Go for growth to get the deficit down

The government faces grave difficulties in securing a pro growth economic policy from both the OBR and Bank. The OBR regularly makes large errors in its forecasts of the future deficit yet the whole fiscal stance is based around the OBR five year forecast. The truth is no one including the OBR can get to within ÂŁ50 bn of accuracy for that figure with any reliability given the huge number of variables that will affect it over a 5 year period.

Indeed, the OBR has been unable to forecast the one year figure in recent years with any accuracy. In March 2022 the budget forecast for that year was a deficit of ÂŁ99 bn. Some of us said that was too low at the time. In November that was hiked to ÂŁ177 bn. The current view of the outcome was just ÂŁ132 bn. So since the budget of November 2022 with no further policy change the OBR has been ÂŁ45 bn out! In 2021-2 the budget forecast overstated that year’s deficit by ÂŁ131 bn.

What should be done?

The OBR should be asked to revise its models. They should provide an honest account of why their deficit forecasting has gone so wrong. Whilst there have been some in year policy changes, the main problem seems to be the revenue forecasts on unchanged policies. Their model wrongly thinks lower tax rates raise less money and higher tax rates more, without putting in a factor for behavioural change and for the rate of underlying growth to correct. Tax revenues are very sensitive to the rate of economic growth, as a marginal pound of extra output or income is taxed highly. Recessions lower profits and incomes cutting tax inflows. The OBR’s ability to forecast spend on unchanged policies is also impaired where they need to work on estimates of take up of subsidy and benefit schemes.
The government should remain committed to getting debt as a percentage of GDP and deficits down in future. It needs to explain how sensitive deficits are to growth, and explain how adopting a better pro growth strategy would assist deficit reduction. It needs to adopt a pro growth strategy and draw on past experience to show how and why faster growth will prove OBR deficit forecasts wrong if they persist with high deficit estimates.
The government needs to make the case for lower tax rates bringing in more revenue. The Thatcher cuts in income tax brought in much more revenue from higher earners. The Osborne cuts in corporation tax brought in more business tax. Above all modern Ireland shows that you can collect four times as much from business proportionate to the size of the economy by setting a 12.5% tax rate.

96 Comments

  1. turboterrier
    May 5, 2023

    The OBR must have a cost involvement and from your post today Sir John it would to the uninitiated be assumed to be a lot of taxpayers money, which begs the question are we getting real value for money?
    I personally think it should not be a question of asking but telling them that due to their models being so far off track they come up with new thinking.
    This is just another area of government depending on models which may or may not be successful dependent on the data input. The same could be said about Net Zero. In a constantly changing world, models have to be flexible and when data appears that undermines them on a regular basis then change the thinking.
    Are these quangos ever be bought to account for the money they directly and indirectly cost us?

    1. Cuibono
      May 7, 2023

      Do we really need “models”?
      Most ordinary people knew exactly where all the mad policies would lead.
      And they have!

      1. Lifelogic
        May 7, 2023

        Indeed what is needed is competent ministers and competent MPs. The Tory Party even kick out Andrew Bridgen one of rather few competent MPs they have.

        1. Cuibono
          May 7, 2023

          +many

        2. Ashley
          May 7, 2023

          Sensible ministers who give civil servants sensible instructions and civil servants who actually do what they are told to do.

          1. Lynn Atkinson
            May 9, 2023

            That’s the real battle. We need the most robust people to fight the civil service on our behalf. You can see the Kemi B was beaten, regardless of her good intentions. ‘The civil service told me I could not withdraw most of EU laws 
.’

    2. Mark B
      May 7, 2023

      I personally think it should not be a question of asking but telling them that due to their models being so far off track they come up with new thinking.

      Group think – Groupthink is a psychological phenomenon that occurs within a group of people in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.

      The only solution to the OBR is to take a quote from the song by the 1980’s band, Orange Juice – “Rip it up and start again.”

    3. British Patriot
      May 7, 2023

      I have said for many years that the OBR needs to be ABOLISHED. They are useless cretins who NEVER get it right. A wrong forecast is WORSE than no forecast at all, as it forces you down the wrong road. But neither the government nor Sir John listen to me. All he wants to do is tweak the model, when you need to exterminate the whole organisation.

      But even Sir John’s mild call for a modest change of policy is a waste of time, as the government is determined to carry on with their moronic policies that are destroying our country. This quote from a newspaper report today says it all: ““It’’s really important that we listen to people,” Frazer [the Culture Secretary] told Sky News. “I know people are frustrated and angry”. She added, however, that the results would not prompt a change of strategy in No 10″. So there you have it. The government ptetend that they are willing to listen but in reality are determined to make no chages whatsoever. The Tories are the ENEMIES of the British people. The party must die.

    4. NottinghamLadHimself
      May 7, 2023

      Another day, another buck passed.

  2. Cuibono
    May 7, 2023

    If the chief of a body like the OBR admits publicly that its forecasts are “ almost guaranteed to be wrong” then why for pity’s sake is it still making forecasts? Why is it still in existence?

    1. Lifelogic
      May 7, 2023

      The forecast have all all been wrong on climate, the economy, the counter productive wars, Covid and the best “solutions”, on inflation (largely caused by Sunak and the BoE) on Brexit (not that we really have this yet (indeed will we ever get a real Brexit now?).

      1. Lynn Atkinson
        May 9, 2023

        Yes, we will have a real Brexit when the EU die – and I can hear the rattle from here.

    2. Lifelogic
      May 7, 2023

      The one thing we have not had in recent years is any Budget Responsibility. We also had the Office for Tax Simplification but we got the complete opposite of Tax Simplification too. Both expensive organisation came from the appalling Chancellor George Osborne under Cameron in 2010. Not a Conservative Policy to be seen from them. The appalling man did not even keep his ÂŁ1 million promised threshold each for Inheritance Tax that made Brown bottle his election plans. It is still just ÂŁ325,000 which is now worth perhaps just ÂŁ200K due to Sunak’s currency debasement and money printing.

      Tax simplification and budget responsibility were of course both highly desirable but we got the complete reverse from these incompetents.

    3. Lifelogic
      May 7, 2023

      Predicting the economy for a few years is a much easier task than predicting the climate for 100 years (especially as they do not (cannot) even know all the climate inputs). But they cannot even do the former.

      What is certain is that the war on CO2 (plant tree and crop food) and expensive unreliable energy will make the economy far worse now and do nothing at all to improve the climate in 100 years time. We have had no recent warming anyway, several years slight cooling in fact.

    4. Mickey Taking
      May 7, 2023

      Why? Start with the notion of a lot of well-heeled, being well paid, with well endowed pensions.
      Will turkeys vote for Christmas?

      1. Cuibono
        May 7, 2023

        Yes I agree with you regarding the well heeled. Very good point.
        But don’t forget all the turkeys who HAVE been voting for Christmas for many years!
        And still are 
to the point where really democracy is finished!( no one to vote for!)

    5. MFD
      May 7, 2023

      That question Cuibono should have been asked by the Cabinet! I believe the OBR must be scrapped and ministers who we can control by our vote, forced to use their own skills and accept the responsibility!

  3. Mark B
    May 7, 2023

    Good morning.

    Let us not forget that, the OBR is a Conservative Government creation.

    Talk about something coming back to haunt you.

    1. glen cullen
      May 7, 2023

      Matthew 5:29 – If your right eye causes you to sin, poke it out and throw it away. It is better to lose one part of your body, than for your whole body to end up in hell.

  4. mickc
    May 7, 2023

    The OBR was a ridiculous invention, and remains so. It should, like any failing body, be abolished.

    1. Ian+wragg
      May 7, 2023

      Sunak and Hunt won’t reduce taxes, spending or promote growth because it’s against WEF policy.
      We have to remember who actually controls us.
      The only growth will be population growth

      1. Ashley
        May 7, 2023

        Seem so and we now have WEF, climate alarmist, anti-GM King too.

        I had forgotten about Prince Charles’s childish & deluded Reith Lecture, suitably demolished by Richard Dawkins’ sensible open letter.

      2. Ian+wragg
        May 7, 2023

        Today the Saudi Arabia of wind is generating less than 2gw. Doomed we are, relying on imports from France, Belgium,Holland and Norway.
        What do we do when Putin sabotage these cables.

        1. Lifelogic
          May 7, 2023

          2GW so enough to power about 700 electric fan heaters or electric kettles. Actually fewer than that after transmission losses. This for nearly 70 million people! So 1/100 of a fan heater each!

          1. hefner
            May 7, 2023

            An average kettle/fan is 2,200W. A GW is 1,000,000,000 W, so to me it looks like
            2,000,000,000 / 2,200 = 909,909 kettles/fans

        2. Stred
          May 8, 2023

          What do we do if the Russians decide that the UK supported the sabotage of the Baltic gas pipelines and get revenge by removing half UK and Polish gas supplies from Norway and the North Sea?

          1. Lynn Atkinson
            May 9, 2023

            The Russians know that the U.K. supports ‘Ukraine’ against them in their existential war with the collective west. The Russians don’t need to sabotage any pipelines, they just need to tell India that they can’t sell on Russian oil to the EU and Britain. That will stop everything in its tracks – this winter?

  5. Sakara Gold
    May 7, 2023

    The government’s electoral problems were worst in Brexit voting areas. They voted Labour. The Liberal Democrats took many wards in previously true blue councils. The Greens made a historic rural breakthrough because of the sewage, mounting opposition to fossil fuels, housing developments and because their voters want renewable energy.

    The British public are not stupid. After giving the matter consideration, they have concluded that because of Partygate, Truss/Kwarteng threatening their pensions and the endless cost of living strikes, it’s time for a change

    1. IanT
      May 7, 2023

      Truss didn’t threathen peoples pensions Sakara, she wasn’t around long enough to make any real difference. What really threatens them is a toxic combination of low returns and high inflation. With regards LDIs, that was a result of funds running final salary schemes needing higher returns than they could make safely in the market. It’s worth noting that money purchase schemes were not involved as the risk is with the pensioner and not the fund. Not all Trustees were silly enough to use LDIs either. No, if you want a culprit – look no further than the BoE and money printing – but windfall taxes on high dividend companies are hardly likely to help your pension prosper either….

      1. Lifelogic
        May 7, 2023

        Exactly.
        The BoE money printing & other incompetence and Rishi Sunak’s tax, borrow & piss down the drain, regulate to death, push idiotic net zero expensive energy policies and the huge & counterproductive lock downs were/are to blame. Truss and Kwasi were at the very worse just the final straw – but Sunak had already set the scene for the economic chaos.

        Great slight of hand by Sunak et al to push the blame from himself to Truss.

      2. MFD
        May 7, 2023

        You must remember Mate, Sakara makes up her own world that revolves around the far left, British success is not to the far lefts liking

    2. Roy Grainger
      May 7, 2023

      The threat to pensions, such as it was, was only to those in final salary schemes, so mostly civil servants including Treasury employees and not “the British public” at all.

      Anyway, Conservative MPs decided they knew better who should be PM and installed him – the local election results show how effective that move was.

    3. Narrow Shoulders
      May 7, 2023

      Areas that overwhelmingly votes to leave the EU were predominantly Labour voting. The middle classes were advantaged by freedom on movement raising House prices and keeping builders, plumbers and batista cheap with access to low priced nannies and quinoa.

    4. a-tracy
      May 7, 2023

      SK “They voted Labour” you are kidding yourself, the Labour vote came out but the brexiteers didn’t come out to vote at all, look at the % of the local population voting compared to the Brexit vote, or the following European election vote or the following vote in 2019 for a version of the Conservative Party sold by Boris Johnson but betrayed by a cabal of ministers like Sunak and Hunt, plotting and planning behind his back for over a year.

    5. Stred
      May 8, 2023

      Thankfully, the Greens have been kicked out of Brighton after their war on the motorist and mismanagement of everything else. Now Labour is in charge we will still have CRT and genderballs taught in schools with over regulation of the large private rental housing, which is needed by the way transient population.

      1. Lynn Atkinson
        May 9, 2023

        Good news re the Greens! One step in the right direction.

  6. BOF
    May 7, 2023

    It seems that the reliance on models has resulted in nothing but harm.

    The always wrong Climate Change models, the catastrophic modelling of the discredited Prof Ferguson throughout the Covid19 debacle (and for many years before), and with OBR models as you regularly point out Sir John.

    Ban computer modelling and bring back knowledge and experience!

  7. Harry
    May 7, 2023

    OBR… A waste of space and money. Nobody can make accurate predictions with the chaos in the world today.
    These people are taking money under false pretenses.
    Their actual function is to provide the government with an excuse for failure.

  8. DOM
    May 7, 2023

    Why does Mr Redwood naively assume that logic, evidence and rational argument have any role to play in today’s warped, despotic Britain? He should know that only power and politics now dictate policy. In a country in which the State cannot now define the biology of a woman then you have to assume there is something SERIOUSLY WRONG

    Taxes are high as it allows Tory cowards to throw money at Labour’s public sector rather than taking on the job of public sector reform which would mean war with the Marxists unions and probably bad headlines from the biased, woke fascist BBC

    It would help the blog if John explained to his readers that this now shithole of a Socialist nation has been crucified by scum Labour, unions and woke bureaucracy and his own party faithful because his party’s leaders are so captured and so fearful that they have sold the people down the river for pure self-protection and self-promotion

    1. Jim Whitehead
      May 7, 2023

      DOM, ++++++++++

  9. Sea_Warrior
    May 7, 2023

    Is the OBR’s work duplicated by Treasury staff? If so, who does the better job? If I were Chancellor, I would be abolishing an office that doesn’t do a very good job.
    And how many of the OBR’s staff have been recruited from left-wing ‘think-tanks’? Does it have a fair recruiting process?

    1. turboterrier
      May 7, 2023

      Sea Warrior
      You for me highlight the what I consider to be the Achilles heel of British politics
      We can have a government somewhere on the slide rule of political position but the Quangos and departmental staff could have their decision making marred by their own political beliefs.
      Is it not time to have 5 year or length of Parliament contracts to attract new blog and ideas? Justifies the slogans We Are Working For You.

  10. Mickey Taking
    May 7, 2023

    The Office for Budget Responsibility was created in 2010 to :
    1)Produce detailed five-year forecasts for the economy and public finances twice a year.
    2)Use our public finance forecasts to judge the Government’s performance against its fiscal targets.
    3)Assess the long-term sustainability of the public finances.
    4)Periodically provides a comprehensive review of risks from the economy and financial system identified in our fiscal risk register.
    5)Scrutinise the Government’s costing of individual tax and welfare spending measures at each Budget.

    1. Mickey Taking
      May 7, 2023

      Wouldn’t all these points be part of the Budget mechanism to assist in setting out the next one?

  11. Ashley
    May 7, 2023

    Life expectancy for a man of the age of King Charles is only about 12 years so I will probably get to see another coronation. True King Charles has long lived parents and has not had to wear himself out with any manual work (beyond ribbon cutting or tree planting) not even squeezing toothpaste tubes it seems. Also he is not reliant on queuing for the dire NHS or waiting weeks for a GP as of his subjects are.

    But then he (and Camilla) have had the net harm Covid vaccines which seems statistically lowers life expectancy rather significantly. Excess UK death still circa 200 each day when they should really be rather lower than normal (after the large increase death rates of recent years).

  12. MPC
    May 7, 2023

    Current practice suits Sunak and Hunt. It gives them opportunity for lucrative employment in left leaning NGOs and other non national bodies after the next general election.

  13. Nigl
    May 7, 2023

    Wasn’t the OBR invented to to take the political heat deflecting criticism that HMG was making its own fiscal rules to further election prospects rather than what the economy needs.

    Obviously your Treasury team doesn’t agree with you. However any forecasting organisation should be challenged when they get so much wrong. Their modelling is wrong not reflecting how the economy works.

    You imply said Treasury team does not challenge their figures which just confirms what the public told you on Thursday, namely you are not fit for purpose.

    If you continue to be bullied by BOE, OBR, the Civil Service and the centrists in your own party establish clear blue water on tax and the economy you have no chance.

    Unfortunately Sunak is a technician not a change driver. What a shame we don’t have a PM with his skills and BoJos oomph.

  14. Donna
    May 7, 2023

    The OBR was created when Osborne was pretending to be a Conservative Chancellor, roughly 12 years ago.
    Since its creation, it has got every prediction wrong.

    So there are two justifications for scrapping it:

    1. The Government / country didn’t require an OBR for centuries pre Osborne’s idiocy …… so it is an unnecessary addition to the Quangocracy which is now running this country into the ground
    2. It has failed in its primary task

    But the current Not-a-Conservative-Government won’t do that because it needs the OBR’s “cover” to do what it doesn’t dare admit it is deliberately doing: making us less competitive; more highly taxed and keeping us very closely aligned with an EU which we are supposed to have left.

    It makes no difference to Sunak and Hunt. They aren’t working in OUR interests and Starmer has made it perfectly clear that he looks forward to continuing to run the country according to the Agenda set by Klaus Schwab and the WEF.

    1. a-tracy
      May 7, 2023

      Was he OBR staffed with ex-Treasury staff or a new cost, if their estimates are the same as Treasury estimates then wouldn’t the government save a lot of money to cancel it, probably the first thing Labour would do. Who appoints and interviews the OBR key workers?

    2. Jim Whitehead
      May 7, 2023

      DONNA, +++++++++

  15. agricola
    May 7, 2023

    Should we be so obsessed with forecasts, there being so many variables and events in the future to make a nonesence of them. Even without these events the scribes in the OBR and Treasury seem incapable of an accurate forecast.
    Much better we have a plan for where we wish to head. If we want Singapore north of Calais then there are building blocks that need to be in place. Currently the plan, if it exists, seems more Pyongyang north of Seoul. At best those who call themselves government have 18 months max to achieve it. If little else our local elections should tell them that they are way off track. More of the same will see them gone for decades.

    One of the first things I would do is look upon the Covid debt as war debt, thinking in terms of its clearance by the end of the century. Everthing else needs to be geared to an enterprise economy with all the tax changes we have been discussing but never realising. Correct some of the obscenities of capitalism such as the way the Silicon Valley empires can operate in the UK for income but such as the Caymen Islands for tax purposes. They are the modern day robber barons.

    For icing on the cake tell M. Macron that he cannot expect french companies to continue trading in the UK while refusing the return of illegal immigrants to France. At the same time publish a list of major companies to be affected.
    Take the same attitude to the NIP, leaving the EU to act as it wishes, but securing the UK as a sovereign entity.

    A plan of such intentions might restore the Conservative vote and save us from further decades of grey thin lipped socialism.

  16. Keith from Leeds
    May 7, 2023

    Cut the cost of Government, Civil Servants, Quangos, and Money given to hostile charities.
    Then you would have plenty of room for tax cuts to stimulate growth, & could take no notice of the forecasts.

    1. glen cullen
      May 7, 2023

      BBC red button reporting that Shell are leaving Cambo Oil Field North Sea and Tata Steel warns of uncertainty in the UK 
.that’s the result of net-zero and high tax

  17. Richard1
    May 7, 2023

    This is all true but has unfortunately become 10x more difficult due to the catastrophe of the Liz truss PM-ship. If only the ‘right’ of the party had united behind a smooth transition to Rishi Sunak once it had become clear how hopeless Boris Johnson had become, in the summer of 22. Now the blob has taken back control. Sunak perceives, rightly, that stability and the restoration of market confidence is essential. That unfortunately – post-Truss – includes the opinion of the blob, which these days is most certainly empowered to speak out when it’s opinions are challenged. That is why we have Hunt as chancellor, why the message is businesses will be taxed more to get the deficit down etc. it’s not a good idea at the fundamental level but it doesn’t frighten the horses.

    Truss, by her clodhopping rush into an emergency budget, which we didn’t need, with provocative headline tax cuts and an unlimited energy subsidy, but nothing on spending controls or any other reforms, put the cause of free market conservatism back by years. Coming after 3 years of Boris Johnson squandering his opportunity, it was a profoundly depressing moment for those of us who would like to see a competent Thatcherite approach.

    Based on the local election results it looks like the truss debacle is going to cost us the next election. Sunak might be able to squeeze us back, but supporting him is the only hope we’ve now got.

    Reply The brief period of the Truss premiership did not cause the problems. reversing all her tax cuts so quickly did increase the problems mainly caused by the Bank ofEngland’s disastrous monetary policies.

    1. Richard1
      May 7, 2023

      The tax cuts of themselves didn’t cause the problems and were not in principle a bad idea. Announcing them with the uncapped energy subsidy and no spending plans did. We got to -11% under Boris which had recovered to -5% by the time he left (because it was clear he was going). Liz Truss took us down to -30%. Sunak has clawed us back to about -12%. If we hadn’t had the truss debacle it seems most unlikely we would be as badly placed as we now are, and nor would Sunak be so cautious and / or spooked by the blob.

      Reply It was the Bank raising interest rates and announcing QT that took the gilt market down, and it was the Bank then shifting to short term QE that rallied it!

      1. Richard1
        May 7, 2023

        Sure the BoE was most unhelpful, but managing that relationship is part of the job. I do not believe that had you been in Kwasi K’s place you would have allowed things to proceed as they did. Truss was PM, was unable to manage the situation, to stick to her plans or to defend them in an articulate way. Which is why I’m afraid I think her selection as leader against a better choice has made a Labour Govt much more likely than it was hitherto. Let’s hope I’m wrong.

        1. Lynn Atkinson
          May 9, 2023

          Why would ‘the right’ (do you mean the Conservatives?) of the Party support Sunak? It was not the Truss tax cuts that were the problem it was the fact that she refused to ‘cut spending’. Watch her at the Despatch box – as she said those words the financial panic set in.
          If Hunt (or anybody) proposes tax cuts without first cutting (government) spending, the same will happen as night follows day.

      2. Mark B
        May 7, 2023

        Richard1

        So you support wasting ÂŁ20bn on carbon capture rather than say, fix our broken roads ?

        Everywhere I go I see pot holes and, it is not just me that is mentioning it, it is countrywide.

    2. a-tracy
      May 7, 2023

      You have got to be kidding, Truss’ mistake was not putting in seasoned MP like John Redwood as chancellor instead of an inexperienced friend maybe ex-friend now the way she treated him. Sunak was and is a treacherous snake all that plotting and planning and getting photographers onside within Downing St. who all got their faces blurred out of incriminating shots, all misbehaving and setting up parties and bringing in booze. I don’t consider myself on the right of the party, in many ways I don’t have a political home, I wouldn’t vote Reform even though I like Richard Tice and think he should be a conservative.

      Who is the blob that have taken control? Is it only ‘market confidence’ you feel government needs? 😂 Which part of the market exactly, do you mean just big foreign business and investors or the millions of this countries business people who keep their spending and resources here or something else all together?

      It wasn’t Truss that stopped my husband voting Tory for the first time in forty odd years! Sunak put his plan in motion to create the commotion.

    3. agricola
      May 7, 2023

      Reply to Reply,
      The Truss period in office did not have time to cause any problems, nor did she actually do anything to cause any problems. It was her expressed intentions that the establishment/blob took exception to. Ask yourselves this, knowing that the E/B have absolutely no democratic mandate, how is it that they can act outside the restraints of government, a coordinated force which can change government for the only reason that it is perceived to be detrimental to their
      pockets or collective political phylosophy. They have all too clearly subverted Parliament and have the current, arguably illigitimate government in their pocket, so what is the way forward. All too clearly a ligitimate government needs to destroy their powerbase.

      1. Peter
        May 7, 2023

        Truss is now offered as a convenient scapegoat.

        Changes she introduced were not well explained or backed up. When the markets dipped the Establishment used that as an excuse to quickly replace her with the current pair who had previously failed to gain support.

  18. Sir Joe Soap
    May 7, 2023

    The government will respond to the downturn in polls by spending more money. They say this shows that they understand the country’s problems with cost of living etc. They say this means that they have to increase taxes. That causes more dissatisfaction, particularly in the public sector which strikes for more money to pay those higher taxes. It’s a vicious circle caused by the false establishment-based premise that spending and taxing more relieves “problems” caused by cost of living etc.
    The whole vicious circle needs unwinding by spending less money, taxing less, curbing benefit-immigration, getting the 5 million into gainful taxable employment and so on. Until that’s done any changes in the OBR models etc are like a speck of dust on the laptop screen. There or not makes little difference.

    1. Timaction
      May 7, 2023

      In totting up our contribution to the exchequer in the last 12 months my wife and I have decided that we ain’t getting value for money. We’d be far better off without any Government health and public services and the whole lot should be privatised. The welfare state and handouts for the majority is broken as the 46% can’t afford them. Hence the ever increasing budget deficits during the highest of taxation years…….ever. Please go and take your incompetent Government with you. We’ve had enough of the consocialists for ever. Even if we have to suffer a few years of Stammer. Never again. A Reform Government will take over in due course.

  19. jerry
    May 7, 2023

    “Indeed, the OBR has been unable to forecast the one year figure in recent years with any accuracy.”

    No surprise there, given how often govt polices have swung back and forth since 2015, with three different Prime Ministers and four Chancellors in the last 12 months alone!

    The problem is not the OBR, the BoE nor Whitehall per se, it’s within Downing Street and by extension the governing party factions, perhaps its time Sunak did some house keeping, Kinnock style…

  20. Kenneth
    May 7, 2023

    I agree that the OBR has a dismal record.

    I don’t see the point in trying to reform it until its management is replaced first.

    1. Timaction
      May 7, 2023

      Just get rid of it. It never existed before and it’s just another costly useless quango.

      1. Mark B
        May 7, 2023

        A classic, jobs for the boys and girls with the right connections.

  21. oldwulf
    May 7, 2023

    Sir

    The problem is that the OBR, the B of E and HM Treasury are stuffed full of economists.

    An economist is someone who, when they find something that works in practice, wonder if it works in theory – Walter Heller

  22. Bloke
    May 7, 2023

    “What should be done?”
    Impose a heavy penalty charge on the OBR based on the % of their error.
    That could reduce the cost of their worthlessness.

    1. Timaction
      May 7, 2023

      We should also impose fines on Government Ministers until they run a balanced and reducing deficit. The fools can’t run a…………….bath!

  23. Ian B
    May 7, 2023

    “deficit forecasting has gone so wrong”

    Has it ever been ‘right’ ?

  24. David+Cooper
    May 7, 2023

    Unlike his two immediate predecessors, the current PM appears to have no vision; no desire to leave more of taxpayers’ earnings and wealth in their pockets; no desire to restore previously lost freedoms and to create more of them; no intention of removing the politics of affront e.g. taxi service and welcome mat for illegal immigrants; and no desire to make anything of Brexit beyond what is grimly called a level playing field by way of euphemism for regulatory alignment. The idea that he and his next door neighbour, both globalist managerialist elitist defeatists, might “Go for growth to get the deficit down” sadly appears to be wishful thinking. Where does this leave the once great party of Thatcher and Churchill?

  25. Ian B
    May 7, 2023

    @johnredwood ‘If taxes have to be this high why are public services not better?’

    Each day that passes the answer becomes more obvious, ‘This Conservative Government refuses to manage’, it refuses the job the people empower and pay it to do.

    To much time pandering to the sound-bite, playing ‘look at me’

    They give our money away to anyone that asks, and never demand a return, any accountability or responsibility. More, Oh you want money you are friends of friends so here you are – how much! That all, there is plenty more were that came from.

  26. Ian B
    May 7, 2023

    @johnredwood ‘Last Thursday many Conservative voters went on strike. They do not want to vote for higher taxes, anti enterprise policies and a failure to take back control of our borders. ’

    That begs the question after 13years in control, a 70year high in tax take, how come everyone’s life is so dire. The worst publicly funded delivery of services in at least 2 generations. Any reasonable individual in charge for so long would have stormed the elections as they would have provide a brighter future for all.

    I note the latest Government ‘Add’ to get everyone to have a Smart Meter, apparently if we all get one the Country will import less Gas – by using more wind and solar power. The brains in this Conservative Government are missing, wind and solar doesn’t power gas central heating.

    Elsewhere we learn the new warships the UK is building to support our Navy and our Shipbuilding industry will now cost significantly more. The reason give as to why, this Conservative Governments NetZero policy stops the UK producing the steel required so it has to be imported(China?). Then add in the fabrication in Poland, the French Government supplying and controlling the super-duper electronics(radar etc.) It goes on and on, in fact it looks like the UK needs these exorbitant tax rates to fund foreign Governments to keep theirs LOW. Another few ÂŁbillion leaving the Country

    CO2 production for the World? this Conservative Government has increased the World production more than any previous Government. Then they blame the UK consumer.

    No wonder Conservatives are angry

    1. The Prangwizard
      May 7, 2023

      The Conservatives in power and more widespread among them, and in the top layers of society, is a disasterous, dangerous and embarassing belief that Britain is so superior in the world in all respects, that others think we are so wonderful it no longer needs to make anything itself, and that we must be green everywhere; that our hands must never be dirty and we must never smell smoke; that with our superiority this will all be possible and justified.

      This attitude may mostly affect England because of the efforts given on devolution and taking England for granted but it means our decline will continue and accelerate with the further pursuit of the Net Zero ideology. Nor do they do understand at all that spending money we don’t have is a problem.

      Only ordinary people are required to repay loans. The government spends more money than the tax they force from us, quite often and wrongly not in our own country.

      They do not believe that we must make more things than we import. They think we are so infinitely superior to the rest of the world we need not try to work and suffer a bit in doing so. They have lived a such comfortable life themselves they have no understanding.

      1. a-tracy
        May 7, 2023

        They don’t think we’re superior “ In 2022, 12,148 doctors with a foreign nationality joined the NHS in England compared with 13,516 British doctors. This is 73 per cent more than the number of British students who enrolled to train as doctors in English medical schools in the 2022-23 academic year.”.

        Or they’d train more of our own in such high powered positions.

      2. Ian B
        May 7, 2023

        @The Prangwizard – are the Conservatives that ‘grab’ power actually Conservative or just destructive Hooray Henry’s with pals that cant hold down real jobs

    2. Timaction
      May 7, 2023

      But their ridiculous carbon capture, trading and exporting our industry makes them feel good. Bunch of religious net stupid types in charge here. China and India keep laughing at us. I wonder who funds stop oil and other lefty type groups etc

  27. The PrangWizard
    May 7, 2023

    It is appalling that Sir John has to repeatedly describe that tax changes affect behaviour and that the understanding of this is lost on the people the top. I enjoyed economics at school and I have say it was easy and enjoyable; (A level) I read the newspapers and observed in the main – this was in the 1960’s so everything everywhere must have changed since then if we are facing such basic fundamental problems, the wrecking of our economy. Sir John can’t get away with telling us it is nothing to do with the people in the Conservative party and leadership though. If they understood and knew what was best they would ensure it happened.

    We need a change of the top people because they clearly are miles away from understanding the real world; they cannot change their lifetime beliefs and understandings.

  28. herebefore
    May 7, 2023

    For growth we need to consider other things besides tax rates – for instance we need trusted trading partners – but we have already turned our back on Europe to a large part and our future trade pact with the US as envisionaged is in the doldrums. Yesterday Sir Jeffrey Donaldson the leader of DUP had the time to go to the Coronation and yet he has no time to bring his party into government – suffice to say that relations with the US has been soured by all of this – ‘they’ like the rest of us want to see the institutions up and working – So where are we going when the tail is wagging to dog? Last week it was announced that a new pharma plant is to be built in West Of Ireland by California company 1500 kore jobs and so on it goes for them but reading the report it took five years of networking and lead in time to get to this point – so there are many other considerations besides taxes.

    Reply The DUP are making the point that the EU is governing them and should not be.

    1. groundsman
      May 7, 2023

      To reply – I don’t think so SJ the Windsor Agreement has largely sorted out any bumps on the road – in fact four of the five parties in NI representing 75 per cent of the people agree that conditions are right to allow resumption of normal activity. NI is not governed by the EU but by UK government through the Secretary of State – it was because of the badly negotiated WA in the first instance that there were follow up’s needed to the protocol but protocols also applied to Gibraltar and Cyprus and everything is running ok there – only in NI have we got the same old nonsense and all coming from the same quarter.

      1. Donna
        May 8, 2023

        The Windsor Stitch-up keeps Northern Ireland within the EU’s Single Market: thus the EU is controlling NI.

        All the EU has “graciously” permitted is an easing of some of its surveillance of trade between rUK and Northern Ireland, which technically remains a part of the United Kingdom but in reality has been hived off.

        NI’s position within the Single Market is then used as a means by which the EU can continue to control rUK. For example, Sunak cannot remove VAT from energy in rUK because he cannot do it in NI and he doesn’t dare highlight the betrayal he has perpetrated.

      2. Lynn Atkinson
        May 9, 2023

        The NI Protestants have had enough and are moving to the mainland. The DUP acknowledge that ‘the demographics’ are no longer there to hold safe seats. We will have to abandon what is left to the EU in order to save the mainland.
        When the Vatican ordered the genocide of all Protestants in Ireland, and Cromwell saved them at great cost, nobody would have predicted that when Roman Catholicism died in the Irish Republic the Vatican would have its victory in the last 6 counties.
        Tragic and humiliating for the U.K. and it’s King and Government.

  29. iain gill
    May 7, 2023

    abandoned any thoughts of getting the actual debt down I see

  30. turboterrier
    May 7, 2023

    Sea Warrior
    Maybe the political leanings of those employed, clouds their judgement for the task in hand.
    All quangos and civil service personnel should be on five year or length of Parliament contracts. The best of the best will have nothing to fear.

  31. Bert+Young
    May 7, 2023

    Growth is dependent on initiative and enterprise – Sunak and incompetent Hunt don’t seem to understand this – or , if they do , they choose to ignore it . The OBRs’ previous predictions show that they cannot and should not be relied on , equally the BoE prefers to follow the dictate of the USA and not the needs of our economy . There is a very bumpy road ahead now for the Conservatives as the recent local elections have shown ; much more is now demanded rather than simply pulling socks up . Leadership must change and true British grit put in place . 18 months is a very short period of time .

    1. a-tracy
      May 8, 2023

      Growth is also dependent on being able to work! This government has sanctioned three extra days compulsory close down on my business within one year, the problem is the week leading up to these extra days is also down training and the day after it, when they talk about GDP being down I hope someone calculates typical GDP per Monday oh and Fridays which seem to be becoming an extra days downturn and compares it to turnover generated. It’s common for higher paid jobs both within government and industry to offer extra days holiday in lieu of a pay increase which they may be unable to fund, which again reduces productivity with more time away from the office and workplace.

      We then hear our local councils decide they can do five days work in four days with no extra hours for the same pay, who are mugs here, us sitting ducks in our homes paying the extra rates, it certainly isn’t for people’s social needs that is crock.

  32. Ralph Corderoy
    May 7, 2023

    ’without putting in a factor for behavioural change’

    The models used by the Government for the spread of Covid also ignored behavioural change. When challenged, it was too difficult to do so. Yet economist Andrew Lilico swotted up on epidemiology, with the help of expert critics, and produced models with variables for behaviour change. His proved more accurate with hindsight.

    ’to getting debt as a percentage of GDP and deficits down in future’

    Isn’t monetary inflation one way to swell GDP? Prices rise, GDP goes up even if productivity is static. Debt is measured in ’old money’.

    For the UK and USA, printing more seems the only way left open as a debt spiral nears. A desperate public will accept Central Bank Digital Currencies because they’ll be sweetened by Universal Basic Income and one needs to eat. Those moving money out of CBDC’s reach will be targeted, blamed, etc.

  33. Original Richard
    May 7, 2023

    There is no intention to “go for growth and get the deficit down” and consequently the OBR, and indeed the BoE, will not be “revising their models”.

    The aim of a majority of Parliament, the Government and the Civil Service is to reduce our CO2 emissions and this requires reduced activity whether this be consumption or industrial output. This is the law and the Government has already had a judgement against it in the High Court for not keeping up with its legally binding carbon budgets and I would guess the Secretary of State for Energy Security and Net Zero does not want to find himself in prison for failing to comply with the law.

    Hence the necessity to dampen down demand, lower industrial output and lower living standards to reduce CO2 emissions

    For the first time in history our energy strategy is now determined by climate activists and judges and not by engineers.

    Reply Laws imposing targets on the governments that pass them never give courts powers to fine or imprison Ministers or officials.

    1. Original Richard
      May 7, 2023

      Reply to Reply :
      Noted, thanks.

      In July last year a High Court ruling found the Government’s climate strategy unlawful as its Net Zero Strategy breached the CCA.

      So a Government and Ministers can ignore these rulings as the CCA is a “target” and therefore not “legally binding” as we are told?

      Reply Can’t ignore findings but Ministers not sent to prison or fined

      1. Original Richard
        May 7, 2023

        Reply to Reply :

        Sorry to be a pain. Sir John, but the law and Parliament are not my subject :

        So what, please, is the penalty applied to a Government if they do ignore the ruling of a High Court?

        Reply That is for the court but it is penalty on government not on individual Ministers. This is not criminal law governing people.

  34. Lindsay+McDougall
    May 7, 2023

    Yes, indeed, reduce corporation tax to 12.5% and tell the Republic of Ireland that we will match their rate no matter how much they reduce it.

    You haven’t mentioned that the low taxation burden of the landed gentry (the Royal Family and the people sheltering behind them) and the high taxation burden of the working upper middle classes is today’s big scandal.

    The banding system of Council Tax effectively puts a cap on the amount of Council Tax to be paid; no matter how great the capital value of your property and land, you don’t pay more than the band H rate. Contrast this with the 40% income tax rate kicking in at about ÂŁ53,000 pa, less than twice the median salary. The Chancellor does not propose to increase this threshold until 2028. Given 5 years of inflation, the threshold will then be only 50% more than the median salary. The 40% threshold should be raised to ÂŁ70,000 PDQ.

    Labour is right in one respect; non-doms are too numerous and too generously treated. The rule should be that if you spend more than 90 days a year in the UK, you cannot be a non-dom. No ifs, no buts.

    We have recently said goodbye to Nigel Lawson, a great Chancellor. His maxim was “Taxes should be low and everybody should pay them.” Good advice, with one exception. If nobody with an annual income of ÂŁ20,000 or less paid any income tax or personal NI, we could get rid of some of the benefit schemes and the civil servants that administer them.

    Raising the income tax thresholds to ÂŁ20,000 and ÂŁ70,000 is Reform Party policy. It’s about time that the Conservative Party started stealing the Reform Party’s clothes instead of the Labour Party’s clothes.

    1. agricola
      May 7, 2023

      L+M
      This consocialist party is only up for stealing a white stick from a blind man and then taxing him for owning a guide dog.

      In the next year it is vital that Reform spread their message so that it is well absorbed by end 2024. Getting air time and print space is their biggest challenge and possibly social media is the way to go.

  35. agricola
    May 7, 2023

    There are many subjects, meriting ministries, that should be outside politics.
    Defense
    How do we best keep the country safe and therefore free to indulde in democratic choices.
    Education
    How do we nurture the talent we have to ensure it is maximised irrespective of parental wealth. The country is the main beneficiary.
    Agriculture.
    If we accept that the principal aim is to feed the nation healthily, how is it best effected.
    Health
    Accepting that a healthy nation is more cost effective than the opposite, how do we bring it about.

    I contend that these are practical questions that do not need the added burdon of political phylosophy any more than does the next model that Toyota brings to market. The time has come when politicians need to grow up and realise that whatever phylosophy they endorse it requires a very successful economy to achieve it. At this late date if should be obvious that only capitalism works. It is down to politicians to achieve the acceptable balance between greed and social reponsibility. Kill greed and you have trodden on the golden egg, caress it and you can fulfil those social responsibilities.

  36. Mike Wilson
    May 7, 2023

    Mr. Redwood, is ‘growth’ your only answer to the issue of the deficit? Surely one solution is to reduce spending. This, presumably, is complete anathema to you.

    The idea of reducing spending by preventing the public sector from the continual, massive waste of money it indulges in never seems to get a mention.

    Let’s face it. Tax take the highest since WW2 and public services are a shambles. What DO you spend all the money on? It isn’t road repairs.

    One thing you are very good at is growing the economy by dint of increasing the population by truly eye watering numbers. You have that old to a fine art.

    Reply I have identified and recommended various reductions in public spending

    1. Timaction
      May 7, 2023

      But they are not doing it. Time to vastly reduce welfare and the state.

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