Boost the economy now

Other countries have been doing what I have advised the UK authorities to do. We are now witnessing a rash of policy announcements by Central Banks and governments around the world to boost their economies . They want to arrest the global slowdown and prevent a global recession. The UK as the world’s fifth largest economy needs to help them.

Australia, the USA, China, Turkey, Russia, Brazil and others have cut interest rates recently.

The USA, China, Japan and Euro area Central Banks have all put more money into markets. The Fed has bought T Bills, the ECB government bonds, the Japanese both bonds and shares.

China has relaxed lending restrictions and offered cheap finance for distressed companies losing revenues from the virus effects. Hong Kong has given HK$10,000 to every adult.

We can argue about the wisdom of individual measures, but they are right to be trying to generate more activity and see business through a difficult time. In this environment boosting demand and ensuring liquidity is probably better than cutting rates.

So what should the UK do?

The Treasury should lift its tax attack on small business contractors, by cancelling IR35

It should abolish VAT on green products and domestic fuel to cut the costs of living

It should cut Stamp duties and VED to promote more home and car sales

It should offer all small businesses a 3 month holiday from Business rates as some will suffer cashflow problems from virus disruption.

Cut Income tax to give all employees a pay boost.

The Bank of England should ensure a plentiful supply of liquidity to markets. It should facilitate lending to companies with temporary liquidity problems brought on by virus disruptions to sales or supplies who have a decent future business model.

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126 Comments

  1. Ian Wilson
    Posted March 4, 2020 at 5:47 am | Permalink

    Plenty of excellent ideas here to alleviate threats of a drop in activity. We also need to allow the construction industry to start digging instead of having colossal investment in machinery and personnel idle due to legal challenges based on the ludicrous Climate Change Act.

    Now it’s not only Heathrow which is stalled (while China & India plan 320 more airports,) roads & even HS2 are being blocked. This economically suicidal act needs repealing, but probably not a chance while Boris (or is it Carrie?) is in charge.

    • Stephen Priest
      Posted March 4, 2020 at 7:03 am | Permalink

      Even the Maldives are planning 4 airports.

      • Lifelogic
        Posted March 4, 2020 at 6:53 pm | Permalink

        The average height of this country of coral beaches is around 4 feet above sea level, and the highest point in the entire nation is just under 8 feet (about 2.4 meters).

        Surely even a large Tsunami might nearly wipe it out.

    • Lifelogic
      Posted March 4, 2020 at 7:18 am | Permalink

      It is indeed economically suicidal and totally pointless too, even in CO2 terms it make virtually no difference. It just exports jobs and industries.

      • Lifelogic
        Posted March 4, 2020 at 7:43 am | Permalink

        I would however cancel HS2 as it is such appalling value for money so many better ways to spend the money. Tax cuts would be far, far better.

        On Heathrow I was in favour of a runway at Gatwick first and a rapid HS shuttle link to Heathrow to may a four then later five runway London hub airport. Gatwick would be quicker to do.

      • Lifelogic
        Posted March 4, 2020 at 5:41 pm | Permalink

        Another huge burden lumped onto business with the sick pay from day one change announced today. The government lumping this liability onto businesses many of which will be unable to afford this. This even before the budget next week.

    • jerry
      Posted March 4, 2020 at 7:24 am | Permalink

      @Ian Wilson; Indeed. The want-to-be “Green” eco credetails of the govt since Dec 14th last is becoming so potentially crippling to our free market economy we might have been better off with Corbyn in No.10 and McDonnell in No11 …at least we would have had a Command economy to go with the madness!

    • Mike Wilson
      Posted March 4, 2020 at 8:02 am | Permalink

      Maybe the diggers could do something useful instead of building a third runway at Heathrow. It’s like a madhouse round there already. The climate alarmists might be right. Why take a chance? Just so more people can have stag dos in Prague? Hen nights in Barcelona! For business video calls and conferencing can replace much business travel.
      As for HS2, what an utter waste of money and a giant exercise in pointlessness. If they want a job for diggers, do something useful and make the A303 dual carriageway all the way to Devon – and don’t waste millions putting it in a ton so by Stonehenge. Pick the stones up and move them half a mike away. Better still, take some pictures then chop them into pieces and do something useful with them. Maybe build a couple of affordable houses in a nearby town.

    • oldtimer
      Posted March 4, 2020 at 8:49 am | Permalink

      The Climate Change Act is a dead hand holding the economy back. The Johnson government is intent on making it a heavier and even greater impediment than it is today. It even claims to be virtuous in doing so.

      • Lifelogic
        Posted March 4, 2020 at 5:46 pm | Permalink

        Indeed another mad proposal today to increase the ethanol content of petrol to go up to 10%! We are clearly government by idiots.

        Let us hope they are at least making sure they have several thousand intensive care beds, anti-virals, ventilators and the likes all available for about a months time when it looks like they will be needed! Cancelling HS2 is far more than sufficient to pay it and it might save thousands of lives.

    • Hope
      Posted March 4, 2020 at 8:59 am | Permalink

      JR, your govt has made a mess of the first three key decisions – Brexit, Haewei, HS2- all EU related all led by civil service. Why do think this will change when it looks like a civil service coup is in the making?

      Carney has never kept his triggers or targets, why do you expect he will change his dire performance to date?

      Dfid leads now make public claims against Patel! Why now? Why did they not take action years ago if true, they failed their staff by keeping quiet? Sack them. Their claims make them unfit for office. They either covered up for her going by their current claims alternatively are seizing the opportunity to get rid of a key leaver minister in govt. a cull of top civil servants required ASAP.

      • Lifelogic
        Posted March 4, 2020 at 5:51 pm | Permalink

        I agree if Civil Servants are allowed to pick ministers and judges allowed to over rule government decisions (based on vague climate alarmism lunacy) then in what way do we live in a democracy? Even once we have actually left the EU.

        • jerry
          Posted March 5, 2020 at 8:35 am | Permalink

          @LL; “judges allowed to over rule government decisions”

          If the Executive do not like current laws they are free to change those laws, assuming they can get the replacement legislation though the democratic will of our parliament – the idea that the Executive should be allowed to unilaterally dictate is the road to dictatorship, not democracy…

    • Hope
      Posted March 4, 2020 at 9:08 am | Permalink

      Con Woman provide an article today asking poignant questions whether the BBC are acting in conjunction with the civil servants to bring down apatel. Rutman needs to be questioned whether he contacted the BBC for his announcement, whether he spoke to Kerslake or others in advance? This has the BBC hallmark of the Sir Cliff a Richard expose.

      The govt should not water down or backtrack on reforming the BBC to a subscription channel. This serves as a central reason to speed up the demise of the BBC as it stands.

      • Lifelogic
        Posted March 4, 2020 at 5:53 pm | Permalink

        Indeed that certainly seems to be the BBC agenda (when they are not pushing alarmist climate propaganda that is.

    • Mitchel
      Posted March 4, 2020 at 12:10 pm | Permalink

      Interesting report from RailFreight.com this week:-“Rail freight China proves most shockproof modality – 3/3/20”:

      “Rail freight traffic in China has proven to be shockproof.Even in the month of February which was dominated by Coronavirus and all its consequences for the logistics industry rail freight volumes recorded an increase compared to last year(+4.5% to 310m tonnes despite deep contraction in factory and service sector activity.).Moreover,now that cargo is starting to move across the contry it is trains that get filled up first and fastest.Container freight on railways has surged by 39.5% to 26.6m tonnes.”

    • Bob
      Posted March 4, 2020 at 12:17 pm | Permalink

      The Maldives are opening four new airports this year.
      They obviously have faith that Greta will prevent a catastrophic rise in sea levels.

      • SM
        Posted March 4, 2020 at 6:53 pm | Permalink

        No doubt you recall that approximately 20 years ago we were told that the Maldives were at very severe risk of being totally immersed by the sea within just a few years because of global warming etc etc?

  2. Stephen Priest
    Posted March 4, 2020 at 5:55 am | Permalink

    The government should aim to get rid of all property taxes, including stamp duty, council tax and inheritance tax by the end of this parliament.

    • Nig l
      Posted March 4, 2020 at 6:52 am | Permalink

      Hardly a policy to allow for rebalancing the economy or making life fairer fir the ‘have nots’ I guess you are lucky to be a ‘have’?

    • SM
      Posted March 4, 2020 at 8:33 am | Permalink

      Not sure why you want to abolish council tax ~ surely services that the council provide should be paid for? Misuse of such funds by councillors and their advisors is of course another matter.

    • Ian Wragg
      Posted March 4, 2020 at 8:34 am | Permalink

      Your taking the proverbial. This is a big tax, big spend government.
      They don’t believe that we make a better job of spending money.
      Now they want to carpet the country in useless windmills subsidised by us.

    • Lynn Atkinson
      Posted March 4, 2020 at 9:40 am | Permalink

      Hear hear! Foreigners pay CGT based on 2019 valuations, Brits on 1984 valuations with no relief. When are we going to get a Govt for the British instead of a Govt for them rest of the world at the expense of the British’? Such a Govt might even appoint a sentient Governor of the BOE.

    • Bob
      Posted March 4, 2020 at 12:24 pm | Permalink

      “The government should aim to get rid of all property taxes, including stamp duty, council tax and inheritance tax by the end of this parliament.”

      You forgot to mention the BBC poll tax.

    • Cheshire Girl
      Posted March 5, 2020 at 6:37 am | Permalink

      I would approve of removing the portion for Police and Crime Commissioners, from my Council Tax.

      I doubt very much that it has been value for money.

  3. agricola
    Posted March 4, 2020 at 6:01 am | Permalink

    I think we have been saying this for some time now. Lets see what the theme of the budget is and then make a judgement. It would seem that the biggest threat at the moment comes from the Worlds collective reaction to corona virus. We now have the tools in place, but as yet do not know the extent to which they will have to be used. To a great extent we are collectively in other peoples hands as they are forced to react economically to the virus threat they face. You can create all the financial freedom you wish but in a production lock down for physical survival the required widgets will not get made.

    • glen cullen
      Posted March 4, 2020 at 10:37 am | Permalink

      media hysteria 53 cases, 8 recovered cases, 45 ACTIVE CASES
      0 deaths of coronavirus in UK

      • Martyn G
        Posted March 4, 2020 at 5:12 pm | Permalink

        Being old and cynical I have concluded that the ongoing mass hysteria in the press etc is in many ways a ‘distraction process’ leading to one thinking, what is going on behind the hype? OK, I do accept that it could evolve into a larger problem for the UK – not least because of the many reports of total inaction at entry points to the UK – but since the wailers and knashers of teeth are forecasting the collapse of the NHS, one also wonders what will happen if it does turn out to be a pandemic?

      • Matt
        Posted March 4, 2020 at 6:29 pm | Permalink

        Daily Mail, Express etc showing photos of empty shelves, shocking graphs, hysterical headlines…

        All of the supermarkets are normal around here. I expect everyone on this blog to be seeing the same.

        The People make up their own minds about things. They did so for Brexit too.

      • Cheshire Girl
        Posted March 5, 2020 at 6:41 am | Permalink

        You’ve made a very good point there. The media should be ashamed. They are causing more anxiety than there needs to be.

      • glen cullen
        Posted March 5, 2020 at 9:08 am | Permalink

        hysteria because every known case of people whom have the virus in the whole of the UK can fit on a single double-decker bus

  4. Mark B
    Posted March 4, 2020 at 6:39 am | Permalink

    Good morning

    Hooray ! King Cnut is back in town. Let’s print some more money.

    Here is an idea. Rather than give people money in one firm or another, give them time limited spending vouchers.

    The vouchers could be given by store and card companies with money reclaimed from the government. They should be time limited so that people cannot goes them. They can be for food and clothing. They effect will be to stimulate the economy that way.

    Better to give money to people who can, and will, spend it on the essentials rather than pump money in and inflate assets.

    • acorn
      Posted March 4, 2020 at 6:03 pm | Permalink

      Actually Mark B you suggest a good idea. Hypothecation is normally associated with taxation. For instance, that National Insurance contributions should do for the citizens exactly what it says on the tin. Or, where the government says a tax increase on property will pay for reducing homelessness. Alas, all taxation goes into the Treasury Consolidated Fund where it loses its source identity and its spending destination.

      I have said elsewhere that injecting stimulus in the form of Pounds Sterling, is most likely to be used to pay down household debt levels before any of it gets spent on consumption of goods and services. Issuing time limited vouchers redeemable in specific sectors of the economy, can be far more effective at boosting the demand side of the economy; which is what the economy now needs above all else.

      A good example is the US Supplemental Nutrition Assistance Program (SNAP), known as the Food Stamp Program, it provides food-purchasing assistance for low and no-income people living in the United States.

    • Matt
      Posted March 4, 2020 at 6:37 pm | Permalink

      You miss the point of making property values rise.

      Asset inflation means that borrowing can be made against it … which is also known as money printing once removed. The bubble can be sustained.

      You cannot print money directly or we become the Weimar Republic. When the vouchers you mention are spent the bubble pops instantaneously.

  5. DOMINIC
    Posted March 4, 2020 at 6:48 am | Permalink

    Ensure liquidity to the banking system is an obvious statement of fact. That’s the primary purpose of any central bank. Buying equity and ETF’s to prop up equity prices is not and should not be part of their remit. Such a policy doesn’t work. Traders simply sell into strength and the market ends up further back than before.

    Traders are always one step ahead of bankers and politicians because they’re more intelligent and adept. CB actions are now predictable and obvious. Traders can pick them off from 20 yards

    The FED needs to understand there’s no gain in propping up equity prices by slashing rates to negative simply because the market can never be deceived by such blunt tactics. If stock prices are gonna fall, they’re gonna fall and the FED won’t be able to stop that process

    The US govt and indeed others need cut the size of government and release the real economy. Cut tax rates (direct and indirect). Reform the state. Liberalise business. There’s a time-lag involved in all of these

    OT – After reading an article in this morning’s CW about the BBC’s concerted attempt to bring down Priti Patel by colluding with this spineless Civil Servant it surely must be obvious to Tory backbench MPs that this Labour organisation is now a loose cannon and must be destroyed. Yes, destroyed before it does any more damage. Stop quivering and do it

    This is why we needed the BP to replace Labour in the north. It would force your party to do what is right. You’re acting in a manner that is in direct conflict with what your constituents demand

  6. Nig l
    Posted March 4, 2020 at 6:57 am | Permalink

    Indeed. Reinforces my view that Carney is all show and no go.

    Off topic the more leaks I read from snowflake whingers about Priti Patel the more I like her and believe she must be doing a lot right. Keep at it girl!

  7. jerry
    Posted March 4, 2020 at 7:12 am | Permalink

    OT; The govt really needs to look very carefully at the introduction of E10 petrol (10% Ethanol mix), this could protection be a huge safety critical mistake -especially for older vehicles that do not have fuel systems designed to use such fuel. It is my understanding, in certain situations, E10 could literally see E10 petrol running down the road as pipes and seals fail. I also understand that should a Ethanol petrol mix fire occur it is more difficult to extinguish the greater the % of Ethanol.

    Once again the AGW eco-madness defies good science.

    • Edward2
      Posted March 5, 2020 at 11:19 am | Permalink

      I agree Jerry.
      Additionally it takes extra energy to make E10 compared to petrol and diesel and it is less powerful meaning you need more E10 fuel to go a given distance.
      But the headline figures are what we need.
      Like Drax.

  8. Sharon Jagger
    Posted March 4, 2020 at 7:13 am | Permalink

    This IR35 is a pain. My husband is a retired Chartered Surveyor who has been, until this month, has been a consultant for a business body. Because of the taxation rules- they have had to let their team of consultants go. Now although my husband only worked for them one day a week, this loss of money means we are drawing our belts in and reducing our spending.

    We also got caught with the women now retiring st 66years, not 60 years malarkey. So we have to wait for s further 5 years until I can draw my state pension. Currently I have no income so my husband’s one day a week more than covered my loss of part time earnings. So my 39 years NI contributions – I have nothing to show for it yet! I retired at sixty, partly due to a medical condition and my husband being seven years older.

    Our spending is reduced!

    • Narrow Shoulders
      Posted March 5, 2020 at 8:00 pm | Permalink

      Hello Sharon

      Your husband worked for one organisation on a part time basis and called himself a consultant.

      Could it be that the organisation paid him an inflated day rate but benefited overall from this arrangement?

      It seems to me that he is an employee in disguise. If he were really a consultant he would offer his services to several organisations.

      He seems like an employee to me not self employed.

      I expect to be disagreed with on this blog.

  9. APL
    Posted March 4, 2020 at 7:20 am | Permalink

    JR: “The Bank of England should ensure a plentiful supply of liquidity to markets.”

    Bridge to engine room. Stoke the inflation furnace hard. It’s the only thing we know how to do, so let’s do it again.

  10. BCL
    Posted March 4, 2020 at 7:20 am | Permalink

    The roll out of MTD should also be halted. It has no benefit for business or personal taxpayers, despite what HMRC allege but will cost tax payers millions.

    • Matt
      Posted March 4, 2020 at 6:39 pm | Permalink

      Get rid of Gary Lineker too while we’re at it.

    • jerry
      Posted March 5, 2020 at 7:04 am | Permalink

      @BCL; “[MTD] will cost tax payers millions.”

      I think that’s the point, real-time reporting makes organised tax avoidance more difficult…

  11. Dave Andrews
    Posted March 4, 2020 at 7:22 am | Permalink

    Perhaps I don’t want to boost the economy. Perhaps I’m happy with the level of effort I put in already. Why should I work more to see my income taxed more?
    I would rather the government focussed on reducing spending. HS2 is of no use to me, yet I have to contribute. Why do I have to underwrite the pension triple lock – those that voted in the damaging Wilson government?

    • Narrow Shoulders
      Posted March 5, 2020 at 8:02 pm | Permalink

      Discuss! I am with you.

  12. Lifelogic
    Posted March 4, 2020 at 7:23 am | Permalink

    Yet we hear the budget may well cancel the entrepreneurs CGT relief on sales of businesses, may attack pensions further and may also put up petrol and diesel costs. Taxes need to come down very significantly to grow economy and the future tax base.

    • Lifelogic
      Posted March 4, 2020 at 7:38 am | Permalink

      Even a new mansions tax was being considered by Javid before he left.

    • Lifelogic
      Posted March 4, 2020 at 7:43 am | Permalink

      Just floating these ideas is very damaging.

  13. Bryan Harris
    Posted March 4, 2020 at 7:33 am | Permalink

    Yes, all good suggestions and they will do for a start

    What the country needs though is a root and branch evolution in how tax is collected.

    We are living in the dark ages of taxation – It needs to be less personal, and it needs to allow basic survival living to be free of tax.

    Nothing less than a total rewrite will do

    • jerry
      Posted March 4, 2020 at 6:45 pm | Permalink

      @Bryan Harris; “[the tax system] needs to be less personal, and it needs to allow basic survival living to be free of tax.”

      It already is, it’s called the personal allowance, those at the “basic survival living” level do not pay income tax. nor is most food subjected to VAT, & our host has suggested removing VAT from domestic energy bills.

      By a “total rewrite” I take it you want businesses and un-earnt income, CGT for example, to be subjected to an ever greater level of taxation, meaning personal income tax and VAT can be cut?

      Somehow i doubt that is what you do mean though…

      • Bryan Harris
        Posted March 5, 2020 at 8:11 am | Permalink

        @jerry – Not at all

        I meant what I said

        I have no aspirations to increase CGT

        The operative word in “needs to be less personal” was LESS – Having a personal allowance does not make taxation less personal

      • Fred H
        Posted March 5, 2020 at 8:48 am | Permalink

        jerry – – you know a lot of pensioners and workers on ‘ basic survival living’ do you? Now £12,500…. Have you tried it for at least a couple of years to see how it works?

        • jerry
          Posted March 5, 2020 at 9:31 pm | Permalink

          @Fred H; The ‘basic survival living’ level is not the stated HMRC personal allowance figure, it is the amount paid by the DWP to people claiming UB/UC, as set out by law.

          You need check HRMC’s own figures for the number of working age people who do not exceed their personal allowances and thus pay no tax, the amount of Housing Benefits being paid out via LAs, and the numbers using Food Banks even though they are working ‘full time’ (which actually means 16 hours of more per week).

          Someone 25yo or over, working ‘full time’ for 16 hours pw, for 53 weeks of the year, earning the NMW, falls £5100 below your stated PA figure of £12,500. What about those who have no fixed hours, perhaps because they are on zero hours contracts…

  14. Lifelogic
    Posted March 4, 2020 at 7:35 am | Permalink

    Good to hear a little bit of realistic and good sense from the two scientists either side of Boris yesterday. Unfortunately non of the journalist asked the obvious question of them – what equipment will be need to treat as far as is possible the percentage (perhaps many tens of thousands) who are badly affected. Isolation beds, ventilators, anti-virals etc.

    Boris still in favour of shaking hands though, why it is such a simple thing to do without anyway. This especially if you then have to wash you hands before and after. Salute perhaps? I always find it a pain anyway as, being left handed, I tend to be holding my bag or papers in my right hand anyway. At least some churches have stopped that horrible hand shaking peace think that so many of them now do.

    Not that I end up in church very often, but it must be very annoying for all those parents trying to get their children to into some half decent religious school or something by the back door.

    • Lifelogic
      Posted March 4, 2020 at 11:02 am | Permalink

      Professor Chris Whitty seemed very sound to me. Such a pleasant change from the waffle, stating the blindingly obvious or just down right lies that so many politicians come out with.

    • jerry
      Posted March 4, 2020 at 6:58 pm | Permalink

      @LL; Re handshaking, perhaps those who must should adopt the Chefs “Kitchen Handshake”, a brief knuckle-to-knuckle touch? Not totally safe but better than grasping someone by the palm of the hand that they may well have recently coughed or sneezed into, or gripped an infected surface with!

      • Narrow Shoulders
        Posted March 5, 2020 at 8:04 pm | Permalink

        A nod in the direction of the recipient

  15. Andy
    Posted March 4, 2020 at 7:47 am | Permalink

    We should scrap pensions and old age perks.

    Then we could halve taxes for hard pressed young people and workers – giving a real boost to their spending power and to the economy.

    It would also see house prices fall – as pensions have to dispose of their homes. This would help younger people get on the property ladder and would see older people end up in more suitable accommodation,

    It would negatively hit the cruise industry but is otherwise a win win,

    • Richard1
      Posted March 4, 2020 at 4:42 pm | Permalink

      I’m sure you’ll be supporting Labour once sir keir Starmer wins the leadership. Any chance you could persuade them to adopt this policy in time for the next election?

    • Glenn Vaughan
      Posted March 4, 2020 at 6:03 pm | Permalink

      “We should scrap pensions and old age perks. ” Andy

      Abolish the overseas aid budget and give the entire proceeds to permanaent UK residents over the age of 60!

    • Narrow Shoulders
      Posted March 5, 2020 at 8:06 pm | Permalink

      Hi Andy. Ok but quid pro uo, education and out of work benefits are also shelved.

      You will agree with this given current taxation allows for pension payment costs and benefits and education.

  16. Mike Wilson
    Posted March 4, 2020 at 7:48 am | Permalink

    Well at least you didn’t call for an interest rate cut again. It appears the Fed’s emergency 0.5% rate cut has had no affect in terms of trying to stabilise the markets. When rates are close to zero you can’t go any lower!

    Governments should be trying to keep everyone calm and keep things in perspective. And making sensible preparations for an epidemic. Why not ask all retired health workers who are receiving good pensions to work for a couple of days a week – to take the strain off the NHS. Make sure there are authoritative TV announcements every day of the ‘Keep Calm and Carry On’ variety. Stop fretting about the bloody stock market – suspend the loop trading for a month. Outlaw short selling for 6 months. Stop hedge funds making fortunes from this.

    • Mike Wilson
      Posted March 4, 2020 at 8:07 am | Permalink

      My iPhone seems to type what it likes. I often type a word correctly, touch to leave a space and notice the word I typed correctly being replaced!

      • Fred H
        Posted March 5, 2020 at 8:44 am | Permalink

        Mike – – stop typing words like democracy (autocracy), policy (bullying), plan (idea), economy (script), reasonable( stubborn) to avoid getting the ones in brackets.

      • Martin in Cardiff
        Posted March 5, 2020 at 1:10 pm | Permalink

        A similar thing is happening with our passports for some silly reason, it appears.

        • Narrow Shoulders
          Posted March 5, 2020 at 8:09 pm | Permalink

          555

          For those who don’t speak Thai that means ha ha ha.

          Yes Martin many people have international perspectives whereas you worry about yourself.

    • miami.mode
      Posted March 4, 2020 at 7:22 pm | Permalink

      Not quite as simple as all that Mike. As you can see from the link to the Daily Mail financial chappie, the worry seems to be corporate debt and the effect it may have on the banks – again! Everybody seems to live on the edge these days.

      https://www.dailymail.co.uk/money/comment/article-8071521/ALEX-BRUMMER-Virus-reveals-debt-trap-share-prices-fall.html

  17. Aaron Shone
    Posted March 4, 2020 at 7:55 am | Permalink

    Some very appealing ideas there. Even if temporary, it should give businesses some liquidity to counter the slump caused from supply chain disruption and key resources self isolating.

    what is your confidence factor of actually delivering any of these before the end of the current parliament? Is it likely, or is it vapourware?

  18. Martin in Cardiff
    Posted March 4, 2020 at 7:57 am | Permalink

    Throwing red meat to the snarling mob, with attacks on everyone from the judiciary to the BBC seems to be sliding down the agenda, doesn’t it?

    The Tories might milk it for a bit longer, but public priorities are shifting, even for the conspiracy theory fixated.

    • Matt
      Posted March 4, 2020 at 6:50 pm | Permalink

      I see no snarling mob (except for XR and the usual lefties.)

      We used the ballot box.

      Start showing some respect for that and stop telling lies about your opponents in order to disqualify their vote.

      • Edward2
        Posted March 5, 2020 at 11:22 am | Permalink

        Matt,
        Martin hasn’t yet come to terms with the 2016 referendum result so he is ptobably several years away from coming to respect the result of the general election.
        He thinks the voters are all gullible.
        Not him of course.

        • Narrow Shoulders
          Posted March 5, 2020 at 8:13 pm | Permalink

          It is very pertinent that Marty uses “snarling mob”

          The majority is the antithesis of such a description but the left………

  19. Iain Gill
    Posted March 4, 2020 at 7:58 am | Permalink

    It’s should also tax foreigners here on work visa at least as much as locals. So no more first twelve months in the country free of national insurance, no more expenses for things Brits working far from home cannot claim tax free.

    Etc

    • The Prangwizard
      Posted March 4, 2020 at 6:18 pm | Permalink

      One of my daughters lives and works in Holland and has done for some years. She is now required along with all other Britons to seek permission to remain from the end of this year and must pay a fee of slightly under €60.

      I believe all EU citizens get a free ride to stay in the UK.

    • jerry
      Posted March 4, 2020 at 7:20 pm | Permalink

      @Iain Gill; I’m sure many such foreigners workers would have no problems with that, just so long as they get the same entitlements from employment day-1 as those born here in the UK who are leaving full time education and moving into the work place, because they now pay income and NI taxes etc. Some how I doubt you want such a level playing field though…

  20. Narrow Shoulders
    Posted March 4, 2020 at 8:04 am | Permalink

    Sir John,

    If fear of contracting an illness or indeed being sick is preventing people from spending as consumers no amount of tax cuts or reduction in VAT is going to persuade them to go out shopping.

    Your proposed solution to this economic downturn is rather in keeping with big government lefties who seem to believe that government intervention can fix everything.

    If government is prepared to spend this kind of money I suggest they rent rooms and fill them with medical equipment. Confidence that we can be treated when the virus peaks will get us out spending more than extra money in our pockets at this time. It will also persuade business to continue to invest for the same reasons.

  21. BeebTax
    Posted March 4, 2020 at 8:09 am | Permalink

    If Coronavirus is a concern then making sure lower paid workers are fully compensated for loss of pay while self-isolating should be a priority ( if it’s a choice between paying the bills and staying home, most will quite rationally ignore their cold symptoms even if that leads to a greater spread of the virus).

    All for the income tax reductions but focussed on low earners, on the basis the worst off are more likely to spend it quickly and in more impoverished communities.

    Medium term we must sort out the mess created by the CO2 target – or rather than spending money on infrastructure, we’ll be spending it purely on legal fees associated with delayed and ultimately thwarted projects.

  22. Mike Wilson
    Posted March 4, 2020 at 8:16 am | Permalink

    I am not one of the many Boris knockers. But Mr. Redwood keeps saying the government should do …’ I have to ask ‘what government?’ I’m in my late 60s, I’ve never felt before that we have a vacuum where we should have a government. But I do now. It feels like he is playing at being PM. Where is the plan for social care? Still on the back of a fag packet? The only decision so far is the inane one to plough on with the ludicrous HS2.

    Still, one thinks ‘if the Tories screw up we can always have a different government.’ Then one looks at the Labour Party.

    • miami.mode
      Posted March 4, 2020 at 6:28 pm | Permalink

      MW, the PMs we get these days seem to have ambitions to actually be PM rather than having a vision of the country they would like us to be.

      • Fred H
        Posted March 6, 2020 at 8:00 am | Permalink

        The vision is not the problem – it is the steps taken, or NOT taken to get there. Concern on how they might be remembered is of more concern to them.

  23. Ian Kaye
    Posted March 4, 2020 at 8:18 am | Permalink

    Instead of the ridiculous Maastricht rules about limiting the national debt to 60 per cent of gdp etc policy should be to keep the interest bill at 50 bn pounds,the current level, and allow it only to rise with level of inflation.If this means issuing more Treasury Bill so be it.

  24. turboterrier
    Posted March 4, 2020 at 8:24 am | Permalink

    Sir John

    Very good entry full of really good ideas in an world atmoshere of recession is coming unless we make things happen.

    Sadly when you hear our senior ministers and politician you once again show that you are in the minority when it comes to wanting to make things happen. Sadly a lot of us leaving out here in the real world are just like you. Two left feet and out of step with the “organised, controlling world” But as it has been shown time and time again it is us the unlistened to that are eventually proved to be correct.

  25. HJ
    Posted March 4, 2020 at 8:28 am | Permalink

    Cutting VAT on domestic fuel would be a strange way to boost demand. For a start, we are heading into spring and summer when people spend much less on fuel anyway. Secondly, VAT on domestic fuel is currently only 5%, so it wouldn’t make a huge difference. Thirdly, abolishing VAT on green products while eliminating VAT on domestic fuel would be directly contrary – one encourages ‘green’ behaviour and the other encourages the burning of more fossil fuels.

  26. ian terry
    Posted March 4, 2020 at 8:33 am | Permalink

    As usual alone in your thinking it seems, even though you are right.

    Like a lot of us, perceived to be two left feet and out of step with the world. The only consolation is we are not alone.

  27. acorn
    Posted March 4, 2020 at 8:35 am | Permalink

    The nation is frightened of what tomorrow may bring and households are carrying a lot of debt with stagnant wages. The first thing they will do with tax cuts and government deficit spending is save it and/or pay down some debt.

    The fiscal injection will have to be large enough to cover the de-leveraging requirement of households; and, supply extra funds that they might actually spend. Otherwise it won’t work.

    Meanwhile, pray that house prices don’t start dropping but be prepared to guarantee all mortgage debt. Something like the US Federal Housing Administration and “Ginnie Mae”.

    • a-tracy
      Posted March 4, 2020 at 7:50 pm | Permalink

      – BBC Newswww.bbc.co.uk › news › business
      13 Aug 2019 – Wage growth in the UK reached an 11-year high in the year to June, and … Wages have been increasing at a faster pace than inflation

      • acorn
        Posted March 5, 2020 at 8:51 am | Permalink
        • Edward2
          Posted March 5, 2020 at 8:57 pm | Permalink

          real total pay…hmm sounds a bit of a method to get the results you lefties want.
          Try take home pay and add all the in work state benefits.

        • a-tracy
          Posted March 7, 2020 at 12:30 pm | Permalink

          You’ve got to be kidding acorn, just look at the minimum wage increases, these are just massaged stats to include all the minimum hours/maximum benefits people. Look, people working part-time will never keep pace with full time working people they should do more hours if they want to raise their REAL total pay and stop waiting for handouts from the rest of us that are doing it for ourselves! From April a minimum wage full time job will pay £17,000 pa.

          I know a couple that have split up because she worked out she was much better off financially as a single parent mother, it increased her student grant, paid her rent, topped up her tax credits and working tax credits because she works a few hours per week AND she gets a monthly top up from her ex partner who’s back in his parents box bedroom. She went on a foreign holiday last year, runs a car, works 16 hours per week only while the cdn are at school and has never been so well off. Oh and she left all of her bad debts with him for the furniture, car, clothes etc. Don’t tell me the system doesn’t get played because I know too many people playing a sweet game.

  28. Everhopeful
    Posted March 4, 2020 at 9:02 am | Permalink

    But the only things they ever actually do are raise taxes, cut interest rates, bubble up the stock market and then raise even more taxes.
    Oh and then bring in draconian control laws. Thought police.
    It didn’t work in 2008…why should it work now?
    If it had worked we would be coasting along nicely.
    Nope.. the powers that be have really fouled up and they are coming for our money…again.
    Ah…sorry…no…it’s the virus! Quite forgot.
    Good job we don’t get all this every year when flu breaks out.

  29. DOMINIC
    Posted March 4, 2020 at 9:10 am | Permalink

    When are Tory MPs going to go on the record and defend Patel and attack the BBC-Civil Service conspiracy to oust a democratically elected Minister of the Crown?

    What is it with Tory MPs? They are elected to fight against the enemy within that is corroding our nation and its morals not remain silent and capitulate

    Reply I have twice intervened in the Commons in support of the Home Secretary

  30. Everhopeful
    Posted March 4, 2020 at 9:22 am | Permalink

    Hard work no longer delivers us economic security.
    The lion’s share of wealth goes to a shrinking number of people.
    The global economy has given to some at the expense of others under the pretext of boosting economic growth.
    Well…it don’t!
    So why must we help other countries in perpetrating more of the same?
    We are surely independent now??
    And where is Keynes’ “euthanasia of the rentier”?
    Didn’t happen.

  31. hefner
    Posted March 4, 2020 at 9:22 am | Permalink

    Declare Coronavirus notifiable allowing small hospitality businesses in England to be covered for losses through their insurance policy. It appears that Scotland, Northern Ireland, Republic of Ireland and Guernsey have all done it, why not England?

    • Martyn G
      Posted March 4, 2020 at 4:47 pm | Permalink

      ….have all done it, why not England?

      Simples! England is the cash cow that keeps the others afloat.

  32. formula57
    Posted March 4, 2020 at 9:25 am | Permalink

    The need to nurse the economy through the Coronavirus epidemic ought to be as evident as it is clearly urgent.

    Direct measures rather than monetary policy adjustments might make most sense, particularly making loans available to businesses facing cash-flow pressures.

    O/T I see our Prime Minister has become a super-spreader, shaking hands with the Coronavirus infected. You must keep your distance please.

  33. Dan
    Posted March 4, 2020 at 9:30 am | Permalink

    Although I agree that these suggestions would be a good place to start I believe that the Chancellor should go a lot further and reform our tax code completely. At 21000+ pages and growing all the time, it is too big, too complex, unwieldy and not really fit for purpose. Reform our tax code and watch massive changes take place in how things are taxed, run, accounted for, how departments spend and what they spend on. Savings would be enormous for the government, for businesses, for the self employed and so on. The most effective and efficient tax code in the world is only 276 pages long, it is the tax code in Hong Kong. We should be aiming at emulating that and reducing ours to well below 1000 pages, probably below 500 pages. Start from a blank sheet of paper if you have to but do something!

  34. nhsgp
    Posted March 4, 2020 at 9:50 am | Permalink

    Cut taxes.
    Oh, no, you can’t can you. There’s 220 bn a year going on those off balance sheet debts.
    How is Mr Average going to pay his £550,000 share [ONS numbers]
    How is Mr Min Wage going to pay the £90,000 that his share is going to increase by next year?

  35. MikeP
    Posted March 4, 2020 at 10:02 am | Permalink

    Meanwhile our Government, and our Bank, stay leaden-footed and slow to react. Why is that when you and others have been making the case for action for years now ?!?

  36. agricola
    Posted March 4, 2020 at 10:10 am | Permalink

    We have an immediate and growing refugee crisis in Turkey. By report Turkey has done a very good job with refugees from earlier times with financial support from countries outside Turkey. So how about we the EU, Turkey, the USA and Russia get together for the purpose of financially supporting the current crisis so that it can be contained within Turkey, minus any financial burden on that state. The advantages are enormous, Turkey has proved it can do it, the refugees would be adjacent to where they can return. Much better than every EU country trying to accommodate them in a piecemeal fashion. Easier for the UN to keep a watching brief on such a solution. This way it only costs money and avoids ethnic unrest. Give it some thought.

  37. glen cullen
    Posted March 4, 2020 at 10:29 am | Permalink

    Sir John I agree with all your comments but I’d go a little further and propose to abolish VAT and all Green taxes immediately

  38. Newmania
    Posted March 4, 2020 at 10:43 am | Permalink

    Interest rates (%)

    USA 1.75
    China 4.35
    Turkey 6.00
    Russia 5.75
    Brazil 4.25
    UK 0.75

    The normalisation of our interest rates which are at a historic and low had to be cancelled to stave off the post referendum recession and with the National debt heading over 90% there are few weapons left
    If the country faces a s true crisis now ( and personally I doubt it will) , no-one can say what will happen next but I would buy tinned food and medical supplies if I were you.

    Reply US rate is 1.25%

    • Richard1
      Posted March 4, 2020 at 4:39 pm | Permalink

      Net debt, which is the relevant number, is c 65%.

      • Newmania
        Posted March 5, 2020 at 8:25 am | Permalink

        Outside this blog “net debt ” is not a concept anyone would recognise at all . Are you seriously suggesting that the B of E should be write off their QE bond portfolios and do you it could do so without consequences ? Of one thing we can be sure , John Redwood is not so foolish ..I call “Knave ”

        Reply No, but we own the Bank so we pay the interest to ourselves.

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

          Newmania

          The man who told us motor manufacturing would die and Nissan were moving to Europe

          £400 MILLION INVESTMENT: Nissan unveils new £52m stamping line as part of wider £400m investment at its Sunderland plant in preparation for next generation Qashqai

          We can all ignore Newmania as he is consistently wrong about everything, when you moving to Frankfurt Newie?

          • a-tracy
            Posted March 7, 2020 at 12:35 pm | Permalink

            Libertarian, we need these companies building and expanding motors in the UK to start making reasonably priced fleet vehicles, there is a huge market for small vans in the UK and if they bring out British made vans and give us choice and better engines, hybrids it will give us back a choice.

  39. Richard1
    Posted March 4, 2020 at 10:59 am | Permalink

    The Bank of England seems to be focusing on prattling on about how it can save the world from global warming by discouraging lending to energy companies. Aren’t we lucky to be so well governed?

    • Mitchel
      Posted March 4, 2020 at 4:39 pm | Permalink

      Apparently the first priority of the newly reconstituted Foreign Affairs committee is also “environmental diplomacy” – according to a tweet from TomTugendhat this mortning.

  40. DennisA
    Posted March 4, 2020 at 12:03 pm | Permalink

    I just followed Guido’s link to the tax payers alliance and ticked the environmental boxes for tax cancellation. Environmental levies, Air passenger duty and the Climate Change Levy came to a total of 16.6 billion.

    https://www.taxpayersalliance.com/tax_burden_calculator

  41. a-tracy
    Posted March 4, 2020 at 1:06 pm | Permalink

    I think one of the biggest things our government can do to help is to keep calm and give good advice. C4 news! Oh my I thought I would be safe to dip my toe into watching it again now that Brexit news has calmed down a bit but oh no. Trying to scare everyone to death we’re going to just be allowed to die by the NHS, nowhere near enough intensive care beds or equipment.

    Can people with breathing difficulty get oxygen supplies at home without them needing to go to the hospital, would nebuliser machines provide a self-help alternative if hospital beds are blocked for the more serious patients?

    I was amazed to read people exhorting elbow bumping when recently we were told to sneeze or cough into our elbows rather than our hand if we didn’t have a handy tissue!

    Maybe it is time our GPs, hospital and care workers, all pharmacy counter staff and people who come into contact with lots of sick people and potential sufferers wear suitable virus masks and disposable gloves between patients. Restrict visiting hours and on some wards stop visiting other than for people who wear a mask and gloves.

  42. Bob
    Posted March 4, 2020 at 1:09 pm | Permalink

    The govt is planning statutory sick pay from day one for coronavirus patients at the expense of the employer, this is on top of employers NIC payments.

    Why doesn’t the govt cover the payments the way they used to before Gideon Osborne screwed things up.

  43. Bob
    Posted March 4, 2020 at 1:21 pm | Permalink

    Isn’t it time that the govt vehicle fleet including the police were switched to electric vehicles.
    This would give a boost to the domestic EV industry at the same time as saving the human race from extinction. Win/win.

    • Lifelogic
      Posted March 5, 2020 at 4:23 am | Permalink

      If you think that electric cars will do anything to save us from extinction then you need to look at the real physics and engineering and do some maths. New electric cars in general use more energy to build than they will use over their useful lives. Plus you still have to generate the electricity they use and the expensive batteries deteriorate rapidly too.

  44. NickC
    Posted March 4, 2020 at 1:28 pm | Permalink

    JR, Your list of actions is sensible and worthwhile. I would add: scrap HS2; scrap renewables subsidies; scrap the deadline for the demise of new petrol/diesel/hybrid LDVs; scrap DfID. You’d have a lot more money to support UK businesses and people if you did.

    • Lifelogic
      Posted March 4, 2020 at 9:01 pm | Permalink

      Exactly but Boris seems to believe in the absurd carbon dioxide “pollution” religion or perhaps just his girlfriend does and he wants to keep her happy. So we will all have to pay the price of this insanity.

  45. Martin C
    Posted March 4, 2020 at 1:40 pm | Permalink

    I would ask for one more measure to be added:

    That the Government arranges with all financial institutions (Banks, Building Societies, Credit Card Companies, etc) that anyone who has contracted the Corona Virus is excused payments on account for the duration of their illness.

  46. lojolondon
    Posted March 4, 2020 at 2:11 pm | Permalink

    100% correct, John, every conservative in the UK would surely agree with your words.

    Except, it seems, for the Cabinet and the BOE. This is really so frustrating!!

  47. KEITH H from Leeds
    Posted March 4, 2020 at 3:54 pm | Permalink

    I know this is a boring comment but would a 25% cut in interest rates really make any difference. As a pensioner with modest savings I am already being punished for being careful & a bit frugal during my working life. Leave the interest rate alone & do the things you have mentioned in your article. Remember if we were getting a decent rate on our savings that puts income in our pockets which we would then spend on meals out, a holiday, even perhaps a new car.

    • Lifelogic
      Posted March 4, 2020 at 4:43 pm | Permalink

      Not much with bank margins of 3% to 80% on top of this being typical.

  48. DavidJ
    Posted March 4, 2020 at 4:21 pm | Permalink

    Good points but tax and squander seems to be the mantra of government at all levels, particularly local authorities. What happened to the rule of “ultra vires”, i.e. councils not involving themselves in matters which should not concern them?

  49. Rhoddas
    Posted March 4, 2020 at 4:35 pm | Permalink

    Super recomendations Sir John, hoping the Chancellor does it all justice, I really do!

    What have we got so far…. a promise re SSP to count from day 1 ….You can get £94.25 per week Statutory Sick Pay ( SSP ) if you’re too ill to work. It’s paid by your employer for up to 28 weeks. Unquote .gov.uk site.

    That’s £2.51 an hour – why not alot closer to the minimum wage – then it looks like joined up HMG thinking… on what folk need to ‘JAM’ Just About Manage on! SSP Beggars belief really for the Self Employed and Zero Hours peops.

    • a-tracy
      Posted March 4, 2020 at 7:32 pm | Permalink

      Rhoddas, the government doesn’t pay SSP their employer does plus the sick leave holiday pay – when you pay £94.25 per week at this time of the tax year people get a tax rebate on top of the £94.25 if they’ve been working all year because of the cumulative tax free allowance.

      Small Employers have to put money aside now to cover potential sick pay for themselves and if they only have one or two members of staff for those employees, so the self-employed that employ themselves must self insure. They already pay less national insurance and no one contributes employers National insurance for them? Employers have to do it which is why they charge more for similar services and get undercut by self-employed contractors who don’t cover Employers NI, SSP and don’t cover it for themselves. Some do put up but not everybody.

      John, The National Insurance system (to cover sickness, state pension and healthcare) is totally broken and is going to blow up soon. If you are going to change the sick pay system and you want everyone to cover more sick pay then the insurance system needs sorting out properly or you are going to stop SMEs hiring. One person on 28 week sick pay = £2639 plus 15 days holiday pay (even on min wage costs a further £1000).

      Self-employed people have a duty to put up for themselves if they don’t why should everyone else have to pick up the bill?

      • Shirley M
        Posted March 5, 2020 at 2:15 pm | Permalink

        Many people think the government pays sick pay and the SSP, Statutory holidays, etc. They do not realise it is paid by the employer, who may also have to pay overtime or temporary workers to fill the gap or in the case of very small businesses … do the additional job themselves.

        • a-tracy
          Posted March 7, 2020 at 12:22 pm | Permalink

          When the government talk about statutory sick pay Shirley they talk as though they are funding it and this MUST stop!
          It infuriates me. It’s like giving extra holidays away – they sound benevolent but it doesn’t cost them a penny and the business has lost days now that you can’t get back not everyone can get back the lost turnover + extra costs and then the government wonder why no one wants to expand, take on extra workers etc. You’re usually fine until you get caught out, such as 3 people out of a small team off sick at the same time. Your customers going elsewhere half of which never come back. What takes 20 years to build can go stagnant very quickly – people that have gone through it are very reluctant to expand or invest.

  50. Lindsay McDougall
    Posted March 6, 2020 at 1:00 am | Permalink

    Stimulating the economy by throwing money at people is not the best way of countering the effect of Coronavirus. The best method is not to impose too many restrictions on economic and social activity to counter the virus. For the most part, only the elderly like myself are seriously at risk. It is up to us to assess the risk to us from being in crowds. The elderly have to ask themselves whether they can risk attending football matches, bridge clubs, public houses, restaurants, cruise ships, churches etc. etc.

    I see little point in shutting down schools for longer than a fortnight, the incubation period, if there are Coronavirus sufferers there. Children not in school have a greater chance of passing on Coronavirus to their vulnerable granny if they spend more time at home.

    I can recall an outbreak of ‘flu at the boarding school I attended in the early 1960s. At one time a third of us succumbed. Apart from feeling rotten, sneezing and vomiting, which lasted about a week, we children came to no great harm. There was more concern for the elderly retired matron, who had a weak heart.

    If Coronavirus occurred in the dialysis unit I attend three days a week, there would be concern. The who, where and what of isolation policy would have to be addressed. Options would appear to be:
    – Isolate all staff and patients at the unit for at least a fortnight
    – Isolate diseased individuals at home (putting their families at risk)
    – Create specialist dialysis isolation unit(s) on an all Hampshire basis

    These choices are not easy and would not be pleasant. And the problem might recur more generally in any hospital.

  51. Iain Gill
    Posted March 6, 2020 at 10:05 am | Permalink

    All the supermarkets in town run out of soap and bog roll…

    Please send help

  • 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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