The OBR has had to explain why it was so far out in its forecasts of the deficit and borrowings last year. They have written:
“Our latest forecast for ( Central government borrowing) 2021-2 is £48.3bn below the October forecast and £131.2bn below our March 2021 forecast (the Budget)” They accept they underestimate tax revenues by a massive £77bn and overstated state spending by £48.7bn. It should be easier to forecast what you spend when you are running the spending controls.
We can all make mistakes. Forecasting is difficult. What is more difficult to forgive is that this was not the first time they have underestimated the revenues and overstated the deficit. Worse still is they used their precise forecasts of revenue and deficit to tell the Chancellor he needed to raise more taxes to reduce the gap between spending and taxing. It turns out they need not have asked him to do that as the numbers were so much better than the numbers they tried to create with tax rises. So when I am asked how do we pay for the tax cuts, the first answer is we are so far ahead of plan there is no problem. The second answer is if you cut the right tax rates to a sensible amount you can end up with more growth and more revenue, not less.
The Treasury also needs to come clean about the debt interest. They have been using their current high figure of £83bn which includes index costs on the repayment of inflation linked debt which does not entail making any cash payments before redemption. They use this figure to scare politicians into accepting more austerity to control the debt interest. What they omit to point out is on their definition of debt interest they forecast a collapse in the cost of it to £46.7bn by 2024-5. That is a fall of £36.3bn or 44% in debt interest.
The Treasury has a tradition of overstating deficits when there is good growth and understating them in recession. There is also a danger their policy advice based on very wrong forecasts could drive us unnecessarily into recession.
July 21, 2022
Liz Truss may now be the only way remedy and avoid OBR errors.
July 21, 2022
In the Telegraph today the excellent Matt Ridley agrees Truss is better and the dire lefty remainer Ruth Davidson supports Sunak.
We can surely therefore be certain Truss is the better option. Almost no sensible Tory MPs are supporting Sunak but he is totally despised by voters for his vast, manifesto ratting, tax grabs and much else. They need to get out and talk to voters.
July 21, 2022
Hilarious – well, at least the Met Office were spot-on with their forecast of record-shattering temperatures, weren’t they?
The angry old men turning a purpler shade of beetroot was quite a comical sight.
July 21, 2022
Even a stopped clock is right twice a day.
July 21, 2022
Well not really, it was nothing really to do with CO2 or manmade global warming just a bit of hot air blowing in for a day or two from the south. The world as a whole has no statistically significant temp rise. Indeed averaged over the uk none either beyond urban heat island effects.
July 21, 2022
To make a car battery, 10 tons of salt is required to be processed for lithium, 15 tons of ore for cobalt, 2 tons of ore for nickel and 12 tons of ore. A total of 200 tonnes of soil is excavated for a single battery. How can anyone believe this is better for the environment than fossil fuel cars?
July 21, 2022
Your perspective presents powerful information, glen.
July 22, 2022
Indeed and the batteries do not even store much electricity per £ nor per KG and do not last very long before they need expensively renewing either.
July 21, 2022
Pouring down and unusually cold for July here today.
Hilarious indeed NHL
PS
Your plainly written ageism is not politically correct.
July 21, 2022
The sun is closer than it has been. It will get hotter. More high pressure zones means more wind movement. Weather will change. The met Office and their computers can work out the approximate amounts but it was fairly easy to forecast. The southern hemisphere has a different seasonal pattern to the Northern hemisphere due to proximity to the sun
Purple enough for you?
July 21, 2022
Actually their alarmist forecast of 43C was a long way off. Moreover, it’s clear it was unusual (though not really novel) weather, not a change of climate. Their local forecast for my area was even further off, with highs of just 33C both days against forecasts of 38C. If they exaggerate a weather forecast so much it hardly inspires confidence in their climate forecasts.
July 22, 2022
Have you ever studied Aesop’s fable of the Frog and the Ox? Do learn its moral, before you burst a blood vessel.
July 21, 2022
I really hope we get Liz. She is fearless and the fact the Russian foreign minister hates her is a massive plus.
I feel she will take on the blob and If it means some turbulence, bring it on.
We want change and we want it now.
July 21, 2022
So do I, Ian!
July 21, 2022
In Greek mythology, Pandora had a box filled with evils. She curiously open the box and all of the evils flew into the world. As the last evil was to fly out, she slammed the box shut and one evil remained—hope. The evil of hope remains inside us.
We’ve witnessed the evils flying out, but the last we’ve not seen yet!
July 21, 2022
Good morning.
I agree with our kind host that predicting things is very hard. That is why one should always take such advice with a sufficient ‘pinch of salt’. But what troubles me most are two things :
1) We have two bodies doing the same job and both getting it consistently wrong. We do not need two bodies.
2) The Chancellor needs to have the strength of character, much like Lord Howe did back in the 80’s, to go against any advice that he disagrees with.
The government policy over the last two years has been about the presenting the image of the ‘Dear Leader’. Those around him have been of variable quality and the high taxation and spending has been done to try and buy votes. It has failed / backfired spectacularly as these narcissistic schemes always do.
We need a change of direction and a real return to sound money and finance. Either that or we will be going cap in hand to the IMF.
July 21, 2022
Predicting the future can indeed be hard or even impossible how many variables known and many totally unknown with affect the climate in 100 years? This when they cannot even predict the weather of more than a few days forwards.
We clearly need to undo all Sunak’s vast & often manifesto rating tax increases but also to cut the vast levels of bloated and misdirected government waste – the insanely expensive and pointless net zero, HS2, the largely worthless degree loans, the road blocking and so much else. We need greater incentives for people to work and lower incentives for them to live off others on benefits. We need a sound currency not an inflationary devalued on. We need far less government, less red tape and competent public services.
Sunak has delivered the reverse on all counts in spades. This while his wife save £millions in taxes by claiming to not be fully attached to the UK, something only available to a few tax payers.
Judge me on my record says Sunak – but Rishi your record (and the extended lockdown) is/was absolutely appalling. Plus you are a huge manifesto ratting electoral liability.
July 21, 2022
Climate change and net-zero was only invented a couple of decades ago and implemented under this Tory government….it’s a self-inflicted crisis which could be reversed
July 21, 2022
Just think of a UK free of net-zero ….its means low inflation, lower energy costs and energy security
Why aren’t we fracking for shale gas ?
July 21, 2022
But remember, LL, we’re into post-truth politics these days.
July 21, 2022
OBR’s Richard Hughes, ex-Resolution Foundation. Say no more. Lefty plant pumping out deliberately false figures to support big State government and working hard to oppose a smaller State, lower tax government.
The OBR is just another parasitic political Quango with a Guardianesque agenda to further big government. Set up by the Tories as well, shamefully.
As an aside. The rise of a politics that invents and invokes contrived threats to justify State imposition and compliance is now out of control and is becoming very sinister. It it ain’t Covid, it’s climate. If it ain’t climate, it’s energy. It all feels so 1930’s. We’re being corralled on an almost daily basis. Well, the truth will always out and the public are beginning to smell manure and people like Obama’s sockpuppet who can barely grunt a sentence is making himself look like a fool regarding climate
July 21, 2022
One of your better posts Dom
July 21, 2022
Agree
July 21, 2022
From Dr Carroll Quigley’s 1966 book “Tragedy & Hope”:
“There does exist and has existed for a generation,an international Anglophile network which operates,to some extent,in the way that the radical right believes the communists act.In fact,this network has no aversion to co-operating with communists,or any other group,and frequently does so.I know of the operation of this network because I have studied it for 20 years and was permitted for two years in the early 60s to examine it’s papers and secret records.”
July 21, 2022
The Resolution Foundation is funded by a Remainer.
The country needs a PM who will remove the anti British pro EU/UN fifth column in our Civil Service and quangos.
July 21, 2022
Spot on Original Richard
July 21, 2022
As a test of its skills, I would ask the OBR to forecast its own budget for the rest of the year to see if it came close to what, in light of its performance, the true figure should be of £0. Just why does this harmful Office get the oxygen of funding?
July 21, 2022
(:
July 21, 2022
Its a shame you are the only MP to pick up on this. Shows who actually runs the country.
July 21, 2022
MF
Exactly my thoughts, surely we have other MP’s who have enough experience in a past life to challenge figures and suggestions government departments produce, if not then it would seem to me that perhaps the initial selection and nomination list process, is simply not fit for purpose.
Surely ability and life and work experience should be the main requirement, not some woke list or percentage.
July 21, 2022
Are the OBR and the Treasury incompetent or are they following some agenda of their own?
July 21, 2022
The explanation is the Treasury and OBR dont trust politicians and think they will bankrupt the country. Who can blame them?
BTW How much in fees did Goldman Sacs and other investment banks receive when issuing Government debt? Does this figure even exist?
Reply The Treasury and govt quango issues government debt
July 21, 2022
The Treasury and OBT are clearly underperforming. Some personnel changes are needed.
July 21, 2022
Liz Truss suggested that government debt caused by the pandemic should be separated out from the rest of the debt, and treated as a kind of war debt to be paid off over the very long term at very low interest.
But we already have a scheme whereby the Treasury can borrow huge sums for indefinite periods at zero interest; it is called the Asset Purchase Facility and here is a recent letter about it addressed to Rishi Sunak:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1073400/Final_-_Gov_letter_to_CX_on_size_of_the_APF.pdf
“At its meeting ending on 2 February 2022, the Monetary Policy Committee (MPC) voted to begin to reduce the stocks of UK government bonds and sterling non-financial investment-grade corporate bonds held in the Asset Purchase Facility (APF) by ceasing to reinvest maturing securities, and by initiating a programme of corporate bond sales to be completed no earlier than towards the end of 2023.”
“As set out when it was established in 2009, the activities of the APF are indemnified by HM Treasury.”
“Since 3 February 2022, the total purchased assets of the APF have fallen from £895bn to £866.6bn, of which £19.6bn are holdings of corporate bonds and the rest are gilts. The funds used to purchase these assets have been repaid to the Bank, and the size of the loan from the Bank to the APF has been reduced accordingly.”
So that’s about £840 billion of the UK state’s debt held by the UK state’s central bank owned by the UK state and indemnified against losses by the UK state, with the interest on that debt being paid to the bank but then repaid to the state as part of the bank’s profits; and I would say there is no need for a new scheme treating some of that debt like war debt, and nor is there any need to get too fussed about the size of the UK state’s debt when so much of it is interest-free debt that one arm of the UK state owes to another arm of the UK state.
July 21, 2022
The government debt was noted caused ‘by the pandemic’. It was caused by lockdowns+ furlough. Several countries, especially Sweden, showed that this was not a necessary response to Covid, and their economies and healthcare have done better than ours.
July 21, 2022
Off topic, I have a letter in the Belfast News Letter today under the heading:
https://www.newsletter.co.uk/news/opinion/letters/ireland-would-suffer-in-trade-war-so-should-implore-eu-not-to-be-stupid-3776446
“Ireland would suffer in trade war so should implore EU not to be stupid”
As I pointed out a few days ago:
http://johnredwoodsdiary.com/2022/07/19/then-there-were-four/#comment-1330135
Ireland could have been hit very hard if the UK had left the EU on WTO terms, and if the EU suspended parts of its special trade deal with the UK the effect would be to move us in that direction.
If the government has not already established a trade war cabinet then it should do so.
July 21, 2022
Ah Denis! nobody in Ireland is paying attention – they have all gone on holidays
July 22, 2022
Yep, Simon Coveney was holidaying in Belfast yesterday.
https://www.newsletter.co.uk/news/politics/simon-coveney-we-hope-new-pm-steps-aways-from-unilateral-action-on-northern-ireland-protocol-3777287
July 21, 2022
Is this the excuse Mr Sunak will use?
It wasn’t me, I was given the wrong figures….trust me.
As already mentioned it seems there are more employed than needs be to do one job. Obviously the old proverb of too many cooks has been forgotten.
As already mentioned those with the job seem to have an agenda of their own.
That’s how things are run here now it seems within the state apparatus.
I’d like to add that I suspect there are a lot within who are there not because of their ability but for reasons of ‘equality/diversity’ as well as the above.
That ties in with the agenda so openly on show for all to see now.
July 21, 2022
As the High Priest of bad predictions Professor Neil Ferguson said “I don’t mind being wrong if it’s in the right direction”. So if things turn out better than a deliberately pessimistic prediction then most people are so pleased they don’t complain about the prediction itself.
There’s an easy way of showing whether a prediction has been manipulated in this way – looking at historical predictions you should find about 50% are higher than what actually happened and 50% are lower. If they aren’t then it has been biased. As an example, I never saw a single prediction of Covid case numbers from Ferguson which turned out to be lower than the actual number – that would be impossible if he were using a valid correctly tuned model.
July 21, 2022
Loth as I am to defend this wretched man, I believe his justification was always that the politicians asked him for the worst-case scenario, not for the most likely scenario. In which case the fault lies with the politicians. However, I’d be pleased to know of any cases where he was in fact asked for a range of scenarios and associated probabilities.
July 21, 2022
Their attitude to forecasts is symptomatic of life in the public sector which seems mainly to consist of covering your backside.
July 21, 2022
Home Office data shows numbers of illegal immigrants in hotels have trebled this year ‘GB News’
July 21, 2022
Could the knowledge that a comfortable hotel room awaits them be acting as some kind of pull-factor, I wonder?
July 21, 2022
Well they’ve all got smart-phones so they probably book in advance
July 21, 2022
Glen C: Numbers The subject is all over the media presently in light of the recent report issued. Entire System overwhelmed. Old technology – biometric data collection failures – Migrants often not being fingerprinted, no pictures. ‘Basic records of biographical information taken by Border Force officers were littered with discrepancies and errors. Nearly 1,000 out of 7,000 records had surnames comprising just numbers, symbols or single letters … ( D.Telegraph “ ‘Damning report slams ‘poor’ Home Office response to Channel Crossings” ) Inadequate levels of questioning when landed – brought up ages ago. Hundreds absconded / are still absconding. Constant lament from some media outlets & charities of the sheer numbers of Asylum Seekers in temporary hotels over extended periods considered to be unacceptable – Refugee Council statistic 26.380 at the end of 2021 ( Guardian ) Hundreds of hotels being used. Over 90% of failed A S in 2020 were not deported & likely little has changed since then. Asylum applications at a 20 year high. Sinking under the weight of Asylum cases. July 2022 total 2615 have landed that are known about (MoD figures) up to yesterday. We have become so indifferent to these figures as we see them reported every day but e.g. on 2 days recently we had 442 and 330 with lower figures daily either side but imagine those numbers & the level of processing, efficiency & interaction needed. So much needs to improve. Why is our National Security so little discussed or referred to by our seemingly frit politicians.
July 21, 2022
I am struggling to see the difference between the CONS and Labour, seeing as socialist Sunak has so many supporters in the party. The majority support Sunak so I assume your party is now majority socialist. Where are the conservatives in the conservative party?
July 21, 2022
When they make these errors and call for more taxes, does anyone ever track if the extra taxes do bring in more money or reduce activity or do they just get subsumed into the whole picture.
One useful job an Office for Budget responsibility could do for future decisions would be to (genuinely) in real time track the Laffer curve.
July 21, 2022
In the private sector they would face the sack for such consistent inaccuracy. Then to duplicate the error by having two separate organisations to answer the same question, both politically motivated, would seem to confirm that this part of the public sector is not fit for purpose.
July 21, 2022
If we hedge bets it’s got to be Liz.
July 21, 2022
Because she won’t last long, and we might get someone better?
July 22, 2022
She tells us that she gets the job done and not fond of high taxes!
July 21, 2022
Telegraph online article this morning by James Warrington seems to counter what you are saying:
UK government borrowing has surged billions of pounds over forecasts as soaring inflation drives up the cost of servicing national debt.
The budget deficit jumped to £22.9bn in June, up more than 20pc on last year and the second-highest June figure on record, according to the Office for National Statistics.
This was largely driven by debt interest of £19.4bn last month – the highest on record – as the retail price index hit new highs.
It leaves the deficit at £55.4bn for the first three months of the financial year. That’s £3.7bn more than the Office for Budget Responsibility forecast in March.
Reply Yes, this year they may well exceed forecast as Sunak slowed the economy so much. I did not forecast another deficit undershoot this year but warned how sensitive revenue and deficit is to growth. I have set out on here the silly way they present debt interest and how on their figures they are forecasting a big fall in debt interest 2023-5.
July 21, 2022
Just listened to Liz Truss’ first big interview on the Today programme and she did come over rather well.
What a pity she didn’t have you around to brief her on the figures you have just shared with us.
You have been pointing out for months that the tax take was vastly more than predicted and that borrowing was down. It begs the question, if Sunak knew these figures, and he must have, why on earth did he go ahead with the tax rises ? I can think of no stronger argument for him to lose the argument over the summer. There seems to be enough headroom for the proosed £35bn of tax cuts and to do something about the hike in energy bills coming in October.
The other question coming out of the interview is, how much and how quickly can a Liz Truss government increase North Sea Oil and gas production and what effect will that have on our energy costs ?
Reply Liz has those figures but a bit nerdy for a big PM interview.
July 21, 2022
Great comment.
Sir John Redwood is awesome on stuff to do with the economy, trade and transport.
Thank you, sir (we need smart people at the top and they need to be encouraged – because things can get dangerous / chaotic / unpredictable if things are badly managed – like this country in the 1970’s in particular springs to mind).
July 21, 2022
Agree with SJR and from experience ’tis better to forecast broadly right than precisely wrong and recalibrate and recorrect the feedback.
This is like flying in fog with no feedback instruments on stalling, direction or altitude and attitude.
Slick Rishi is at the controls like Top Gun with dark glasses smiling while ignoring any feedback as he is deaf ears and on a mission, his own PR – “Here’s good looking”.
July 21, 2022
Forgot to add “Now where’s that ejection seat button?” Over and out.
July 21, 2022
Predictions are maybe more accurate ( or rather less inaccurate ) when made by people who understand what they are attempting to predict.
No doubt much to the annoyance of this overconfident, fallen-flat-on-its-face government JR has not once been wrong in what he has said might happen.
He reads his runes with the wisdom of great experience.j
July 21, 2022
Sorry. That j should not be there! iPad!!
July 21, 2022
Any reasonably sensible individual attempts to forecast and plan ahead in their private life: what are their personal aims, how could they be achieved without relying just on luck, putting a little away for a rainy day even at the cost of a few nights out or a missed holiday.
Any reasonably savvy business owner, whether it’s the chap who washes your windows or the CEO of an international company, knows s/he has to look ahead and think about plans of action for good times and bad.
In both examples, if you keep getting your forecasts wrong, you end up in the soup – just what happens to the ‘experts’ in the OBR when they get things so wrong that they drastically affect millions of taxpayers? Do they get demoted? Do they get sacked? Do they forfeit large chunks of their Civil Service pensions?
Do I already know the answer?
July 21, 2022
SM
What happens when they constantly fail, they set themselves up as advisors, trainers, consultants or experts, they can talk the talk, but can not actually walk the walk themselves, Failed salesmen are the worst example.
have attended a number of so called courses over the years, that you can instantly sense and read the failures like a book.!
Those who have never ever run commercial business in their lives, simply swallow this sort of promotional hype, thinking they are so called gods.
Management consultants often know that all the answers to a companies problems can be found on the shop floor, so that is where they start, by interviewing the workers/low level management and relaying that information back to the board, all dressed up in an expensive and nicely bound report.
July 21, 2022
The ONS report on public sector finances is good for lay readers of government accounting. Look out for the actual cash debt interest payments in Tables 3 and 7. See section “The Bank of England’s contribution to debt” . Keep in mind that the Gilts bought by the APF now contain no cash; that was stripped out and paid to the sellers of the Gilts as deposits into their bank accounts, but they still pay a coupon in side the APF, which round trips back to the Treasury that paid it in the first place. Then the ONS discounts it all in its PSND ex BoE calculation. It’s all smoke and mirrors.
https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/bulletins/publicsectorfinances/june2022
July 21, 2022
Let’s hope that with Liz Truss as winner you become Chancellor. If so can you please as a matter of urgency apply policies to balance our trade even if they are tough and initially painful, and also ban the sale of any more home owned business and home producers to foreign buyers. What is currently being sold in our defence industries is traitorous. And who thinks that inviting the French to build Sizewell C will be good for us. It’s only because policies have made us bankrupt to be exploited by competitors.
We cannot imagine any longer that the present selling out practice is beneficial – we just prostitute ourselves further each time we sell something. Only the greed of those in The City is satisfied.
July 21, 2022
‘Tories have never had rigid beliefs as to how the state and society should be governed. Instead, they have had values and principles that have remained constant throughout the years. These values have included patriotism, personal liberties, the rule of law, a free parliament – and a government dependent on that parliament – as well as an acceptance of the responsibility to improve the economic and social wellbeing of the people as a whole. This last objective has often been described as the One Nation aspiration. The single most important reason for Conservative political success is that, through its history, the party has tried to be true to the principles and values’ mentioned above. ‘Most importantly, the Tories have been a conservative, not a reactionary, party’.
In ‘The Future of Conservatism’, Malcom Rifkind, Prospect, Summer Special 2022, p.28-31.
prospectmagazine.co.uk , 15/07/2022.
July 21, 2022
And what is your point?
July 21, 2022
If Liz Truss is to be the standard bearer for the free market, low tax Conservatives it could be a good idea to have a private teach-in for her on some of these issues. for example this am she was interviewed by the BBC’s Nick Robinson (who announced as a fact that Patrick Minford is not an eminent economist! Minford has of course been far more correct on everything from the ERM to the euro the Brown boom-bust-bailout to the Brexit great recession that never was then all those eminent economists the BBC favours). In it Liz kept saying we will “pay down debt” and “get debt down”. We will not. as long as there is any deficit at all, the total stock of debt goes up. What might come down is debt / GDP. I do think its important for the potential PM to master these basics, otherwise the direction of policy is likely to be wrong.
July 21, 2022
No forecast is better than a bad forecast. Without a forecast the Chancellor has to use his initiative, intelligence and instincts to make the right estimate as to what is the best policy. If he is a good economist he will get it right, and if he isn’t you can immediately tell and then sack him and replace him with a better one. But with an inaccurate forecast the Chancellor will mistakenly trust this and rely on it and then , as with computers – Garbage In, Garbage Out – will come up with flawed policies. And you can’t sack him because he says he was ‘following the (economic) science’!
So, as I have said many times before, ABOLISH THE OBR AND ALL ECONOMIC FORECASTS.
July 21, 2022
+1
July 21, 2022
If you want some really funny numbers there’s always the just released 2022 Future Energy Scenarios from National Grid. We are all supposed to make do with much less energy, which would require substantial cuts in living standards. Even then, it assumes quite magical improvements in technology and a truly massive scale of investment just for the grid (of course it would – who is designing the scenarios?).
July 22, 2022
The electricity Grid will need extensive upgrading on current plans to eliminate gas space heating and industrial use while converting transport to EVs. The intermittent nature of renewable energy, starkly obvious this year, will necessitate rationing and will lead to blackouts.
Nothing is more important than to revise the ruinous Net Zero plans, but decades of anti CO2 propaganda (an unpleasant but accurate word) will make the changes difficult to sell to a brainwashed population. Just chanting renewables good, gas even better is not going to work alone.
Were we to use natural gas in internal combustion engines the CO2 emissions would fall, with NOX and particulate emissions down to near zero. Extend the gas Grid and eliminate oil space heating and oil in industry. Natural gas use would take us halfway to the hydrogen economy, a slogan and a fact that would be a PR man’s dream.
There are strange temperature anomalies in enclosed bodies of water that suggest that greenhouse warming is not the whole story. See the reports from the Sea of Marmara for example where surface pollution by oil and surfactant combined with sewage and farming run-off is causing double the warming rate of clean ocean.
The existence of other warming factors can be used to ease the move to a reduced CO2, reduced pollution world.
JF
See TCW Defending Freedom blog post ‘Are We Smoothing Our Way…’
July 22, 2022
An interesting comment in TCW was about the effect of the sanctions that Mz Truss is so keen on. Russian oil and gas production has remained at the same total level. They sell more to the Chinese and Indians at below world price. The Indians refine the oil and sell it to us or resell the diesel. The Chinese need less ME oil and gas snd so the more ME oil and gas is sold to Europe. As this Russian and ME gas need to be liquefied and the oil also shipped half way around the world, much more CO2 is produced and the cost to European customers is higher.
July 21, 2022
It would appear that your good self, SJ, should be in the OBR or, better still, running the Treasury.
Surely it is past time a PM had the common sense to realise that something in the State of the Treasury is rotten?
There is no chance of such change with ex-Chancellor Sunak of course, so I hope that Liz Truss with put her tax-cutting words into actions and get this country back on track. A word of advice for her when dealing with the Treasury, “Don’t let the bar stewards get you down”.
July 21, 2022
John Redwood for PM!
July 21, 2022
Or at least Chancellor
July 21, 2022
No, not his forte. Very much a Chancellor, though. Would be an inspired choice.
July 21, 2022
So the lady who has been in the Cabinet since the 4th of September 2012, including two years as Chief Secretary to the Treasury (June’17-July’19) has suddenly realised that the Treasury/BoE orthodoxy of these last twenty years have been detrimental to the country’s economy. Better late than never.
I expect that one groupy/ie from her fan club is going to explain how:
– tax cuts financed by more borrowing/more deficit/less reimbursement of the debt will decrease inflation,
– same tax cuts will boost growth and prevent recession,
– same tax cuts will increase government revenues.
That person will obviously be aware that in the ‘80-‘90s an average of £18 bn/year (10% of the Treasury income) was coming from companies extracting oil and gas from the North Sea (eandt.theiet.org, 20/01/2021), which might not be available these days.
As an aside, Brexit should also have increased government revenues these last six years. If anybody knows of a report on how that money has been used, I’d love to know about it.
July 21, 2022
@ hefner – how could she have “suddenly realised ” before now, she has only just been briefed by Sir John (probably)?
The issue with tax cuts now or not surely rests upon the extent of economic activity and how much it needs to be promoted. It is, surely, not too hard to suppose a tax cut that saw prices decrease (as would happen on a widespread scale if VAT were cut for example) would decrease inflation just by the ineluctable laws of arithmetic. Those same tax cuts ought easily to boost growth (assuming supply side constraints do not arise as they need not if those cuts are targetted) and may prevent recession, depending upon scale and timing and the extent of other measures. There being in consequence more economic activity, typically the volume that falls within the scope of taxation will increase thereby boosting revenue. That same activity is likely to see some Government expenditure reduce, notably welfare transfers. Taxing jobs (NI increase) and enterprise (31 per cent. rise in CT) seems imprudent in a world on the brink of recession.
July 22, 2022
A few days ago you called for reduced tax on fuels to help bring down the burden for less well off people.
July 21, 2022
Just reading “Vaccines a Reappraisal” ( 2017 ) by Moskowitz.
It’s very detailed and goes into all the things that are bandied about today.
I wish someone clever, good at figures ( I’m not ) could read it and
lay out pros and cons in percentage risk type terms.
Not for my risk but for children.
July 21, 2022
Please advise the next PM to scrape all quangoes from day one and reassess their need….and stop the ‘jobs for the boys’ culture
July 21, 2022
@ glen cullen – but recall when Sir John had asked here for quango-scrapping suggestions answers come there not.
July 21, 2022
Follow the argument where it leads. Get rid of the OBR. If you want an economic assessment that differs from Treasury orthodoxy, appoint a team of free market monetarists. Someone like Patrick Minford could assemble such a team. They would not be permanent State employees.
July 21, 2022
And be judged on their performance too, just like weather forecasts are based on their performance UK model v the rest.
July 21, 2022
Item on the two candidates just now on the BBC, the OBR was referred to but no mention of the inaccuracy of their forecasts.
If the corporation tax hike is cancelled by Liz Truss, that encourages my company enormously to grow and make profit. Does the OBR factor in the disincentive of tax rises?
When taxes rise, there comes a point where you feel it’s not worth making the extra effort. Take walks in the countryside instead.
July 21, 2022
To the BBC, the OBR is like climate change….undisputed and settled
July 21, 2022
Dave. Yes and make the most of the countryside while it’s still there and not a bloody great housing estate.
July 21, 2022
Given that the OBR have got their forecasts wrong again by an order of magnitude and that the proposed tax rises were therefore unnecessary, Ms. Truss’s stated intention to reduce the actual and impending tax hikes would appear to be much less of a risk than commentators and critics (and Mr Sunak) would have us believe.
How come the muppets in the OBR still have jobs? They would have been handed their P45s years ago, if they had been working in the private sector.
July 21, 2022
I agree that without sound finances we are doomed, but there are other things going on in this country and, unless they are reversed, we are finished.
July 22, 2022
Like Net Zero.
JF
July 22, 2022
The 2019 manifesto said that HS2 would go to Manchester and Leeds and cost £81bn…..three years later HS2 is reduced by half and the cost increased to £150bn est
Sound finances my arse
July 21, 2022
”Global coal-fired electricity generators are producing more power than ever before in response to booming demand and the energy crisis. Coal’s comeback leaves Net Zero all but over” – Net Zero Watch
Has anyone told our government
July 21, 2022
This is complete rubbish. Even if John Redwood is correct and the Bank of England, Treasury and most of the market are wrong, the UK government still has to issue debt to finance the running deficit. If you do that with a plan that consensus sees as building a huge deficit / inflationary you will have to pay higher interest … if you can issue the debt at all. Most of the debt that the government has issued in the last 5 years has been bought by the Bank of England!! They have stopped and are now looking to sell down the debt that they have … adding to the market over-supply of UK treasury. It is ok sitting in the House of Commons ivory tower with some theoretical model. This is not the real world. Truss and her crazed plan risks finishing us all.
July 21, 2022
It would be nice to think that under new leadership your party could actually work together to take advantage of Brexit and actually work TOGETHER instead of infighting and take control with the majority the voters gave you. How many times does the party need to be told we voted for a real Brexit, control of our borders, energy security, control of our fishing waters and real Conservative policies?
July 22, 2022
The next PM (First Lord of the Treasury) must find another Sir Alan Walters pronto, take the advice constantly, and force the Treasury (and its Chancellor) to stick strictly to implementing the advised policy.
July 22, 2022
R4 World Service prog saying Amazon touted to do Primary US Healthcare. Someone tell our Heath Minister ( Lost count of who it is ). They needn’t worry too much about opening up
GPs etc ! It may be a great idea , who knows.
July 22, 2022
The Treasury, Sunak and his followers are claiming Liz Truss’ proposed tax cuts in the Autumn funded by borrowing will be inflationary which is surely an absurd argument based on not foreseeing the context. While in the medium and long term I don’t see extra borrowing rather than less state spending as the answer and it is conceivable in other circumstances some (not V.A.T.etc.,) tax cutting might be slightly inflationary, that would clearly not be applicable this Autumn. Rather because of the massive price increases in essential spending such as gas, electricity and petrol and much food, people won’t have enough money to spend to afford the other discretionary items they have normally spent money on which will result in job losses and bankruptcies in suppliers of such things (e.g.holiday travel , hospitality, furniture and carpet supply and much else). In those circumstances tax cuts won’t be inflationary but will be a modest help in reducing economic disaster in many sectors.
July 22, 2022
Good news they are re-opening Rough storage – somewhere to put the gas from fracking instead of giving it to ungrateful continentals.
July 22, 2022
The OBR created by a Tory govt is now attacked by a Tory. What a joke. Absolutely hilarious. John Redwood wishes to pursue an economic programme that will push up inflation and will increase the deficit. He wishes to push up demand while we have the same level of supply. What we need are structural supply reforms: more visas for immigrants to reduce labour constrains, more globalisation to bring down supply costs so we need to cut tariffs, build thousands of council homes to bring down rents (abolish right to buy on these properties) so that they still in the social rent sector, planning reform to get more private houses built etc… The issue isn’t tax, it’s structural. On the topic of immigration, we need to abolish the terrible Rwanda scheme and instead create legal passage for these asylum seekers to come to the UK, we then need to give them the legal right to work here. That will integrate them into society and help with our labour constraint problems.
July 23, 2022
Do you refuse to accept that the OBR got its predictions wrong Kyle?
More visas for immigrants…what even higher than a million last year?
Open borders for dingy people….
Presumably you are already giving up your spare space to house some newcomers.
Well done
PS
Good job you dont need to get elected.
July 23, 2022
Surely a formal declaration by the new leader’s new chancellor that they have no confidence in the OBR numbers is required.
Also a simple explanation of the effect of these erroneus numbers on policy and spending is required. Add to this the effect on people’s livlihoods.
Simply put the war against the blob has to be formally articulated.
Instead at the moment each year the chancellor quotes the obr numbers as if accurate and his policy expenditure reasonable.