Deficits and growth

One of the features of the OBR/Treasury model that works badly is the ability to forecast the all important public sector deficit or amount that the state needs to borrow each year. This is all important as the forecast drives tax policy. Whenever the Ā model forecasts a high or rising deficit the cry goes up to increase taxes.

The last two years saw massive over forecasts of the likely deficit. It seems the model underestimates the impact of recovery or growth in output and incomes on the deficit. Faster growth spurs considerably more revenue, as each marginal pound of extra personal and company income is taxed more highly than average income. It is also more likely to spent more on discretionary items that attract more VAT and transaction taxes than purchases of the basics.

There is also an inbuilt hostility to any laffer effect. Cutting Stamp duty to stimulate transactions recovering from covid for example was scored as cutting revenue but the overall boost to taxable activity was positive and Stamp duty itself overall rose.

This financial year we may discover the model makes these errors in reverse when there is little or no growth. I expect the deficit to exceed the OBR forecast of Ā£99 bn given the big hit to real incomes and the marked slowdown in activity. The bizarre way of counting so called debt interest at a time of high and rising inflation will also push up the stated deficit. So far this year the government has paid bond holders Ā just Ā£11.6bn of debt interest in cash payments. It is scored as Ā£39.8bn of spending given inflation effects on indexed debt with no accounting offsets for gains on erosion of real value of the bulk of the debt from inflation.

200 Comments

  1. Lifelogic
    August 22, 2022

    An inbuild hostility to any Laffer effect means the model is clearly just wrong. Of course people will change their behaviour when taxes are significantly cut or increased in some areas. If you cut CGT more people will dispose of assets, if you cut stamp duty rates (absurdly high currently) you will get more transactions, income taxes and people will work more and fewer will leave. IHT and more rich will come & fewer will leave.

    Some dope on the Westminster Hour from the climate alarmist FT saying the UK are good at wind power and “on windy days” we get 25% of our energy from them. So what even that costs a fortune, destabilises the grid and wasted more fossil fuels in less efficient use of the other power stations? That is still only about 6% of total energy use even on on windy days. But why on earth only consider windy days? On average more like 10% of electricity production and 2% of total energy needs. Surely this is essentially just more attempted BBC propaganda

    1. Lifelogic
      August 22, 2022

      Ineptitude and institutional wokery is the tragic legacy of Tory rule
      The first task for the new PM must be to answer why – after 12 years in office – a Left-wing agenda continues unabated
      DOUGLAS MURRAY today in the Telegraph.

      Truss will have one hell of a lot of things to fix and prevent a Starmer/Sturgeon disaster in 2024.

    2. SM
      August 22, 2022

      I am currently watching a markedly Leftwing TV documentary series on the history of British film making which, having reached the 1980s, is happily abusing the ‘awful’ Mrs T.

      This is despite the fact that it clearly noted that the supertaxes imposed on the rich by the Callaghan government drove talent out of the UK, to the detriment of all – and that Mrs T’s changes encouraged their return, much to the benefit of the film industry.

    3. PeteB
      August 22, 2022

      And if you want the model to be more accurate simply find the person who owns it and say “your pay and bonus is directly linked to the accuracy of your model”.
      I predict the model will improve rapidly…

    4. Lifelogic
      August 22, 2022

      Some daft Shadow Minister a Nottingham MP talking about some huge, half baked government home insulating plan they propose. Someone needs to tell him that if you cannot afford to heat your home there is really no point in insulating it. Plus insulating homes is very expensive, not always possible and very energy intensive too. Perhaps insulate the people or the one room you cannot afford to heat.

      1. Peter Wood
        August 22, 2022

        The pressure for a substantial heating/cost of living handout is rising fast. It should be clear by now, a minor income/VAT tax cut for low income earners isn’t going to cut he mustard. As I previously commented, HMG IS going to have to find a lot of cash from somewhere to give to all those freezing and starving households THIS WINTER, or face social unrest (never a vote winner). The question therefore is where is that money going to come from? Well Sir J, is it going to be more borrowing, printing more money, or from ‘Exceptional profitability’ of the energy companies? Decision time is fast approaching…

        1. No Longer Anonymous
          August 22, 2022

          Peter Wood – The situation cannot arise whereby wages are chasing benefits. It’s bad enough wages chasing inflation.

      2. Jason
        August 22, 2022

        Not true – the little heat you can generate in a well insulated house stays in a lot longer. Of course you need double glazing, pumped walls and good attic space insulation. Cost? well the double glazing might be the most expensive.

        1. No Longer Anonymous
          August 22, 2022

          Jason, I’ve done all that and the resultant condensation in the loft space has been so bad that it caused complete saturation of the beams and the risk of rot. I had to put vents in the eves and the gable ends to return some airflow.

          Cavity walls were NOT designed to be filled and houses are meant to breath.

          1. Wanderer
            August 22, 2022

            True about the need for houses to “breathe”, NLA. Despite the French being well, the French, I’ve found they were often years ahead of us in terms of building technology for residential buildings.

            25 years ago they were fitting whole house heat recovery and moisture control units. These were very cheap to buy (<Ā£100) and run, and easy to retrofit in traditional homes. A box sat in the loft, slowly drawing stale moist air from the rooms, extracting the heat and returning fresh, drier air. End of condensation problems and the house felt a lot warmer and healthier.

        2. Lifelogic
          August 22, 2022

          All rather pointless if you cannot afford to heat it anyway. It would still be at the same temperature as the average outside ambient temp.

      3. Mike Wilson
        August 22, 2022

        Someone needs to tell him that if you cannot afford to heat your home there is really no point in insulating it.

        A foot of insulation in the loft pays for itself pretty quickly these days.

        1. hefner
          August 25, 2022

          MW, +1.

      4. Lifelogic
        August 22, 2022

        can afford to heat – not cannot

        1. Lifelogic
          August 23, 2022

          Does nothing unless you can afford to heat the house as no heat to keep in.

      5. Mark
        August 22, 2022

        The Green New Deal spent Ā£300m of its Ā£1.5bn budget before being closed down. It was delivering savings of just Ā£641,000 a year, or a payback time of 468 years.

    5. Richard1
      August 22, 2022

      I think the average is about 25% of electricity and 4% of total energy consumption. Total subsidies to date must be Ā£50-100 bn (itā€™s difficult to find the actual number through all the smoke and mirrors.) Subsidies run now I believe at Ā£10bn pa. If weā€™re spending Ā£10bn pa on renewables and if they are as ā€˜cheapā€™ and efficient as claimed why do we have an energy crisis at all?šŸ¤”

      1. Lifelogic
        August 22, 2022

        +1

      2. glen cullen
        August 22, 2022

        +1

    6. Neil Sutherland
      August 22, 2022

      I thought they switch the wind turbines off when it gets too windy.

      1. Lifelogic
        August 22, 2022

        They do when too windy. Also the need for back up means gas and fossil fuel powered stations run less efficiently than they could do.

      2. MFD
        August 22, 2022

        They do, the blades would break up as they exceed their design parameters.

        1. glen cullen
          August 22, 2022

          Didn’t one or two go on fire recently

      3. Fedupsoutherner
        August 22, 2022

        They do frequently in Scotland and some new wind farms have a limit of how long they can be turned on due to too much power going onto the grid abd it being unmanageable. Pathetic in this day and age relying on intermittent power.

    7. Peter Parsons
      August 22, 2022

      The idea that that people will move house more often with all the hassle involved just because of a cut in Stamp Duty is Laff-able. What really happened is exactly the same thing as when the government gave advance notice of cutting the top rate of income tax – transaction shifting. HMRC’s own analysis described the amount of income declared on which the top rate of 50p was payable as “articifially low” (their words, not mine). The reason? A simple one. People who could do so deferred taking income until the start of the following tax year, thus paying 45p in the pound rather than 50p. Perfectly rational behaviour on the part of an individual, but zero evidence for any Laffer effect. The same is true for Stamp Duty. What happened in reality is that everyone who was planning a house move over the next couple of years decided to do it while the Stamp Duty rates were temporarily reduced (even though the savings typically ended up being lost by being added to the purchase price), and since those transactions will now no longer happen over the next year or two, some people will argue that it’s a Laffer effect, which it isn’t since transaction shifting and driving increased tranaction volumes are not the same thing.

      1. Lifelogic
        August 22, 2022

        ā€œThe idea that that people will move house more often with all the hassle involved just because of a cut in Stamp Duty is Laff-ableā€

        Not at all Peter P. People used to by a one bed or studio, then a two bed, then a small house then a large house then trade down to a bungalow or flat again in old age. With the current absurd levels of SDLT no point in buying at all until you are sure you will stays for 8+ years or so. Now they tend to buy later or stay put and extend as it is usually cheaper to do that.

        1. No Longer Anonymous
          August 22, 2022

          Lifelogic – No-one I know did that. There are huge amounts of costs in trading the property ladder that way. Stamp duties, estate agent’s fees. It used to be the case that a working man could buy a family flat or house and keep his wife at home on a single wage. He would also put in a company pension and get similar to what the public sector get today.That really is the way it worked.

          The actual drop in real earnings is shocking when viewed that way.

          1. hefner
            August 22, 2022

            And what is Laff-able is the usual one(s) commenting on it as if it was one unique curve. Anyone with just a tiny bit of brain would realise there might be one such curve for tax on pure income/salary/pension, one for capital gain tax on share dividends, one for the tax on selling properties, one for business rates, one for IHT, ā€¦ but no, what we see repeatedly on this blog are the usual one(s) unable to make that difference, and Liz does not seem to be much better at it.

          2. Lifelogic
            August 22, 2022

            Perhaps more of a London or higher priced area thing.

          3. Peter2
            August 22, 2022

            Well hefner what is laughable is you not realising that is what Laffer suggested.
            There is a sweet spot for tax levels.
            And as you have said there are many different taxes with many different rates.
            Behavioural economics is a fascinating subject.

      2. miami.mode
        August 22, 2022

        Agree about transaction shifting. In anticipation of an income tax rise bonuses were paid in March rather than May as normal.

      3. Peter2
        August 22, 2022

        Do you dislike the Laffer effect because you don’t like lowering taxes Peter?
        Seems to work the other way when big State adds taxes on high CO2 cars, tobacco products and alcohol to deliberately reduce use.

        1. Peter Parsons
          August 22, 2022

          Because it’s nothing more than a thought experiment drawn up on a restaurant napkin which has been proven not to work in the real world.

          If you don’t believe that, do some research on the Kansas experiment. Laffer’s ideas (for which he was well paid) nearly bankrupted a US state.

          1. Peter2
            August 22, 2022

            You always come up with the one single thing that you think disproves the theory Peter.
            The discredited Kansas example.

            No response to the two points I raised in my post I note

          2. Peter Parsons
            August 23, 2022

            Increasing taxation in a manner designed to change behaviour e.g. on tobacco is a fundamentally different thing that you didn’t ask a question about, you just made a statement. Such taxation changes are not about raising revenue. I answered your question with the one real word example of where Laffer was given free reign to apply his curve. It proved to be a disaster that the taxpayers of Kansas are still paying for. Cutting rates of taxation is not a guarantee of raising revenue, it can also see revenues decline as the residents of Kansas found to their cost.

            The reality is that a modern tax system is a complex series of interactions that, has been pointed out elsewhere, can’t be modelled using a single curve. Changing one element has knock-on effects throughout the system.

          3. Peter2
            August 23, 2022

            As you admitted that higher taxes are used to reduce revenue and there are many examples of reduced rates creating extra revenues (plus employment and economic growth) then you are demonstrating the basics of Prof Laffers theory Peter.
            You use the discredited Kansas example…the exception to the rule…every time, to try to say the whole theory doesn’t work.
            That is ridiculous Peter.
            Read some behavioural economics.
            100% will not maximise revenue
            Neither will 0%
            It’s somewhere in between

      4. Mike Wilson
        August 22, 2022

        The idea that that people will move house more often with all the hassle involved just because of a cut in Stamp Duty is Laff-able

        You may find it amusing but it is, in fact, true. To move house you need the deposit and the stamp duty in cash – which for most young people is a challenge. Whenever stamp duty has been cut in the past, particularly at the lower end of the market, the housing market takes off. Again. With yet more price rises.

  2. DOM
    August 22, 2022

    It’s an economic and public financing model based primarily on Keynesian ideology that treats the profit-making, resourceful private sector as a mere subsidiary supplier of income to finance the authoritarian activities of that righteous entity I would like to term the Socialist political State.

    Running continual deficit to justify abusing the private space isn’t inadvertent but deceitfully deliberate. The charlatan Keynes, the grubby Bete noire of all right thinking people, has been a god send for all authoritarian minded Statist providing ‘intellectual and academic’ justification for their abuse of those who seek to live within their means ie only consuming what is necessary unlike the State that is the ultimate ABUSER of the earth’s natural resources

    When one accepts the truth ie that the State is a vested interest in its own right then all that we have seen since they down Thatcher begins to make total sense. Attacks on speech and freedom are the actions of a vested interest desperate to expand its parasitic and gilded existence

    1. DOM
      August 22, 2022

      ‘self-righteous’, obviously

      1. Ian Wragg
        August 22, 2022

        Everything the treasury does is based on extracting maximum revenue from the public.
        It is run by socialist mandarins and until there is a massive clearance nothing will change.
        It’s time we had a government that governed.

        1. glen cullen
          August 22, 2022

          The logic is ‘get what we can’ not ‘get what we need’

    2. Peter
      August 22, 2022

      Dom

      I love your use of the phrase ā€˜right thinking people. I have not heard it since the days of Graham Chapman of ā€˜Monty Pythonā€™.

      1. Mike Wilson
        August 22, 2022

        Usually when someone says ‘right thinking people’ they simply mean ‘people that agree with me’. Dom’s use of the phrase should have been in inverted commas really – to make clear he was taking the mick.

        1. Lifelogic
          August 22, 2022

          Well indeed ā€œright thinking peopleā€ are exactly the ones that agree with me.

          1. Peter
            August 22, 2022

            LL,

            Your thought for the day :-

            ā€˜When you are in a hole stop digging.ā€™

    3. glen cullen
      August 22, 2022

      Agree – ‘Something is indeed rotten in the state of Denmark’ …We canā€™t continue with the civil service treasury team having one economic view, while the quango OBR having another economic view, and the government another

      1. Mickey Taking
        August 22, 2022

        If only it was Denmark and not closer to home!

  3. Mark B
    August 22, 2022

    Good morning.

    This is all important as the forecast drives tax policy.

    Pardon me, but I thought spending drove tax policy ? Surely the government must know the amount it has to spend and any shortfall in spending is then covered by borrowing.

    I do not know about anyone else, but I am not buying the crap that both the BoE and the OBR are somehow to blame due to in ability to predict the future.

    Learn to match you spending to your income.

    1. Lifelogic
      August 22, 2022

      Indeed it is government spending and the appalling inefficiency and misdirection of spending in the UK that is the problem. Once spent the government will find the money somehow – in taxes, money printing (back door taxation through inflation) or borrowing (deferred taxation). Much is spent doing positive harm like net zero, HS2, endless red tape, test and trace, rather ineffective & often dangerous vaccinations even for childrenā€¦

      Excess largely non covid deaths running at about 13% up so why is this. Is it delayed treatments and negligence from the dire NHS, the damaging effects of the vaccines for some, the hours you have to wait for an emergency ambulance or what. Why are the government net coming clean on this?

      1. No Longer Anonymous
        August 22, 2022

        Please start calling them lockdown deaths. Because that’s what they are.

        1. Lifelogic
          August 22, 2022

          Well lockdown deaths or vaccination side effects or just lack of a competent and prompt healthcare system. Or perhaps some other cause unknown. Easy to determine which but it seems the NHS and Gov. simply do not wish to find out.

        2. Mark
          August 22, 2022

          They will soon be outpaced by cost of living deaths. Many households will suffer penury, unable to afford energy and food, perhaps eviction for non payment of rent or mortgage. As the NHS points put this will lead to a huge toll in illness, and probably suicide as well.

    2. formula57
      August 22, 2022

      @ Mark B “Learn to match you spending to your income.” – not necessary if you own the mint (per MMT).

    3. Mickey Taking
      August 22, 2022

      as Dickens said ā€œAnnual income twenty pounds, annual expenditure nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.ā€

      1. Mike Wilson
        August 22, 2022

        as Dickens said ā€œAnnual income twenty pounds, annual expenditure nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.ā€

        Yes, and as far as an individual’s finances go, that is true. But an individual does not have to build roads, railways, schools, hospitals etc. These, by definition, are built using future income. After all, on the day of the first government there were no roads, railways etc. and no-one had the money to build them.

        1. Mickey Taking
          August 22, 2022

          I don’t think Dickens was talking about the ability to increase that income at a whim, with nothing to stop it!
          You’ve lost me with railways…plans were made to seek shareholders to build railways, but landowners often refused access permission, and Governments of the day ruled on access – often compulsory purchase.

    4. turboterrier
      August 22, 2022

      I remember being told on numerous occasions to ” look after the pennies and the pounds look after themselves”
      If all government departments provided a profit and loss sheet on a monthly basis the vast areas of waste would be highlighted and then addressed. Then these forecast departments might be able to produce more realistic figures.

      1. Mike Wilson
        August 22, 2022

        How can a government department provide a ‘profit and loss’ account? It makes no sense. They could provide an income and expenditure account. Which, if it was detailed enough, would highlight wasteful or idiotic spending. I recall the Town Council where my wife worked for 18 months (before it drove her insane). They used to pay a company to come in and water the plants in reception. It was not possible, apparently, for the person on reception to have a little watering can and do it themselves. Why should they? It’s not their company or money. The money tap is always on. So, take it easy and spend, spend, spend.

        1. Pauline Baxter
          August 22, 2022

          Mike Wilson.
          You are quite right. A government department produces nothing, sells nothing, so can not have a profit and loss account.
          Your Town Council anecdote is very believable. It made me chuckle, though it is not funny really, is it.
          And I can think of other similar examples of silliness, in central and local government offices.
          Also in the N.H.S.

        2. Fedupsoutherner
          August 22, 2022

          Isn’t that what Turbo was saying Mike? God, it irritates me when people are pedantic for the sake of it.

    5. hefner
      August 22, 2022

      Mark,_B, +1. Sir Johnā€™s attacks on the BoE and the OBR sound less and less serious and getting more and more fanciful. These do not augur well for a future Chancellor or Chief Secretary to the Treasury. If as such he is not able to take decisions outside the forecastsā€™ framework, whatā€™s the point of having him as a Minister?

      Reply If the OBR and Bank got everything right why do we have 10% inflation when Japan and Switzerland also paying for dear energy do not?

      1. Dave Andrews
        August 22, 2022

        Reply to reply.
        I admire your setting of the “Let’s blame Brexit” trap.

      2. glen cullen
        August 22, 2022

        UK inflation 12.7% (weā€™ve implemented policy of net-zero)
        China inflation 2.2% and India inflation 6.7% (neither have implemented policies of net-zero)

        1. Denis Cooper
          August 22, 2022

          http://johnredwoodsdiary.com/2022/08/19/what-is-treasury-orthodoxy-2/#comment-1335890

          ā€œAnnual inflation up to 8.9% in the euro area. Up to 9.8% in the EUā€

          http://johnredwoodsdiary.com/2022/08/12/yesterdays-meeting-on-energy/#comment-1334560

          ā€œRussian oil production has fallen by less than 3 percent … as flows are rerouted to India and China.”

          https://www.nytimes.com/2022/06/24/business/russia-oil-china-india-ukraine-war.html

          “China and India have been buying at a 30 percent discount to the global benchmark price, a boon to both economies in a world buffeted by rising inflation. Despite the discounts, Russiaā€™s oil revenues are growing, since prices have climbed to more than $100 a barrel.”

          Basically the sanctions we are applying to Russia to support Ukraine are backfiring on us.

          1. Mark
            August 22, 2022

            Because China and India are buying Russian oil it frees other oil for use by erstwhile Russian customers. There is dislocation because oil is travelling further from source to destination, but overall supply is maintained. Oil prices have been falling back from highs. There is of course a threat to supply if we fail to keep drilling.

            Gas has a different picture. Much of the cutback in Russian exports to Europe is not being exported elsewhere, but is simply being shut in. That means we are seeing a real decline in supply, and no attempt to replace it in much of the West. That is the problem we have to address, and it isn’t solved by wind turbines that only work when it’s windy.

          2. glen cullen
            August 22, 2022

            Oil price per barrel in March 2020, when Boris annouced his net-zero policy, was $21 dollars and has been climbing month by month since then – $95 today
            The Ukraine was is a factor but wasn’t the started and will not be the finish

      3. David L
        August 22, 2022

        Surely some of the roots of the inflation can be found in the consequences of locking down the populace? Many were the scientists, medics and economists who advised against it, yet no debate took place and all political parties acquiesced in the diktat. Never mind, some well-connected people and companies made fabulous fortunes from it all.

    6. rose
      August 22, 2022

      If spending drives tax policy, why do we have the percentage of GDP formula for defence, aid, etc? Why not just decide what needs to be spent and raise it?

      1. glen cullen
        August 22, 2022

        You mean setting a budget on requirements…I like it

  4. Denis Cooper
    August 22, 2022

    I’m looking at this recent article on our national debt:

    https://www.economicshelp.org/blog/334/uk-economy/uk-national-debt/

    and thinking

    “Let’s not get too worried about this while foreign investors are not too worried about it, especially as about a quarter of the debt is actually owed by the government to itself via the publicly owned Bank of England”.

    I’m much more concerned about the knock on effects of the war in Ukraine, which must be brought to an end.

    https://www.thetimes.co.uk/article/the-west-doesnt-have-a-putin-problem-it-has-a-russia-problem-vnhq0bqd6

    “The West doesn’t have a Putin problem, it has a Russia problem”

    1. Hat man
      August 22, 2022

      It must indeed be brought to an end, Denis, before this country finds itself actually at war, with consequences that would make the current cost-of-living crisis look like a picnic. In the most recent issue of the Army’s official magazine ‘Soldier’, an article advises military personnel regarding possible involvement in a conflict with Russia, saying:
      ‘I want us all to check that we are physically ready for combat. It is also important that we prepare loved ones and families, who often have the most difficult role in our absence. I ask that you discuss the potential deployment with them now.’
      We are being softened up for a catastrophe.

      1. Mickey Taking
        August 22, 2022

        I think (hope) there are enough senior Russian military personnel who would ensure the day Putin loses it and presses a button, with the sure and certain knowledge that whether his rockets reached targets or not, retaliation would be underway and unstoppable – -with a mass of many countries laid waste and uninhabitable for decades at best. I have to believe the button would not work.

      2. Wanderer
        August 22, 2022

        I hope you’re wrong, Hatman. It would be completely bananas to go to direct war with Russia, supposedly over the invasion of a country of zero interest to the UK. It’s bad enough funding the West’s proxy war in Ukraine.

      3. anon
        August 22, 2022

        Why would you want to fight for the country?

        Lets face it , we are hardly a good example of a proper representative democracy. In fact its obvious , elections for presentation purposes are just problems to be managed away.

        Senior Service staff pushing diversity ahead of defense being a clear example of undermining defense capability.
        Surely those responsible should be first out and replaced by individuals who have actually refused to do this.

    2. glen cullen
      August 22, 2022

      No – the west has an acceptance of russian ‘money’ problem

    3. Pauline Baxter
      August 22, 2022

      Denis Cooper.
      I haven’t followed your link but what strikes me is that it is not ‘The West’ that has a ‘Russia Problem’.
      It is the the U.S.A. that has a problem. It has become clear that the U.S. is no longer the one ‘Top Dog’ on the world stage.
      The world price of oil is a major contributory factor.
      Why does the U.K. have to slavishly follow the diktats of N.A.T.O. and E.U.?
      Putin and/or Russia are not threatening the U.K.

  5. Nottingham Lad Himself
    August 22, 2022

    Another day, another buck-passing…

    1. Peter
      August 22, 2022

      NLH,

      There are still two more weeks of ā€˜talkā€™ before a new Prime Minister is in place and we can start to see how they operate.

    2. IanT
      August 22, 2022

      Well, I guess we should all vote for Sir Keir instead NLH. He’s apparently got the money presses all ready to roll. What a nice man, he’s going to pay all our energy bills (just for this Winter of course) because, obviously the energy markets won’t stay high forever. Will they?

      I do worry that if governments are willing to subsidise ever higher energy prices (and there is no demand destruction) why would energy prices fall? So Sir Keir better have a very large money tree growing in his La La Land. Maybe I should think about moving to Venezula while I can still afford it. The Bolivar might be a better bet than Sterling if we keep going down this path…

      1. No Longer Anonymous
        August 22, 2022

        + 1

        Why is the imposition of tax (to pay for such things) not classified as inflationary ? All this will do will close the gap to near zero between those who do responsible jobs and those who don’t. It won’t be worth going to work, the way this is going. A middle manager will be spanked for tax paying senior civil service pensions at one end and fuel subsidies at the other while his own family sits in the cold.

        1. No Longer Anonymous
          August 22, 2022

          Alas polls (not that I respect them much) show that around 65% of the population support fuel handouts and most of the rest ‘don’t know’.

          Where does it end ? Wages chasing benefits ????

          I was on a train this morning, delayed by hooligans. 7am for goodness sakes ! Both of them were clearly off their rockers, probably drug addicts. The police had to follow them up and down the train trying to plead with them to get off and everyone had to accept it. 15 minute delay – increasing to 25 by final destination. Such things aren’t unusual.

          This country has completely lost its marbles. It is an open asylum.

          I just don’t see how it can survive.

          1. glen cullen
            August 22, 2022

            Its lost its spirit, identity, rule of law and its soul in the last decade or soā€¦

      2. Mark
        August 22, 2022

        Timera has an interesting blog out today. They show how forward energy prices for delivery over the next three years have steadily risen as the markets realise that politicians are dithering and fiddling at the edges instead of tackling the fundamental need to increase global gas production. They speculate on the degree of rationing necessary to bring supply and demand into balance, and what prices might be required.

        Not being macro economists they miss that if you shut down industry your balance of payments and exchange rate implodes, and unaffordable or simply unobtainable energy and food is a fast way to civil unrest.

    3. Mike Wilson
      August 22, 2022

      Another day, another buck-passingā€¦

      Another day, another buck-passing down the toilet. Whose bucks are they anyway? Not theirs. Every year the bucks are handed over like magic and they do whatever the hell they like with them. Mayor’s car? So a silly little, self-important local with a chain of office around his neck can visit a fete now and then – and turn up in a limo! The waste in the public sector is systemic.

  6. Denis Cooper
    August 22, 2022

    Off topic, I’m pleased to see that the letter I sent to the Belfast News Letter:

    http://johnredwoodsdiary.com/2022/08/20/the-battle-of-the-railways/#comment-1336038

    has appeared today under the heading:

    “UK prime ministers created a crazy situation in which the wrong goods are checked”

  7. SM
    August 22, 2022

    May I strongly recommend to you all a decisive and clear report on the Treasury and its problems by Anthony Browne MP in today’s ConservativeHome.

  8. Donna
    August 22, 2022

    Anyone who is hostile to the Laffer effect either doesn’t understand, or is hostile to, human nature.

    That is like Communism and its close relative, Socialism: on paper they might sound like a good idea, but they come up against human nature and therefore the only way they can be made to work (for a while) is through force.

    1. Mickey Taking
      August 22, 2022

      and if there is little or no incentive to work most people will do as little as possible.
      Communism fails on this basic principle.

  9. Roy Grainger
    August 22, 2022

    At the weekend The Times indicated you would be offered a Ministerial job in the Treasury under PM Truss. Good idea !

    Reply The Truss campaign is unlikely to have briefed the Times on such a matter! No-one told me. Liz Truss will decide and announce her cabinet once she has won.

    1. rose
      August 22, 2022

      The Times is not the paper it once was. It regularly makes things up, as indeed do they all.

  10. ChrisS
    August 22, 2022

    Hopefully when you are ensconced in the Treasury in a couple of weeks time, you will be able to do something about all this and much more !

  11. formula57
    August 22, 2022

    Much comment around that the OBR will not be asked for supporting forecasts for the emergency budget (itself correcting Sunak’s errors from attending to OBR fantasies). Can we hope this prompts the OBR to shut up shop.

    1. rose
      August 22, 2022

      Much comment indeed, hard on the heels of those very same pundits demanding Miss Truss say right now in conversation what her budget will be.

  12. cuibono
    August 22, 2022

    Iā€™m certain sure that taxes must be raised.
    How else will this con government find the money to featherbed the feckless through government created crises?
    How softly the tories tiptoe around their best bunnies while grinding down the increasingly burdened tax payer.

    1. Mickey Taking
      August 22, 2022

      most of us are certain sure spending must be cut, there is plenty of scope to trim the wasteful, fanciful, ill-judged Ā£millions if not Ā£billions thrown around.

      1. cuibono
        August 22, 2022

        Agree 100%

  13. Paul Edwards
    August 22, 2022

    I would be interested to know Sir Johnā€™s detail plans for the economy over the next 2-3 years. It is easy to criticise others, not so easy to offer explicit plans to overcome the twin problems of inflation and low productivity in a period when demographics show an increase in the non working population. Some of the diary comment looks more like an opposition view than that of a member of the governing party for the last 12 years.

    1. No Longer Anonymous
      August 22, 2022

      The increase in the non-working population has a lot to do with early retirement in the public sector and the ‘success’ of the NHS.

      It is very good at keeping people alive in a poor state into extreme old age on cocktails of pills.

  14. Dave Andrews
    August 22, 2022

    We’re busting out of our premises and need to expand. If the government reverses the NI increases and scraps the plan to increase corporation tax then we will have confidence to expand. If however the government continues on a path of higher taxation I expect our business to be stifled and the urge to expand may be only temporary. Furthermore, I will be less inclined to bust a gut if my efforts are just swallowed up in tax.
    Does the OBR/Treasury take these thoughts into consideration?

  15. Richard1
    August 22, 2022

    Not enough from either candidate, in particular from Liz Truss, about cutting spending we donā€™t need. What about just cancelling HS2? OK weā€™re Ā£10bn in the hole on it now so it will be embarrassing, but we will save an incremental Ā£90bn! Innovators and entrepreneurs will come up with imaginative ideas for the tunnels which have already been dug. All the land purchased can immediately be released for new housing development. Letā€™s take 100k heads out of the civil service to get it back to where it was in 2016 (was anyone then crying out that we need more civil servants?). Letā€™s purge all the wokery, out with the silly people who have stopped RAF recruiting until there are 20% ethnic minorities (vs 10% across the population). (A good thing the wartime Churchill govt didnā€™t apply such restrictions when recruiting the Few, who probably werenā€™t very ā€˜diverseā€™ either, but they were skilled and brave). Closure of or an immediate ban on payments to woke quangos and ā€˜charitiesā€™ like stonewall. An immediate proof of necessity exercise on any job with a title including such words as ā€˜diversityā€™ ā€˜equalityā€™ ā€˜inclusivityā€™ etc. loads of scope to cut costs from the bloated state. We need cuts to have sustainable lower taxes and higher growth and productivity.

    1. glen cullen
      August 22, 2022

      Spot On….at the same time get us out of the ECHRs, and stop paying billions to the EU and UN

      1. Fedupsoutherner
        August 22, 2022

        5000 illegals so far just this month and August isn’t over yet. Hundreds more today. Where the hell are they all going to go? Why can’t the government and the new leader see the dangers in these figures. I can’t see how anyone can fail to realise the seriousness of this catastrophe. It must surely be more than Ā£5m a day to keep them now.

    2. Pauline Baxter
      August 22, 2022

      Richard1.
      If I was Liz Truss at this moment I would hesitate to make such policy commitments so clear.
      Some of the people who might be adversely affected might be Party Members yet to vote !!

  16. Stephen Reay
    August 22, 2022

    Ken Clarke say “taxes and VAT should increase ” .he goes further to say that” it’s madness to think reducing tax will reduce inflation.
    His point being that because of the supply problem and then people having more cash in their pockets it would just push inflation up further.

    1. IanT
      August 22, 2022

      So raising taxes (and VAT) isn’t inflationary?

    2. Clough
      August 22, 2022

      If true, Stephen R., it tells us that the most urgent thing is to work with other countries to fix the supply problem.

      1. glen cullen
        August 22, 2022

        What supply problem…..the supply hasn’t changed, its the cost of supply thats changed, due to the futures energy market increases – due to governments policy of net-zero

      2. Stephen Reay
        August 22, 2022

        @clough that’s correct, ideally all countries should have agreed to end lockdown at the same time, well in an ideal world.
        The problem is China with their zero covid policy they’re in perpetual lockdown. Until China ends their lockdown or we find others sources for the goods we need then inflation could be high for years to come. High inflation for longer will erode savings and occupational and private pensions which aren’t index linked.

    3. glen cullen
      August 22, 2022

      Some of these ā€˜new labourā€™ thinkers just donā€™t want people to have cash in their pocketsā€¦.heā€™d never admit that its to mad policies and potential future scarcity of fossil fuel of net-zero that driving up prices and inflation

    4. No Longer Anonymous
      August 22, 2022

      People have no cash in their pockets yet inflation is already at a 40 year high. So general wages are not the cause.

      Yes, we have politicians in the top decile of earners (part of the pension debt) telling those below them that they must not have pay rises because of the “wage price spiral… blah blah” but…

      The Government is taking extra tax off ordinary people through the extra VAT brought by external inflation caused by their decision to lock us down for two years and set the printing presses running.

      Could they not give the extra VAT they are raking in back to us ? We are not talking about a cut in the tax rates that already existed but a cut in the windfall that the Treasury is getting.

      Alas I think the truth needs to be told.

      They are desperate for this tax and cannot ease off on us.

      Lockdown has ruined us and we have slipped in global rankings. This adjustment is the reckoning and is leading us to a permanently poor state and we need to accept and get used to it.

      The Great Reset has happened on the Conservatives’ watch.

      Until the Tories are honest about this and so long as they insist on telling us things are normal then the Mick Lynch’s of this world will win because the Tories have created the false hope and therefore the false landscape for debate in which a straight talking bruiser will excel.

      No Tory MP can tell Lynch that what he’s saying is nonsense because they would have to admit the true depth of the catastrophe that we’re in.

      Perhaps a Tory MP could ask him on QT if a woman can have a penis. I don’t know how they’d get him onto the topic but the Tory MP would have to be prepared to answer the question themselves. It would have him floundering for once.

  17. JRW
    August 22, 2022

    If, as I suspect you are correct, the deficit will exceed Ā£99 billion forecast by the OBR, where does that take us in terms of the upcoming new PMā€™s approach to the multiplicity of associated problems: even more govt borrowing, even more weakening of sterling, ever higher debt interest payments, yet higher inflation – unless considerably higher interest rates. I would not be comfortable in expecting a conservative government re-election in 2024.

    1. Mickey Taking
      August 22, 2022

      it appears the electorate ‘would not be comfortable in expecting a conservative government re-election in 2024.’

    2. glen cullen
      August 22, 2022

      ”the deficit will exceed Ā£99 billion forecast by the OBR”
      Well let scrap HS2 at a cost projected at Ā£150bn – that could fund the deficit and some

  18. Gary Megson
    August 22, 2022

    There is an inbuilt hostility to the Laffer effect, and to any other economic theory that has been consistently proved to be wrong

    Reply So why then were OBR forecasts of revenues so low last year ?

    1. XY
      August 22, 2022

      No. No. No.

      It has consistently been proven IN THE REAL WORLD to be right.

      The Weimar republic, post WW2 Germany cut taxes and regulation drastically and we saw the result – they became an economic powerhouse.

      JFK’s government came to power on a tax-cutting agenda, based on the ethical notion that the State shouldn’t take so much of peopel’s money. They expected revenues to drop, so they were surprised when they went up.

      Venezuela on the other hand… you know the rest.

      Your post is the usual lefty assertion with nothing to support it.

      I won’t be checking back for replies, no time, so post as much follow-up twaddle as you wish.

    2. Richard1
      August 22, 2022

      Plenty of examples of the Laffer effect with tax cuts. Look it up.

      1. acorn
        August 22, 2022

        After years of studying macroeconomics, I have not found; nor has the US Treasury, nor the US FED; have ever found a situation where reducing taxes has ever increased revenue. It can appear to do so over short time scales, due to “forestalling” by tax payers; taking maximum advantage of a tax policy change, which will have been announced some months before the tax change event. Data taken over a period of one year before and three years after the tax change event, has proved that a reduction in a tax always leads to reduced revenue.

        1. Peter2
          August 22, 2022

          If you are right acorn then the opposite would happen, ever increasing tax rates will show huge revenue increases for the State and at the same time economic growth and commercial success happens.
          It fits your ambition for a huge State controlling ius all.
          Take all our money and give us a bit of pocket money.

          1. hefner
            August 31, 2022

            Error in your logic P2 (but why Iā€™m not surprised?):
            Laffer says A leads to B.
            acorn says A does not lead to B.
            Then P2 comes saying: ah ah therefore B leads to A.

            It is no proof that suddenly B leads to A, my poor little P2, anybody with A level maths knows that.

    3. acorn
      August 22, 2022

      The Chancellor is supposed to prepare a budget based on official economic forecast from the Office for Budget Responsibility (OBR). Lizzy is going to dodge that bit by the sounds of it. The OBR really is a superfluous link in the fiscal chain. As soon as I read politicians using the word “borrowing” and “dangerous” levels of borrowing, you know these people are clueless. They have no idea how the UK got through previous economic crises. https://i.imgur.com/9uB8g1Q.png

      HMRC Table 1 Receipts Col. W https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1098667/NS_Table_Final.ods Will show you what happened to Stamp Duty. The big money came in after the scheme finished in Oct 21 and reverted to the original free rate. After the tax discount having effectively raised the price of houses; reacting to increased demand.

      1. Peter2
        August 22, 2022

        Is there any level of borrowing where you would say it was heading towards dangerous acorn?
        Or does your magic money theory have no limits and no consequences?

        1. Peter2
          August 23, 2022

          Apparently not.

  19. OAP54
    August 22, 2022

    A little box has popped up TODAY on my energy suppliers website.
    ” Energy Bills Support Scheme”
    Within this box MANY little headings
    including
    Energy priority scheme
    Other ways we can help
    Energy support scheme
    Winter Fuel Payment
    Warm Homes Discount
    Fuel Direct
    Disability
    How many Grannies are internet savvy enough or even have a computer.
    My task for this morning is working out how to complete ONE of the Read Only forms.
    Also some require OAPS to be on Pension Credits a “scheme” which is currently
    experiencing difficulties.
    Someone said to me that the system is designed to reduce the numbers by making it complicated.
    I will post again when I work out it all out.

    1. glen cullen
      August 22, 2022

      Iā€™ve to date completed online requests to receive the government energy grant Ā£150 via the local council to 4 retired neighbours who donā€™t understand the internet, donā€™t own smartphones and donā€™t pay by direct debt ā€¦..government workers donā€™t seem to understand the term ā€˜lowest common dominatorā€™

      1. OAP54
        August 22, 2022

        I think poor old Klaus is getting a bad rap.
        I might put myself forward as Noah’s replacement.

    2. OAP54
      August 22, 2022

      Right. Hours later. Unable to complete read only” Apply to be on our Priority Services Register. ”
      Going to try and type out the many pages and attach to email.
      The Free Food Voucher People want me to tell ” My Story” for the Media.
      I am too CROSS for that.
      Incidentally I think the Poor Pensioner thing could be eased by amalgamating all these silly little schemes
      and using the DWP Pensioner Database to send out a letter saying
      If you’re poor with less than Ā£X you can get Ā£Y
      by writing to us using the enclosed prepaid envelope.

    3. Pauline Baxter
      August 22, 2022

      OAP54
      Well like me you appear to be a computer savvy O.A.P..
      I received something like that from my energy supplier.
      Do you HAVE to reply to it?
      I haven’t. I filed it safe in case I do want to read it in future.

      1. OAP54
        August 22, 2022

        To Pauline Baxter
        I’m not sure what you mean. ( but thanks )
        The energy thing isn’t solicited by me.
        It’s just a box on their website to which
        I’m TRYING to apply.
        The Food Voucher people are a different set up.

  20. Original Richard
    August 22, 2022

    The OBR/Treasury model in the hands of the communist fifth column is as corrupt as those they produce for Covid and the climate, with no scientific basis and simply designed to produce the result they want.

    In the case of the IPCCā€™s climate model, each year the overblown predictions, which are being used to unilaterally bankrupt the country via the Net Zero Strategy, for average global temperature, extreme weather (ignore the false information broadcast by the BBC), sea level rises, polar ice cap melting, ocean acidification etc. have to be scaled back to match the real, observed data, despite the ever increasing levels of CO2 (plant food) in the atmosphere.

    1. glen cullen
      August 22, 2022

      The re-growth of coral at the great barrier reef says it all

      1. Original Richard
        August 22, 2022

        Especially because the warmest seas in the World, around the Indonesian Archipelago which includes the Philippines and the Solomon Islands, are widely known as the Coral Triangle because they have the World’s highest diversity of coral with more than 600 species, which is 76% of all coral species. Thus demonstrating quite clearly that coral loves warmer water!

  21. graham1946
    August 22, 2022

    Sunak is heavily criticising Truss for planning an emergency budget without asking the OBR. Even if the OBR was useful (have they got anything right for years?) it would take many weeks for them to come up with their codswallop. Let’s hope Sunak is defeated as his idea of an emergency budget would run into next year probably and will follow the normal budget for which they no doubt have already incorrectly calculated their figures, ignoring the emergency we are now facing. Time to save some money – get rid of the OBR.

  22. Berkshire Alan
    August 22, 2022

    The Government has no hope if it puts in position people and organisations who cannot do simple mathematics.
    I have said many times before, work on historic information, and not pie in the sky guesswork.
    Why do they still continue to use a failed model, with failed people, surely it cannot just be “it wasn’t me gov” excuse can it.

  23. oldwulf
    August 22, 2022

    Sir

    If the servants do not learn from their own mistakes ….. then why do we employ them ?

  24. ukretired123
    August 22, 2022

    It seems to me that you Sir John should be spear heading a pro British “Silver Bullet” team of trouble shooters into the Public Sector starting with the Treasury and stress testing the Cost / Benefit of quangos like the OBR.
    Many of us know you are the sane, cool head to knock sense into these zombie systems that just go the motions of appearing as too big to fail.
    You only need to look the history of previous giants like IBM in the Private Sector for inspiration. They thought they were invincible but had to change drastically like millions of other corporations to be in tune with modern trends.

    1. Pauline Baxter
      August 22, 2022

      +1 ukretired123.
      Sir John AND Lord Frost advising Liz Truss is the best we can hope for.

  25. MikeP
    August 22, 2022

    Talking of the Public Sector, you Sir John strike me as a very productive MP, I’m one of your constituents, you answer or comment upon my emails and letters promptly, your work around Wokingham District is there for us all to see, you represent us in the Commons and both there and in your daily blog you provide informed and incisive commentary on issues of the day. But what of other MPs? How is productivity of our 650 MPs measured and why have we not yet reduced the number of representatives proposed years ago? Legislation seems to take ages to pass, the archaic voting mechanism is an anachronism, do other MPs have a handle on their output, their added value to the nation? Is the sleepy House of Lords really beyond parody and way beyond its sell-by date? Is it time for “Physician, heal thyself” in productivity terms?

    1. No Longer Anonymous
      August 22, 2022

      What the coal miners were to the ’80s this problem is to the ’20s.

  26. The Prangwizard
    August 22, 2022

    Very interesting but all of this is irrelevant until our trade deficit is removed.

    We must make more things here, government must change its current attitude which is short-termism is best, and lets be nice to other countries through buying their stuff. And that includes fuel. They would rather we bought theirs instead of using our own.

    Leaders are living in fantasy world, debt is ok as far as they are concerned.

    And they like foreigners to buy our assets. They think that is a vital investment. All that is destroying us, economically and socially.

    1. Mickey Taking
      August 22, 2022

      Governments behave like WAGS given a footballer’s debit card.

  27. Jason
    August 22, 2022

    Reply to reply – so just like I manage my household budget I put a little away for the rainy day fund knowing that I cannot always see ahead in case something untoward should happen.

    It’s called plan for the worst but hope for the best – then always have that ten shilling note in the back pocket.

  28. Bloke
    August 22, 2022

    The OBRā€™s recurring failures fill a bucket of sloppy worthlessness overflowing with misled waste. Being independently-minded adds nothing of value if their opinions are just daft. Empty the waste from Govt to avoid data being contaminated at taxpayersā€™ expense.

  29. XY
    August 22, 2022

    The unanswered question behind all the recent posts on Treasury failings is… what can a Chancellor do about it?

    Can he tell them to adjust their model? Can they refuse?

    Perhaps he can tell them to adjust it until the model takes the inputs from previous years and produces the correct output “forecasts” (since the actual values are now known, being part of history, we have some excellent test data available).

    If the model forecasts what actually happened then it’s (probably) fit for purpose, if it doesn’t, then it needs work.

    1. Mark
      August 22, 2022

      Run a modelling competition, open to major universities and banks and perhaps a few others. Publish the league table of forecast accuracy. Award contracts for assisting with policy evaluation based on results.

  30. wab
    August 22, 2022

    Oh God, the “laffer effect”. It’s 2022, not 1982. Laughable nonsense from the “trickle down” brigade. No matter what the problem, their solution is tax cuts for the rich, with a few pence for the non-rich just to pretend that this is all ok.

    If Truss (the pound shop Boris) is the next PM, maybe she can make Redwood the Chancellor of the Exchequer, so that we can see his nonsense roll out in real time.

    1. Peter2
      August 22, 2022

      Who is proposing tax cuts for the rich Wab?
      More twaddle from our Labour troll

  31. Rhoddas
    August 22, 2022

    UK inflation to almost double to 18.6pc, economists warn
    Citigroup believes it will take until mid-2024 to meet Bank of England’s 2pc target…

    On a positive note we just wiped out 20% of the debt from Corona… is this the ulterior motive?

  32. Rhoddas
    August 22, 2022

    UK inflation to almost double to 18.6pc, economists warn
    Citigroup believes it will take until mid-2024 to meet Bank of England’s 2pc target…

    On a positive note we just wiped out 20% of the debt from Corona! Ulterior motive?

    1. Mark
      August 22, 2022

      We had inflation of 18.4% in Jan1980. It took 13 years to get down to 2%. Citi are wildly optimistic.

  33. Rhoddas
    August 22, 2022

    UK inflation to almost double to 18.6pc, economists warn…
    Citigroup believes it will take until mid-2024 to meet Bank of England’s 2pc target…

    On a positive note we just wiped out 20% of the debt from Corona! Ulterior motive?

    1. graham1946
      August 23, 2022

      How come we het all these duplicates and triplicates. I thought this site was moderated. Obviously some contributors are not.

      1. hefner
        August 23, 2022

        Itā€™s because they are not real dupli-, triplicates, look at suspension points or change around ā€˜ulterior motiveā€™.
        If one submits twice exactly the same comment the system recognises it. But if you are so keen on your own prose that you keep submitting it again and again changing a comma, a small dot or an exclamation mark here and there, you could see tens of your delicious verbiage on this page.

  34. DaveM
    August 22, 2022

    OT. Illegal immigration – what the hell is going on Sir John? Why is the Conservative government doing this? I donā€™t expect a reply because I assume the whole Conservative party is complicit in facilitating the invasion of our homeland.

    1. glen cullen
      August 22, 2022

      MOD Royal Navy report today zero (0) illegal immigrants in boats this past 24hrsā€¦.maybe the Royal Navy donā€™t like going out at weekends now theyā€™re winding down their role and handing over the responsibility to the sea-scouts

      1. glen cullen
        August 22, 2022

        Update from GB News
        Last 12hrs, 20 boats with 1,000 illegal immigrants crossing today

        1. Diane
          August 23, 2022

          19/20/21 August – 3 days recorded ZERO. Yesterday 22 August: Final figure 1295 / 27 boats (MoD) I question yet again what happens in the Call Centre, what communication goes on between those people manning the centre & the French authorities and any other bodies, charities / NGOs & the like, if any at all. The boats started just after midnight Sunday 21/8 we are told. Were those escorted from the French side in the dark to the midpoint ? Were our vessels waiting for them to arrive at that point with advance notification or not. They were still being brought in during the evening yesterday. What about the securing of a likely thousand plus extra hotel rooms after yesterday’s arrivals. Does the UKG & its appointed operatives have a bank of hotel rooms ready for such ‘surprise’ landings. How many rooms were on standby. What was known in advance if anything. How many coaches were on standby. How many UK staff were on hand to deal with so many. 1295, think about what that number of individuals looks like. We have become so blase about the numbers. Where are they now?

          1. glen cullen
            August 23, 2022

            …and the French did see anythink…..yeah right

        2. graham1946
          August 23, 2022

          Tuesday morning and the official released figure is 1295, a third higher than yesterday’s estimate.

    2. The Prangwizard
      August 22, 2022

      Being reported 1000 illegals brought over today by his government. And that includes his party and everyone in it.

      They are all responsible for the destruction of our country. A few words saying it’s not nice is all we read. They will not risk their positions with true opposition.

      1. glen cullen
        August 22, 2022

        This government is the enemy and/or is in league with an external enemy by not protecting our shores, coastline and borders

  35. Mike Wilson
    August 22, 2022

    This ‘supply problem’ I keep reading about. What is in short supply?

    Electricity? Nope, power is on.
    Gas? Nope, gas is on.
    Water? Nope, taps are running.
    Food? Nope, shops are full of food.
    Clothes? Nope, shops are full of clothes.

    1. Mickey Taking
      August 22, 2022

      midweek railway trains? – some days nope.
      weekend railway trains? – some days nope..
      weekend Underground lines? – some days nope.
      strike planned over the August bank holiday on buses operated by TFL.
      post delivery? – planned days nope.
      criminal barristers? – nope.
      UK’s busiest container port working? – nope.
      waste staff in Edinburgh working? – nope.
      M4 diversions or closure at weekends- months of it.

    2. Pauline Baxter
      August 22, 2022

      Mike Wilson.
      Well the corrupt M.S.M. have to find some shock horror story to churn out !!

    3. Mark
      August 22, 2022

      Don’t count on power, and perhaps not even gas over the winter. Without power you will get no water. You may not be able to cook or heat food. You won’t have money left over for clothes, which will remain unsold (other than woolies).

      1. IanT
        August 22, 2022

        One of the wife’s Canadian cousins cooks on his BBQ all year round, even knee deep in snow. It’s right outside his kitchen door (and plumbed into the gas mains). I’ve just had the propane bottle refilled on our BBQ and I think i’ll move it a bit nearer the back door. Also had the chimney swept last week (we’ve not used it for nearly 20 years) and I’ll cut some logs too. Until recently, I’d have thought I was going a bit bonkers to be thinking this way but now it seems to make a weird kind of sense. But then I can remember going into shops in West London that were lit by Tilley Lamps during the three day week.

        1. graham1946
          August 23, 2022

          As a 40 years plus log burner, I urge you to get some education on cutting, storing and burning them It can be very dangerous if they are not correct and the chimney is not conditioned each week and swept at least a couple of times a year. Ordinary open fireplaces are not the place for log burning. Better and safer to get smokeless coal available from all the discount stores and garden centres etc. Please be careful or you may burn your house down.

          1. IanT
            August 23, 2022

            Thank you Graham – I will research further

    4. glen cullen
      August 22, 2022

      Correct – its the cost of supply which is the issue rather than supply itself
      The energy to our lights wont switch off, its just that the energy to those lights will be so expensive that the average Joe will be unable to afford to switch them on !

    5. hefner
      August 22, 2022

      MW, A bit simplistic, all those things might be available but at increased prices. From experience my weekly food basket has gone up by 15+% . Gas and electricity have gone up and will continue to go up. I might not need new clothes and the water bill might not go up in price as much as gas and electricity but over all, your comment is rather deluded.

      And as usual on this blog there are other deluded people congratulating you for your ā€˜insightā€™!
      I would never have expected to find that British people could be so dumb. But thatā€™s the ā€˜fish bowlā€™ effect, there appears a stupid comment and not long after some people agree with it.

      1. Peter2
        August 23, 2022

        We can’t all be as clever as you think you are heffy.

        1. hefner
          August 23, 2022

          P2, you are just another symptom of this ā€˜fish bowl effectā€™, the commenter who thinks he always has to put the ā€˜dissidentsā€™ on the right track.

          1. Peter2
            August 23, 2022

            I am simply exercising my right of free speech heffy.
            Unlike you I try not to be rude and describe people with different opinions as simpletons, deluded dumb and stupid, as you did in your post above.
            Try arguing the subject rather than going personal.
            Use your undoubtedly huge IQ
            Or perhaps imagine yourself chatting in a bar somewhere.

          2. hefner
            August 24, 2022

            Sorry, I donā€™t usually go to bars, just my local pub. And I love you for defending ā€˜the widow and the orphanā€™. I am sure that without you they could not respond to my critical comment, couldnā€™t they? Thanks G*d for P2, the white knight in a shining armour battling the left-wing dragon.

  36. paul
    August 22, 2022

    The problem is, deflation. Good for people on low wages, family’s and fixed income people, bad for shares, housing and valuables, but most of all it bad for government taxes, deflation cannot be taxed, so what’s good for the majority of the people is bad for the government and who ever is in government. Catch 22

  37. Mark
    August 22, 2022

    Some simple sums for the Treasury.

    800TWh of gas x price increase of over Ā£200/MWh = Ā£160bn
    250TWh of electricity x price increase of over Ā£400/MWh = Ā£100bn
    Almost Ā£10,000 per household either directly or indirectly

    What are your plans?

    1. glen cullen
      August 22, 2022

      Every household got Ā£150ā€¦.and net-zero continuesā€¦the plan, well its more offshore wind turbines (under Sunak & Liss)

      1. glen cullen
        August 22, 2022

        That Ā£150 we got from the government has just been cancelled out

        ā€˜ā€™ The cost of UK households bailing out ā€˜greenā€™ energy retailer Bulb is expected to soar to more than Ā£4bn by the spring, saddling every home with an additional Ā£150 or more on their bills next yearā€™ā€™ FT.com

      2. Mickey Taking
        August 23, 2022

        What Ā£150 ? – -where’s mine?

        1. graham1946
          August 23, 2022

          Get on to your council. It was paid out on the Council Tax account. Mine came in June.

          1. Mickey Taking
            August 23, 2022

            Only if Council Tax rating A to D !

    2. Dave Andrews
      August 22, 2022

      I’ll tell you the government’s plan – borrow Ā£260bn.

      1. glen cullen
        August 22, 2022

        Well thats not a very conservative plan….couldn’t they just cut back government by Ā£260bn
        New strapline – ”Cut Back Better”

  38. ChrisS
    August 22, 2022

    The predicted rises in the cost of gas are now so high that no government could possibly subsidise bills for the majority of the population. Starmer might be able to cancel the rises for one quarter, but at immense cost, but then what would he do about the next quarter, and the following few ?

    It seems to me that the only possible route to keep families solvent is to reluctantly put a windfall tax on the energy producers, to reclaim the excess profits they will be making. Whether that is at all possible, depends on where those profits are declared and in which country they are taxed. If that is outside the UK, what then can any government do to relieve the burden ?

    One thing it can do is take all the extra profits made on UK wind and solar generation as, by definition, that takes place in the UK and the prices are artificially inflated by being linked to the wholesale price of gas. Even so, that is a relatively small amount because wind and solar are such a small proportion of the energy we consume.

    1. Mark
      August 23, 2022

      I imagine the price of imported woodchips has been increasing. I note that Drax have been making little use of the unit that operates under a CFD, which effectively taxes the the difference between the baseload reference price and the indexed CFD level. The other units operating under ROCs get full market price plus subsidy seem to get much more use. Another example of expensive supply supplanted supposedly cheaper supply in our crazy system.

  39. turboterrier
    August 22, 2022

    Sir John is it not time to throw all these posts about the the country’s finances when we have another thousand illegals arrived today. In 30 years or so they will all be eligible for an old age pension.
    This parliament has lost any semblance of respect and credibility. For the love of God get a bloody grip. You cannot go on being a voice for the few of your colleagues. This will end in floods of tears and grief as they keep coming and disappearing. Stuff the laws the long term on this country will be catastrophic something has to be done.
    NOW

    1. Original Richard
      August 22, 2022

      turboterrier :

      Agreed.

    2. No Longer Anonymous
      August 22, 2022

      Turbo – I gave up complaining about the immigration crisis some while ago. I predicted the boat situation would come here as soon as it started in the Med but was ignored.

      It’s over, mate.

      I’m just glad that the party that betrayed us the most is in power and will be utterly wiped out in under two years time.

      1. ChrisS
        August 23, 2022

        And just who do you expect to put the country back on the right track ?
        Starmer ?
        Sturgeon ?
        Davey ?
        Thought not ! What you would actually get is even worse : a grubby coalition of all three !

  40. stark
    August 22, 2022

    Just heard Starkey who lauded JR (fair enough) but he didn’t seem to get that
    it’s global.

  41. glen cullen
    August 22, 2022

    The average salary for a Barrister is Ā£89,400 gross per year, which is 202% higher than the UK’s national average salary
    https://uk.jobted.com/salary/barrister
    Everyone now on the government payroll expects 20%+ pay rise

    1. Enigma
      August 23, 2022

      Junior barristers doing work supported by legal aid can earn under Ā£20k/year and struggle to make enough money to live on.

      1. glen cullen
        August 23, 2022

        Every career starts as a ‘Junior’ on low pay….You must look at the working average for true comparison

        1. Enigma
          August 23, 2022

          Read The Secret Barrister

  42. Mickey Taking
    August 22, 2022

    Wishing to avoid the horrific cost of energy in this winter, I plead for assistance with this plan:-
    I wish to go where it will be MUCH warmer in our winter months – say Jan/Feb/Mar – allowing me to turn off UK use apart from preventing icing damage. I would want to stay abroad for the likely 3 months visa maximum. The location probably should sleep 4 to 6, be near some facilities, not in the middle of nowhere, and have reasonably cheap living costs. Any ideas?

    1. Mickey Taking
      August 23, 2022

      ‘allowing me to turn off UK energy use’

    2. Mark
      August 23, 2022

      Rwanda?
      Azores, Canaries., southern US

    3. hefner
      August 23, 2022

      Some English-speaking Caribbean islands parts of the British Overseas Territories?
      In winter the risk of hurricanes is near zero. And if you choose well you might even find a nice place for your ā€˜savingsā€™. Do I need say more?

      1. Mickey Taking
        August 23, 2022

        Flight costs? Apartment rental costs, Living costs – you can eat only so many bananas!
        Wish I had those savings to invest in Cayman Islands!

  43. Bloke
    August 23, 2022

    If one parent is a GP writing prescriptions and the other is a pharmacist dispensing them, might that nowadays be regarded as a conflict of interest?

Comments are closed.