment to the country too. Tax and cuts in red tape are a win win. We should undo all the red tape inflicted on us by the EU over the last 40+ years now and aim for the tax take to be more like 20% of GDP.

        Mark Littlewood today in the Telegraph is right.
        It’s too late for this budget, but PM will need a proper free-market growth plan.

      • Bryan Harris
        Posted March 1, 2020 at 9:43 am | Permalink

        Why do we have to accept the huge cost inherent in collecting taxes?

        With a little innovation and positive thinking we could create a tax system that makes a positive contribution to life rather than penalising those that make our country work.

        • Fred H
          Posted March 1, 2020 at 8:00 pm | Permalink

          Bryan – -why do we have it? – – Empire building boosts top of the tree pay and status.

      • Lifelogic
        Posted March 1, 2020 at 2:08 pm | Permalink

        You say:- “This has predictably hit both the housing and car markets, the two largest purchases people make”.

        Except actually the largest purchase most people make is government (whether they like it or not). Often more that 50%+ of your lifetime income. In income tax, NI, VAT, CGT, council taxes, fuel and alcohol duties, misc. licence fees, building control taxes, land regustry taxes, stamp duty, pension taxes, motorist mugging fines, road tax, energy and water (market rigging/back door) taxes, landfill and carbon taxes and the rest – and then finally, at the bitter end, 40% of anything left in inheritance tax.

        But this it is perhaps more a form of extortion than an actual “purchase” as you have so very little choice and get so very little of real value in return.

  8. Wil Pretty
    Posted March 1, 2020 at 7:59 am | Permalink

    Sorry to be off topic,but in the news is the record rainfall in February.
    This is due to Climate Change.
    The Met Office failed to predict this event in advance, however, to their credit, they are world leaders in hindsight.
    The main change in the UK Climate over the last 250 years as recorded by the Central England Temperature record is that our winters have become significantly milder.
    In winter, mild conditions are caused by the weather coming from the South West direction and this brings strong winds and rain with it.
    This year the weather was almost completely from the SW so it’s hard to see any likelihood of future years being any wetter.
    Thus now is an ideal time to take action to prevent the river flooding that happens on a regular basis in this country and causes injury and damage.

    In my opinion, River flooding should be tackled in the same way that we protect ourselves from the sea.
    To prevent sea flooding we build embankments – Sea Walls.
    Whenever we have a river flood, we should construct an embankment to contain the area that was flooded. Between the embankment and the river should be designated a Floodplain and in the long term it should be returned to agricultural use, no-one should be permitted to reside on a Floodplain and any buildings should be required to have a floodable ground floor.
    In time this process would eliminate the danger and damage caused by flooding.

    We also have the Climate Change Jamboree in this country later this year and we could show ourselves to be leading the world in tackling Climate Change.
    This also would be a significant job creation project providing work opportunities for planners, environmental impact surveyors and lawyers.

    Reply I agree we need more banks, bunds and floodplain

    • Leslie Singleton
      Posted March 1, 2020 at 8:31 am | Permalink

      Dear Wil–Embankments and increasingly high walls likely to make it worse. We need new flood relief channels to remove flow from upstream before an otherwise coming flood can do damage. Ideally in to the sea, either directly or via a nearby larger river, dredged if necessary, or simply downstream if no town below. Big task of course but consider that back in the day canals were routinely and quickly built just by navvies with picks and shovels.

      • BJC
        Posted March 1, 2020 at 11:07 am | Permalink

        Leslie Singleton: It would appear that the government’s primary source of advice, The Environment Agency, is no longer fit for purpose. Whatever policies they’ve developed in support of what they believe their fundamental role to be, I suggest it’s probably not the role it actually should be.

      • Wil Pretty
        Posted March 1, 2020 at 4:26 pm | Permalink

        Leslie
        Our weather is too variable to be able to predict where it will rain, so any new channels may well be in the wrong places.
        However we do know where it floods, so if those places are treated as Floodplains then we have done the best we can.

        • Leslie Singleton
          Posted March 1, 2020 at 7:48 pm | Permalink

          Dear Wil–The agendum is simply to relieve the river of its excess water from anywhere upstream–Once built, the channel automtically works forever and no need for those frighteningly inadequate “defences” one sees on the News.

        • gregory martin
          Posted March 1, 2020 at 9:03 pm | Permalink

          Agreed that engineering to withstand peak flow is the worst option.In areas of persistant flooding, the way it should be handled is through steady retreat. Local authorities should be responsible in their respective areas of using their oversight in arranging affected properties to be relocated away and above the stricken areas. The insurance industry should be engaged to provide liquidity instead of compensation, therefore reducing their future risks.
          The Environment Agency must either provide upkeep and maintenance of waterways to expedite drainage, or relinquish that task to landowners through Drainage Boards as previously. It is a nonsense that navigatable waterways such as the River Witham become so choked with silt that rowing boats are prevented. The notion that water voles etc be encouraged; and then being drowned in flood conditions, is a nonsense. Yes, they can swim but not across thousands of acres.

      • glen cullen
        Posted March 1, 2020 at 6:55 pm | Permalink

        If you don’t dredge at known river flood hot spots, it creates an underwater dam…result it continues to flood upstream

    • Norman
      Posted March 1, 2020 at 8:36 am | Permalink

      Or is it simply ‘February Fill-Dyke’, with cyclical variation?
      Another old saying is: ‘An ounce of March dust is worth its weight in gold’. This implies a dry seed time is crucial, but is not always a given.
      Interestingly, I note the Church of England’s 1662 Book of Common Prayer has prayers for both extremes – flooding and drought:
      For Rain.
      O GOD, heavenly Father, who by thy Son Jesus Christ hast promised to all them that seek thy kingdom, and the righteousness thereof, all things necessary to their bodily sustenance: Send us, we beseech thee, in this our necessity, such moderate rain and showers, that we may receive the fruits of the earth to our comfort, and to thy honour; through Jesus Christ our Lord. Amen.
      For fair Weather.
      O ALMIGHTY Lord God, who for the sin of man didst once drown all the world, except eight persons, and afterward of thy great mercy didst promise never to destroy it so again: We humbly beseech thee, that although we for our iniquities have worthily deserved a plague of rain and waters, yet upon our true repentance thou wilt send us such weather, as that we may receive the fruits of the earth in due season; and learn both by thy punishment to amend our lives, and for thy clemency to give thee praise and glory; through Jesus Christ our Lord. Amen
      Amen, indeed.

    • Lifelogic
      Posted March 1, 2020 at 8:55 am | Permalink

      The Climate has always changed and always will do. Idiotic things like banning gas boilers, electric cars, net zero carbon by X and renewables will make no significant difference whatsoever. Indeed it might do more damage than good to waste large sums of money in this way.

      Sensible flood defences and suitable adjustment is the only sensible way to go.

      • Lifelogic
        Posted March 1, 2020 at 8:57 am | Permalink

        I thought the alarmists and the BBC dopes used to threaten us with water shortages and tell us we needed drought tolerant plants, might they make their minds up?

        • Shirley M
          Posted March 1, 2020 at 11:42 am | Permalink

          Yes, I remember the constant threats of drought too. Then again, they have also claimed that rising sea levels would have us all underwater by now.

          • Lifelogic
            Posted March 1, 2020 at 4:49 pm | Permalink

            Nothing has been as bad as the East Coast floods of 1953 that killed 2551 people! This well before any very significant rise in C02. They we pushing global cooling after this in the late 60s.

        • Fred H
          Posted March 1, 2020 at 1:22 pm | Permalink

          LL – – you are not supposed to remember that!
          The BBC & Met Office will not thank you….

      • Leaver
        Posted March 1, 2020 at 11:11 am | Permalink

        Ridiculous. We were flooded out zero times during 1973 – 2003, and twice from 2003 – 2020.

        Looks like a trend to me. But I guess since you and Dave are living in nice, dry houses, you can pontificate to the rest of us.

        • Edward2
          Posted March 1, 2020 at 3:53 pm | Permalink

          Check out the EU Water Directive which our Environment Agency followed with enthusiasm.
          Over twenty years now of a general policy of minimal intervention.
          They want nature to take its course.
          Maybe after finally leaving the EU we can get back to clearing ditches, creating run off lakes, dredging rivers,widening rivers and raising up riverbanks heights and a long overdue return to fighting back against coastal erosion.

          • Martin in Cardiff
            Posted March 1, 2020 at 6:54 pm | Permalink

            Did the European Union directive order more rain to fall from the skies during February than has ever been recorded before, Edward?

          • Leaver
            Posted March 1, 2020 at 7:14 pm | Permalink

            I hope you are right. I fear it may be climate change, but perhaps Brexit will resolve our flooding issues. Let’s see.

          • Edward2
            Posted March 1, 2020 at 10:53 pm | Permalink

            Martin
            What a silly response.
            Twenty years of neglect meets a year where rain has been a bit above average.

          • Martin in Cardiff
            Posted March 2, 2020 at 9:19 am | Permalink

            Silly is a relative term. I consider yours immeasurably sillier.

            This was not “a bit above average” rainfall.

            It is an all-time record for February.

          • Edward2
            Posted March 2, 2020 at 2:02 pm | Permalink

            Which the EA if they read the IPCC climate reports should have been able to have predicted and mitigated by doing some work on areas prone to flooding.
            Over twenty years on inertia as flooding coincidentally got worse and worse.

    • The Prangwizard
      Posted March 1, 2020 at 9:27 am | Permalink

      And more dredging and general maintenance. Strolling along the sides of the navigable upper reaches of the river Thames last year I was astonished at the quantity and size of tree branches hanging into the river which then collected debris. Goodness olny knows how much silt and dead wood there is under the water as a result of such neglect. Magnify this across all our rivers and it’s no surprise that flooding is getting worse.

      If we ever get clear of the DU can we have change at the Environment Agency. And face up to it, that means changing the people at the top.

    • Fred H
      Posted March 1, 2020 at 1:27 pm | Permalink

      Wil – – It is not Climate Change – – -evidence?
      It is a natural cycle of winter weather – sometimes peaks and troughs.
      What is different for some is that man has channeled rainfall into fewer and fewer areas of land to absorb it, and reduce downstream flow.
      If we continue this relentless building on land, we will have to find ways, dams, sluices etc to slow down the flow to allow nature to absorb the current torrents.

      • Wil Pretty
        Posted March 1, 2020 at 4:20 pm | Permalink

        Fred H
        Climate is long term variation of Weather. It is always changing, there are many natural cycles.

        • Fred H
          Posted March 1, 2020 at 7:57 pm | Permalink

          Wil – – I think you made my point. Climate change might be good for some – horrendous for others.

    • margaret howard
      Posted March 1, 2020 at 4:57 pm | Permalink

      Wil Pritty

      “In my opinion, River flooding should be tackled in the same way that we protect ourselves from the sea.
      To prevent sea flooding we build embankments – Sea Walls”

      Call in the Dutch. They are the world’s experts.

      They drained our fens and their own country is a marvel in ingenuity and expertise.

  9. Richard1
    Posted March 1, 2020 at 8:26 am | Permalink

    60% debt to GDP was probably a reasonable rule of thumb when interest rates were c. 5%+. It is of course entirely necessary for a currency union like the eurozone to have strict rules on debt issuance – and as we have seen it actually needs cross-guarantees on debt and substantial transfers, which it doesn’t have or make. There was no need for non-eurozone countries like the U.K. to be bound by this, and at current interest rates it may not make sense. We also have general confusion between gross and net debt, a distinction which should apply to the U.K. but doesn’t apply to eurozone countries in the same way.

    Economists Rogoff and Reinhardt have done a comprehensive study showing a debt level of over 90-100% is a tipping point for a doom loop of economic failure, so we want to stay well short of that. Of course it varies from country to country, depending on size strength and competitiveness, and on tax/GDP (a low ratio should allow more borrowing capacity and vice Versa) with the US being able to get away with far more than anyone else.

    The continued reluctance to accept the Laffer curve effect is certainly very damaging. Policy on Income tax, CGT, stamp duty, and Corp tax rates have all shown strong evidence for the Laffer curve effect over the last two decades.

    • acorn
      Posted March 1, 2020 at 10:56 am | Permalink

      Economic studies earlier this decade show at US state-level income tax cuts, almost always find that revenue gains from tax cut-induced work incentives; only partly offset losses from those rate cuts.

      Large tax-cutting states have suffered losses in revenue in subsequent budget years. Kansas is the now classic example of the Laffer curve backfiring badly. Nobody ever knows where they are on the “supply siders” Laffer curve and you can’t test it for the maximum tax point, like you can test for the maximum power point on a solar panel for instance which has its own equivalent of a Laffer curve.

      • forthurst
        Posted March 1, 2020 at 6:02 pm | Permalink

        Laffer and Philips curves are quite simply pathetic attempts by economists to promote the falsehood that their dismal science is in anyway scientific. The idea that a graph can be plotted to take account of human behaviour as if under quasi-laboratory conditions does not cut the mustard which is why economists’ future projections and predictions are nearly always wrong.

    • Leaver
      Posted March 1, 2020 at 11:16 am | Permalink

      The issue with the Laffer curve is always which side you lie on it.

      The current levels of U.S debt (the Republicans are great believers in the Laffer Curve) would indicate that lowering taxes has not raised tax receipts.

      Though I think once tax levels start going above 50%, it might come into play – but not at current levels. Though that is a guess.

  10. Sharon Jagger
    Posted March 1, 2020 at 8:31 am | Permalink

    We all make a fuss about climate change, and this last bout of rain as though it were something new.

    This is not the first time that the country has been devastated by heavy periods of rain and bad weather. It rained almost constantly throughout the summer and autumn of 1314 and then through most of 1315 and 1316. Crops rotted in the ground, harvests failed and livestock drowned or starved.

    And although we obviously have a greater populous, how can we explain the 1300’s? That’s just what weather does…and always has done!

    So I think we need to accept Mother Nature will do what she does, take sensible precautions and treat the world with respect in the knowledge that if Mother Nature wanted humans gone – we’d be gone! No matter how we Try to go back to medieval times by going Zero Neutral, I doubt we’re affecting things that much. Remember the fuss over the hole in the ozone layer? That recovered on its own!!

    • Matt
      Posted March 1, 2020 at 4:24 pm | Permalink

      And go back to medieval rates of infant mortality – before St Greta moans again about her childhood being stolen.

      The only species on the planet with any hope of averting the next extinction asteroid. The only species to have spotted the caldera and archived the DNA of other species in an Arc.

  11. Javelin
    Posted March 1, 2020 at 8:36 am | Permalink

    I believe the treasury is focused on the average tax spend per person rather than maximising tax to avoid accusations of austerity.

    I have written on this blog before the problem with importing cheap labour is lower tax being paid per person leading to TAX DILUTION.

    When Labour bangs on about austerity they are talking nonsense because taxes have never been higher. The problem is tax dilution because we have imported so many low skilled migrants who are net tax takers and not net tax givers.

    • Narrow Shoulders
      Posted March 1, 2020 at 12:47 pm | Permalink

      Yes indeed.

      Not only is the tax take higher than ever but so is the spend.

      If we are importing people who are not making GDP per head higher then we are making ourselves poorer through this policy. Making something poorer must fit the definition of austerity but you don’t hear the left calling for this austere policy to be dropped.

      George Osborne’s political use of the words austerity and cuts when spending actually rose (but not per head due to mass immigration) is possibly his worst political legacy.

    • forthurst
      Posted March 1, 2020 at 6:08 pm | Permalink

      The government’s purpose in importing large numbers of foreigners is not to dilute tax but to dilute the English and force the English to pay for that. I would have thought most people would have understood this by now or possibly not as they keep on voting for it.

  12. Lifelogic
    Posted March 1, 2020 at 8:49 am | Permalink

    You make excellent points on Laffer and Phillips. The property sector also hit by idiotic bank lending rules, the double taxation of landlord interest, bank lending restrictions to landlords especially landlords with several properties, CGT on non real gains, proposed attack on landlords rights to recover the property, enveloped dwelling taxes, over the top building regulations…….. Stamp duty rates are absurdly high and hugely damaging.

    The car market also hugely hit to by the idiotic electric car agenda. The technology is not satisfactory for most people yet and is absurdly expensive and depreciates rapidly too. The real range of cars seems to be about 75% of the claimed one. Plus you probably would not want to risk running on the last 10%.

    It seems the treasury only employ economic illiterates whose main aim is to tax the economy to death and piss the money down the drain.

    • steve
      Posted March 1, 2020 at 12:17 pm | Permalink

      LL

      “…bank lending restrictions to landlords”

      I’m a Landlord, but to be honest I never borrow money as I don’t agree with usury.

      “It seems the treasury only employ economic illiterates whose main aim is to tax the economy to death and piss the money down the drain.”

      …..yep, but truth be known their main aim, like that of all left wingers, is to knacker the country.

      • Lifelogic
        Posted March 1, 2020 at 4:55 pm | Permalink

        I borrow quite a bit, usually to built or buy more units and then sell or let them but it makes less sense now due to the absurd and evil tax rule that now taxes you on the interest (that you have paid to the bank) as if it were your profit! The bank they pays tax on it again in there profits. But they are actually profiting!

        • Martin in Cardiff
          Posted March 2, 2020 at 9:22 am | Permalink

          So you’re a hostage to fortune on rates, then.

          People, capitalists, who fund with capital rather than with debt don’t have this problem.

          One or two in e.g. Norway understand this.

    • Dave Andrews
      Posted March 1, 2020 at 4:29 pm | Permalink

      I read the other day a cost of up to £45 in a motorway service station to recharge an electric vehicle, giving the vehicle the ability to limp on a couple of service stations before it needs charging again. For that cost, I could have practically a tank full of diesel that could take me anywhere in the UK.
      Can the chemical engineers, who have transformed the modern world with an array of polymers, not turn their attention to synthesising 224 tri-methyl pentane for when the oil runs out, preferably out of plant material?
      If we’re worried about CO2 emissions, there is a very reliable technology to pull it out of the air even when greatly diluted – it’s called photo-synthesis.

      • steve
        Posted March 1, 2020 at 5:44 pm | Permalink

        Dave Andrews

        “I read the other day a cost of up to £45 in a motorway service station to recharge an electric vehicle”

        Hopefully when people wake up to what’s coming that will be the end of EV’s.

        Anyone who believes will be cheaper to charge than filling up a normal vehicle needs their head examined.

        Charging point owners will be robbing the shirts off people’s backs.

        I imagine the wheel clamper community will get in on the racket & stitch things up.

        It’s simple – run out of juice you’re well and truly stuck. It isn’t as though you can call a friend to rescue you with a can of electricity.

        “If we’re worried about CO2 emissions, there is a very reliable technology to pull it out of the air even when greatly diluted – it’s called photo-synthesis.”

        Exactly, and how much vegetation and trees were destroyed so far for HS2 ?

        • Fred H
          Posted March 1, 2020 at 7:55 pm | Permalink

          STEVE – – Ah but the RAC( other breakdown companies are available) may provide vehicles with (roadside) charging equipment. You know – wait 2-3 hours, they arrive, start the diesel generator, plug your car in, and perhaps 2 hours later you have enough battery level to let you drive on – home?
          Wonderful? (sarcasm intended).

          • steve
            Posted March 1, 2020 at 9:31 pm | Permalink

            Fred

            “start the diesel generator, plug your car in”

            Nope, not allowed. Boris said so, (because Greta told him and Boris does what Greta says.)

            But what Boris hasn’t worked out is that he’d better start doing as we say, or else.

            Fuel £4.54 a gallon

            No ban on petrol or diesel engines.

            Diesel fuel price on parity with aviation kerosene and domestic kerosene 25 (it’s the same stuff so should be about 50p / litre.)

            Discourage EV’s.

            No foreign fishing vessels in British territorial waters.

            Flood the channel tunnel.

            End immigration – we’re full up.

            Other than that Boris can do as he likes for all I care.

  13. ian terry
    Posted March 1, 2020 at 8:53 am | Permalink

    For me Sir John spot on the mark, especially the last two paragraphs

    Got to do everything to support our manufacturing industries.

  14. Andy
    Posted March 1, 2020 at 9:04 am | Permalink

    I wouldn’t worry about Treasury officials. It seems the modus operandi of the Cummings government is shout, swear, belittle and to yell abuse at hard working public servants until they are forced to quit.

    Meanwhile over 60s have been told to avoid crowds as the threat of Coronavirus is too great for them. Hopefully this means swathes of the Parliamentary Conservative Party can stay at home – where they can do less damage to our country.

    • DOMINIC
      Posted March 1, 2020 at 9:44 am | Permalink

      ‘hard working public servants’. LOL

      • Andy
        Posted March 1, 2020 at 5:43 pm | Permalink

        I know plenty of people who work in the public sector. Police officers, firefighters, teachers, nurses, doctors, soldiers and – yes – civil servants. The idea that they are mostly not skilled and that they do not work hard is one of the sillier things many contributors to this blog believe. And you mostly believe some very silly things.

        • Edward2
          Posted March 1, 2020 at 8:15 pm | Permalink

          Your original post just specified Treasury officials and was about the current Home office row, then you quickly switched to a list of front line staff.
          We do notice these things Andy.
          Red herring alert.

        • margaret howard
          Posted March 1, 2020 at 11:30 pm | Permalink

          Andy

          I see their spleen has been re-directed from the evil, unelected Brussels eurocrats to our own unelected civil servants.

          • Edward2
            Posted March 2, 2020 at 7:13 am | Permalink

            Is there much difference?

    • Lifelogic
      Posted March 1, 2020 at 11:28 am | Permalink

      Well many of them are doing little of any use and many are doing positive damage. If about 65% of them quit it would be a very good thing they could get a more productive job and there would be fewer of them to harrass people in the rather more productive private sector.

    • The Prangwizard
      Posted March 1, 2020 at 12:49 pm | Permalink

      I imagine Andy that the prospect that many older people are likely to die will cause you much delight.

    • Fred H
      Posted March 1, 2020 at 1:20 pm | Permalink

      evidence ? – – of course not. You don’t do evidence, do you!

      • Martin in Cardiff
        Posted March 1, 2020 at 4:26 pm | Permalink

        If the claims made in the recent resignation speech were untrue, then why does not Patel sue for defamation?

        • Edward2
          Posted March 1, 2020 at 5:31 pm | Permalink

          A few days ago he issued a joint press release saying how happy he was to work together.

          • Martin in Cardiff
            Posted March 1, 2020 at 6:57 pm | Permalink

            Answer the question.

          • Edward2
            Posted March 1, 2020 at 10:54 pm | Permalink

            I have.
            One minute he is happy
            The next he is in tears.

          • Martin in Cardiff
            Posted March 2, 2020 at 9:23 am | Permalink

            You have some imagination.

          • Edward2
            Posted March 2, 2020 at 2:07 pm | Permalink

            He was on TV in tears and a week or so earlier he issued a joint press statement saying he and Pritti were happy to work together
            No need for imagination.

        • Fred H
          Posted March 1, 2020 at 7:51 pm | Permalink

          perhaps she is content with just doing her job? There is no compulsory ‘sue evervbody who calls you a liar’ in this country – FACT.

          • rose
            Posted March 1, 2020 at 11:10 pm | Permalink

            This “why doesn’t she sue?” is always used by certain sorts of people to establish guilt. These people have presumably never tried to sue anyone for libel. If they had, they would know it takes over their life – no time for a job – and it robs them of their worldly goods. It is also the case that so much mud gets thrown by the libellers’ lawyers that it is counterproductive.

  15. DOMINIC
    Posted March 1, 2020 at 9:41 am | Permalink

    Why make it so complicated? The production of goods and services for consumption is a simple process to understand. It isn’t simple to execute but it’s simple to understand.

    The use of unproven, backward economic theory to dictate policy is idiotic in the extreme. I would go as far to say it is deliberately destructive and utterly political

    Why would a business-person ever take advice from a PPE Graduate at the Treasury about wealth creation?

    The material production process has been politicised. Like all areas of life, all comes under the guidance of the State.

    The State (the vested interest that feeds like a parasite of one and all) cannot leave alone. It doesn’t know how to leave alone. It’s raison d’etre is intervention.

  16. Lifelogic
    Posted March 1, 2020 at 11:12 am | Permalink

    So the government is going to recall retired medial staff to deal with the corona virus. These people being rather older will doubtless have about 3% chance of dying should they contract the virus. Will there be much uptake I wonder?

    Red tape prevents people even climbing a ladder to clear a gutter or something and yet they expect retired medical staff to volunteer to do this?

    • Everhopeful
      Posted March 1, 2020 at 3:30 pm | Permalink

      Mind you the older medics are less likely to be in a pc panic.
      They might suspect that there is an agenda…compulsory vaccination or putting a stop to travel ( for the 99%)??
      Maybe? So far this does not seem to be behaving like the Spanish Flu.

      • hefner
        Posted March 1, 2020 at 3:51 pm | Permalink

        Is Everhopeful Mark Honigsbaum’s nom de plume? Or were you around in 1918 and do you know exactly how the Spanish Flu developed?

        By the way there were fewer medicines in those days (no antibiotics to start with, not that they would do much it seems to the viral Covid-19).

        So I am afraid you are comparing rotten cabbages and rotten eggs.

        • Everhopeful
          Posted March 1, 2020 at 5:08 pm | Permalink

          Actually…my grandmother’s small sister died of the Spanish flu.
          A very well documented family affair.
          Doctor recommended red wine and raw steak…great grandfather knocked up local shop at midnight to no avail.
          The poor little girl died.
          So there!!

          • Everhopeful
            Posted March 1, 2020 at 5:16 pm | Permalink

            AND as a matter of fact in WW1 they had Acriflavine which is now heralded as a possible saviour in the fight against viruses and antibiotic-resistant bugs.

    • Andy
      Posted March 1, 2020 at 8:54 pm | Permalink

      Red tape does not prevent the use of ladders to clean gutters. Honestly your statements are preposterous.

      • Edward2
        Posted March 1, 2020 at 11:00 pm | Permalink

        You are required work with a minimum of risk and danger to your employees.
        Working at height regulations means that you would need a machine like a cherry picker to achieve best safe practice.
        If you used ladders and something bad happened you would be open to prosecution.
        You say you employ people but I am getting very sceptical.

      • Stred
        Posted March 2, 2020 at 12:22 am | Permalink

        It’s very difficult to find anyone to do high level work to gutters and fascias because my local authority prosecuted tradesmen who did not work off a scaffold.

  17. Lifelogic
    Posted March 1, 2020 at 11:20 am | Permalink

    I see that Sir Philip Rutnam (in his resignation speech) seems most concerned about the 35,000 people working for the Home office. Could someone please remind him and indeed all civil servants that they are not there to look after the interests of just other civil servants and the state sector. About 80% of people work in the private sector and they are the ones who generate the vast majority of the wealth that the state sector largely waste.

    Most do not have large salaries, gold plated pensions, large pay offs and cushy jobs for life either. Indeed their pensions have been mugged by Brown, Osborne, Hammond and perhap in 10 days yet again.

  18. acorn
    Posted March 1, 2020 at 11:21 am | Permalink

    Since the 1980s Western economic thinking has been a miserable failure for 99% of its citizenry; but, very profitable for the top 1% who have no intention of changing the system. The level of economic knowledge in the 99% is abysmal (see above).

    The next time you are quarantined for fourteen days have a read of http://www.levyinstitute.org/pubs/tst_11-20-19.pdf “CONGRESSIONAL TESTIMONY: Reexamining the Economic Costs of Debt Hearing before the House Budget Committee, November 20, 2019 . You could learn something.

    • Edward2
      Posted March 1, 2020 at 5:29 pm | Permalink

      That’s not correct.
      Since 1980 there has been a large increase in the standards of living people in Western economies.
      Just thinking socialism with its big state and huge increased tax, print, spend and waste will work better, shows it is you that refuses to see how those policies have impoverished many millions all around the world.

      • hefner
        Posted March 2, 2020 at 5:33 pm | Permalink

        A bit limited, Edward2. Can’t you imagine an economic system based on free but fairer markets that could work better for the common people and not for multinationals? I found you rather funny when the only argument you seem able to advance is the fear of (USSR-type) socialism.
        For all its defaults China have improved the living standard of its people over the last twenty years.
        Even social-democracies as in some of the Northern European countries appear to produce more satisfied people than the UK.

        You show your age and the tripe you have been fed and swallowed over the years (including on this blog).
        Remember the UK house price crisis of 1986-87?

        • Edward2
          Posted March 3, 2020 at 12:06 am | Permalink

          You have an overactive imagination Hefner.
          I’ve never said the choice is between the extremes you apply to me.
          When have I ever mentioned I have fear of USSR style socialism?
          You start by saying you like free but fair markets but then reveal your support for extreme communist systems.
          I’m not surprised.

          If you want a Chinese style of Government then I cannot take you seriously as a left leaning thinker when you must surely realise their record on human rights.

          Like most socialists in my lifetime you are an apologist for communism and dreadful socialism dictatorships who treat their citizens badly and refuse free democratic elections.

          • hefner
            Posted March 3, 2020 at 10:35 pm | Permalink

            What a brilliant analysis. Thanks for it.
            BTW, I lived for 10 years in France under Mitterand’s socialism, it was far from perfect, but nothing USSR-like, nor Chinese, nor Nordic country for that matter.
            Do you check every night before going to bed to make sure there are no socialo-communist (with a knife between their teeth) under it?

  19. William Long
    Posted March 1, 2020 at 11:41 am | Permalink

    I am afraid that words like ‘Heads’ and ‘Brick-walls’ came into my mind when I read this excellent post. There only seem to be two scenarios in which the sensible actions you recommend might come to pass: first if in addition to the Treasury ‘Advisers’, all the Treasury civil servants were to be sacked and replaced, and I cannot see that happening even on one of Mr Cummings’s better days. Secondly, if Mr Sunak happens to agree with you, and tells his officials to stop mucking about and get on with it. We will see whether that happens on 11 March, but I cannot say that I am holding my breath!

  20. Stred
    Posted March 1, 2020 at 12:32 pm | Permalink

    The government’s attack on the self employed through the retrospective tax going back 20 years is going to be very damaging and will result in less tax. I know of a case which concerns an agency which puts students and tutors in touch, with payment made through this small firm. The business is conducted on the net. HMRC is insisting that the business is sn employment agency. The permanent employment of tutors who mainly work part time will not be possible. Other agencies, competing with foreign firms, incorporate in low tax countries. The agencies working in the UK are going to be doing the same and the home jobs, corporation tax, Vat and NI will be lost.

  21. DennisA
    Posted March 1, 2020 at 12:34 pm | Permalink

    The biggest threat to the economy is the Climate Change Act. The government is now in thrall to environmental activists who are extremely well funded and can stop any development, except it seems, HS2, for which so far they have no announcements on legal challenges, as such a challenge wouldn’t pass the “Paris Test”.

  22. Jim
    Posted March 1, 2020 at 12:53 pm | Permalink

    Anyone can squirt economic ‘Engine Start’ into the tired old engine that is the UK economy. Sure it will spark up but keeping it going is the problem and has been the problem for many years.

    Some say cut taxes, fair enough but taxes are there to pay for things govt does. Some say investment, but in what, that is a big problem. Some say education, certainly better than ignorance, but a degree is not what it was. Coupling these things to economic growth is not so easy.

    Then we might look at the load on the engine, is it too much. Are there too many unproductive people holding back the economy? A close and honest look might reveal that it’s not the usual suspects.

    Then we might look at other economies, the USA does well, but has many features the populace might not like much. The German economy has its problems as have the French. Probably we all three face the limitations of (over) mature Western economies. Or we might look East, I am sure one or two in Whitehall look at the way the Chinese run things and think mmmmm…..

    So chuck some cash into the economy and turn the key. It will work – for a little while.

  23. Sakara Gold
    Posted March 1, 2020 at 2:40 pm | Permalink

    Yet another fatuous and stupid statement – on the BBC no less – from the Health Secretary Matt Hancock. He is prepared to lock down cities affected by the virus, but will not countenance sealing our borders!

    Doubtless he has been influenced by utterances from the Chinese regime-funded WHO that it isn’t necessary to prevent travel from infected areas.

    Apparently we now have people infected with this virus who have no travel history or contact with known cases – I believe the “experts” refer to this as “community infection” Good grief….

    This is not a time to have imbeciles in charge of the asylum. Once more, for the fourth time, I implore the government to close our borders . Does it really want a morgue in Hyde Park holding ten’s of thousands of casualties, mobile crematoria etc? For pity’s sake get a f***ing grip Boris!!

    • Martin in Cardiff
      Posted March 1, 2020 at 4:29 pm | Permalink

      How can you demand that France, say, retain possibly infected British people returning here?

      Perhaps Matt Hancock thinks a little more than you do?

      • Sakara Gold
        Posted March 1, 2020 at 6:47 pm | Permalink

        Look, if they want to live in the EU, they can take their chances with the EU healthcare system.

        We can still stop this epidemic, but only if we close the borders and concentrate on tracing contacts. China itself has just announced that all people leaving or entering China will be checked for symptoms, contact with infected persons or travel from areas with a high number of infections. Judging from comments esewhere here on JRs blog, we have not even been taking this obvious, basic step.

        • Martin in Cardiff
          Posted March 2, 2020 at 7:37 am | Permalink

          That would mean preventing British people returning from holiday, business or anything else from re-entering the country.

          That would mean inflicting them on some other country.

          What right does the UK have to do this?

          You write as if it were surrounded by a great emptiness, not by other nations.

          • Edward2
            Posted March 2, 2020 at 2:09 pm | Permalink

            Same rights Japan had to hold a cruise ship for several weeks.

    • Lifelogic
      Posted March 1, 2020 at 5:48 pm | Permalink

      Too late, there must be at least a hundred people infected in the UK and this could well be doubling each day or so. So numbers might reach 100,000 in ten days time (and well over 1 million in another 4).

      • CHRISTOPHER HOUSTON
        Posted March 1, 2020 at 7:32 pm | Permalink

        I see the information. I decide we will not have a Coronavirus epidemic.

      • Lifelogic
        Posted March 1, 2020 at 8:29 pm | Permalink

        Hancock read PPE Oxon so probably does not understand the maths.

        • hefner
          Posted March 2, 2020 at 8:50 am | Permalink

          100 today, then 200, 400, 800, 1600, 3200, 6400, 12800, 25600, 51200, 102400 ten days later, 204800, 409600, 819200, 1638400 in four more days.

          Who wants to bet? As LL himself said, ‘this could well be doubling each day or so’ … or not.
          Worldwide after more than ten days, there are 89,216 confirmed cases on 02/03/2020 at 08:45GMT.

  24. Chris S
    Posted March 1, 2020 at 3:10 pm | Permalink

    Hammond appears to have done his level best to create the conditions that would make Remainer predictions of a Brexit-led recession come true. Fortunately in that respect he failed miserably and is now out of politics completely.

    With one eye on recent events in the Home Office, I wonder if the Treasury is manned from top to bottom by dyed-in-the-wool traditional Remainers who won’t countenance any move away from the liberal democratic economic policies they have been pushing for the last decade ?

  25. lojolondon
    Posted March 1, 2020 at 3:31 pm | Permalink

    You are totally correct here John. Taxes that urgently need to be moderated or removed entirely are NI, IR35, IHT, Stamp Duty, Beer duty. All have damaging implications and effects that far outweigh the revenues collected.

    • Lifelogic
      Posted March 1, 2020 at 8:27 pm | Permalink

      Nearly all taxes do far more harm than good. You take the money off people who would in general have spent or invested it rather wisely and give it to governments who invariable do the opposite.

      • Lifelogic
        Posted March 2, 2020 at 10:46 am | Permalink

        Plus you have all the costs and damage done by the collection and government overheads.

  26. Henry Law
    Posted March 1, 2020 at 4:18 pm | Permalink

    The optimum Laffer curve optimum figures differ from one tax to another, and the shapes of the curves differ. The curve fails to take account of interaction between taxes. VAT, for example, abstracts revenue from other taxable income streams and thereby reduces the yield from those taxes.

    In the case of property taxes, the yield is directly proportional to the rate of tax until the point is reached where the actual tax claimed is more than the rental value of the site alone, at which point the land is not capable of economic use. At that rate of tax, the land eventually goes out of use and the yield falls to zero. This is the case with shopping streets, and manufacturing and heavy process industry, power generation and similar scale opererations in areas of low land value.

  27. DOMINIC
    Posted March 1, 2020 at 6:31 pm | Permalink

    It surely must now be obvious that the BBC’s become nothing less than an politically active organisation intent on undermining any government that dares to question the prevailing orthodoxy

    Why oh why is this government pissing around with BBC-CH4 reform? Privatise them both and transfer them to a subscription model asap.

    It is utterly appalling that the civil service is working with their allies to undermine elected representatives such as Patel

    We want radical reform not piecemeal change that affords leftist entities to maintain their parasitic status on the taxpayer

    • Lifelogic
      Posted March 2, 2020 at 2:17 am | Permalink

      I agree endless absurdly biased propaganda from the BBC.

      I just listened to the Desert Island Disc programme with Dorothy Byrne yesterday the head of News and Current Affairs at Channel 4. What planet is this woman on?

      • APL
        Posted March 2, 2020 at 7:21 am | Permalink

        Lifelogic: “with Dorothy Byrne yesterday the head of News and Current Affairs at Channel 4.”

        BBC contemplating its own navel as usual.

  28. Iain Gill
    Posted March 1, 2020 at 8:25 pm | Permalink

    given that Dom Cummings blog over the last few years seems a fairly accurate description of what is being done to the country (hey who bothers with manifestos eh) I think your analysis is off the mark John.

    I like Dom, the senior layers of the public sector certainly need a big shake up. The fraud/corruption/abuse of office/ etc a lot of them get up to (I know I could prove a fair amount, and I am just one individual) with no fear of ever being called out has got to change. If I can get locked up for fraud there is no reason these people should be immune. Senior layers of Financial Ombudsman Service and FCA would be easy targets, and a number of them really should be in jail IT IS THAT BAD. It is the fact that none of them ever do, no matter how blatant their actions, that allows the rest of them to believe that “the system” will protect them forever.

    I would rather have a chat about the stuff Dom is clearly wrong about. Which political blogs (of the Conservative ish world view) are going to tackle that?

    The vast numbers on the public payroll failing in their basic brief.

  29. Mike Wilson
    Posted March 2, 2020 at 9:33 pm | Permalink

    We need instead a new central aim of promoting faster economic growth

    It intrigues me why this is the basis of all your thinking. Why do we need economic growth? Will we ever have grown enough so we can take a pause and say ‘we’ve grown enough’? Or are we doomed to continuous growth and the consumption and environmental damage it involves?

    • Edward2
      Posted March 3, 2020 at 7:51 am | Permalink

      It is the result of human endeavour and technical advancements.
      People wanting to improve their lives and uplift the lives of their families.
      It is the aggregation of the ambitions of the population.
      It just happens.

      • hefner
        Posted March 3, 2020 at 10:28 pm | Permalink

        Isn’t that a dearth of thinking, Edward2? One could have ‘human endeavour and technical advancements’ not translating into economic growth, specially one measured by GDP. You obviously know that the floods of the past few weeks might be good for the GDP.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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