We read that the Chancellor is being told there is no scope for tax cuts in the budget because debt interest continues to leap upwards.
I do agree the government needs to reduce the deficit and control state debt in future. The best ways to do that are to control public spending better, and to grow the economy faster to increase tax revenues. Tax cuts are essential to a growth strategy. The decision to cut HS 2 is an important first step in controlling public spending. This blog has identified plenty more.
The debt intertest figures being used to terrify the Chancellor are a muddle of three very different things.
There are the payments actually being made in cash on all the past government borrowings. These are going up a bit as a result both of the increase in debt, and the increase in interest rates meaning that when some of the debt matures the replacement borrowings are at higher rate. These are still affordable.
There is the payment being made to the commercial banks for holding reserves at the Bank of England. This is a new torture for taxpayers introduced as part of the Bank’s ill advised Quantitative Tightening policy familiar to readers of this blog. Money deposited at the Bank by commercial banks as reserves used not to attract interest, then attracted a reduced amount of interest based on a weighted calculation. The European Central Bank has recently announced they are going back to no payments on required reserves. Why doesn’t the Bank of England resume its old policy to save the taxpayer some money? Interest paid to commercial banks has soared as the Bank has hiked interest rates and passed it all on to them, a direct gift from taxpayers.
Then there is the real killer in the figures, the inflation cost on the indexed part of the debt. Around one quarter of the state debt has been borrowed offering the lenders reimbursement for inflation on the income and capital they are owed. The main capital enhancement is not paid as a cash sum each year as inflation mounts. At the maturity of the debt which may be 10 or 20 years away then the inflation is added to the sum to be repaid. In practice the state just borrows the extra sum as it rolls over the debt. It is wrong to treat this as an annual cost affecting the running deficit as the current accounts do. This gives alarming figures for debt interest when inflation is high. In June debt interest was said to be £13.6bn but £9.3bn of this was inflation provisions where no cash was paid out.
October 15, 2023
It’s all a ruse to justify high taxes, maintainthe big state and welfare programmes and to support the useless NHS..
October 15, 2023
Indeed why on earth were the BoE and Sunak borrowing on an inflation linked basis when they were using QE lockdowns and vast government waste to stoke up inflation? They could borrow for 10 years at less than 2% PA until recently (rather a bargain) even fixed mortgages were less than this. Gross economic incompetence yet again from Sunak and the BoE, especially as their QE and waste was causing all the inflation he now wants the credit for halving. He even thinks this would be âa tax cutâ so clearly he is mathematically illiterate.
Mathew Syed in the Sunday Times. âUntil we find a vaccine for religious fundamentalism there is no peaceâ Indeed that we have perhaps had enough of net harm unsafe and ineffective vaccines. We also have a government hooked on absurdly damaging new religions like Net Zero and climate alarmism.
Should we really have state funded, religiously segregated, schools hugely expanded by the dreadful David Blunkett yet another dire fool resigned in disgrace twice but now in the Lords.
October 15, 2023
Is Hunt really that thick or does he want to make us all poor to level down to third world status while transferring industry and jobs east?
Hunt must know transferring industry to his beloved China and buying goods to transport back only uses more fuel costs more. Hunt must know it does not help balance trade deficit, must know it reduces UK tax take, raising corporation tax has proven to lose tax revenue, reducing corporation tax increases tax take and makes UK competitive. He must know buying LNG from EU through inter connectors is acting against the public mandate to leave the EU while tying UK to EU energy and forcing UK fishing rights to energy is an act of self harm acting against our national interests, same for steel, food, energy, water etc. I can only conclude Sunak and Hunt are deliberately acting against the interest of our country as the Windsor EU sell out shows. The Tory party allows this therefore they need to be ousted. JR has made many very good cases, including this one, why his govt is not fit for purpose and are traitorous. The actions- BOE selling bonds at losses of multiple billions is a glaring example. Why would Hunt allow this? Sunak needs to brush up on his own maths before preaching to toners! Idiot.
October 15, 2023
@Hope +1
Of course he realises, like his buddy next door once he has trashed the UK he will be off to newer pastures. Of course leaving the rest of us to pay back his debts with no economy to turn it around. Top notch Socialist Thinking.
October 15, 2023
The central plank to get elected in 2010 was to balance the structural deficit and start to pay down debt by 2015! Then 2017,2019,2021 and then abandoned by Hammond! Come on JR. Get real. Where were you all? Taxes kept rising to 70 year record high with the worse public services! Same for immigration, cut to tens of thousands, Osborne admitted no one was serious in private. Last year your party CHOSE to import 1.2 million! Less than 3,000 were the brightest and best category! Same for Brexit. A party of deceit and lies.
October 15, 2023
Indeed one would have thought Hunt & Sunak must know this but then they both did read PPE and Sunak was an appalling Chancellor (who got everything wrong thought Covid) and Hunt for 5 years was a dreadful Health Secretary who failed to even try to address the dysfunctional structure of the NHS.
I see that Cambridge has taken the war against the motorist to new absurd levels with a car trap to catch and in some cases write off cars that attempt to use Bus Lanes. Bus lanes are a system of reducing the capacity of roads by about 50% by restricting 50% of the road space to 95% of the traffic. Taxis are often allowed to use the bus lane (this despite the fact that taxis are about three times less efficient than are cars at they travel empty about half of the time – and need a professional driver too).
I thought the whole point of bus lanes was to mug drivers as much as possible & to raise money. So do the Council have even larger release fines for people whose cars are trapped and perhaps even written off by the council’s car traps! Will they go back to man traps too soon too to enforce their 15 minute cities.
As I say so much of the taxpayers money that the various arms of government spend & waste clearly does v. significant positive harm to people and the economy!
October 15, 2023
Peter
I do not think it is a ruse, it is simply a fact that government with successive Chancellors have made a huge cock up in printing and spending our money without realising how much future damage that will cause, they have then complicated the matter further by spending more than they have printed and gained in taxes, have got little value in return for their excessive expenditure, have decided/allowed the BOE to crystallise the losses on bonds now, instead of waiting for maturity, and after doing some simple maths, have found out they cannot afford it.
Thus they have caused a huge financial imbalance of colossal spending themselves, which is not even covered by increasing taxation income, so they want us to cough up even more to cover for their mistakes.
No wonder Rishi wants people to do an element of maths at school until they are 18 !
Problem is school does not educate people in the real world of compound interest, or the cost of interest in general.
Quite shameful that the Government want us to live within our means, but refuses to do the same itself, but in addition wants us to bail them out with higher taxation (which Directly affects us) because that adds to our own problems of trying to live within OUR means, especially when you are on a fixed income.
In short it has been a, We spend you pay policy.
October 15, 2023
@Berkshire Alan +1 Education not teaching basic Maths surely not. They teach discrimination, how to perform sex acts, how to interrelate with your fellow trained socialist clones – but maths, how to learn and comunicate is no longer the prevue of UK Educationlists
October 15, 2023
If Sunak is competent at maths why did he and the BoE borrow at inflation linked interest rates when he could borrow at less than 2% (ten year fixed money) until recently, This when he and the BoE was pumping up inflation hugely with his QE and tax borrow and piss down the drain agenda. 10 year fixed borrowing at 2% was a bargain you damn fool Sunak.
October 15, 2023
Indeed. We’ve had so many promises that the Tory’s would balance the books by 2015,16,17,18 etc. No they won’t. They need to cut their spending, by time limiting welfare, stopping mass migration, and useless spending on things like HS2 and foreign aid. Why on earth are the Tory’s not deporting illegals and foreign criminals to Countries in receipt of aid? Braverman now TALKING about raising income thresholds for working migrants to median wage thresholds. FFS. Stop talking and act. We don’t believe you anymore.
October 15, 2023
@Peter Gardner; At this stage of the political cycle it is (or should be) all about what will keep the Tories in power for another five years, it is about what the majority want, big state, little state – or perhaps finding a middle way, encapsulating the best of the free market along with the best of the planned economy?
How many floating votes are gained or lost by cutting taxes vs. how many floating votes are gained or lost by promising to improve the nations infrastructure, that is essential to any growth strategy, and which all Free Enterprise in the UK relies upon. We all know the NHS is “useless”, the question most people ask is why, which results in the Tory party having to repeatedly assert that ‘the NHS is safe in our hands’…
October 15, 2023
@jerry – yup, too many focus groups, getting big fat cheques by causing and creating concerns about the floating 6% that win or loose elections. Although now I have said that, no one actually wins elections, they just loose them.
October 15, 2023
@Ian B; Well if the Tory party needs employ focus groups, write “fat cheques”, to find out what common sense and/or an ‘ear to the ground’ tells almost everyone else…
October 15, 2023
If the government was a private company it would be declared bankrupt
It’s time to stop this year on year increasing the national debt and reduce public spending
Dozens of Quangos could be culled.
Payments to so called charities stopped and aid for disaster relief only.
It’s time to get a grip.
October 15, 2023
Vast amounts of fat that could so easily be cut but no political will to do so. So much taxpayerâs money is spent doing positive harm:- HS2, pointless worthless degrees, net zero, road blocking, most red tape, OTT planning controls, the net harm vaccines, paying the healthy to not work, open door immigration hotelsâŠ
October 15, 2023
Too many voters voting for governments to increase the national debt, like pensioners keen on keeping the triple lock, those on Universal Credit and those nurturing lifestyle diseases.
October 15, 2023
Pensions were bought with valuable money, we are now being given confetti in exchange. And the U.K. is the world-leader is shortchanging itâs pensioners, look at what other countries pay.
October 15, 2023
Only your occupational pension. All your contributions to the state pension were spent in the year they were collected, usually by governments that had to borrow even more to fund their spending.
October 15, 2023
The fact that they spent our good ÂŁs does not alter the fact that we contributed good ÂŁs. This is not discretionary spending by the Government like paying benefits. Indeed the labour shortage would be resolved in a week if the Government did not pay people not to work.
October 15, 2023
@Dave Andrews;“and those nurturing lifestyle diseases”
Wow, that is a very wide gambit; most of modern life nurtures lifestyle diseases, everything from video games to modern sedentary office work, even commuting by car. Good luck putting that to the electorate!
Also one has to ask why Universal Credit claimants have become couch-hugging these days, might it be the hassle of the overbearing systems of sanctions, stopping claimants from getting involved with allowable unpaid voluntary groups, mental health wise, it being easier to just sit at home, in case the DWP officer comes calling?
October 15, 2023
@ Ian+Wragg “Dozens of Quangos could be culled” – not so, shown by readers here repeatedly failing to answer Sir John when he asks for the names of those to be abolished.
October 15, 2023
Get him to publish a list and we’ll soon see which can be binned.
October 15, 2023
People really need to research their own proposals, best made with explanations of why activities now undertaken by a quango can appropriately be discontinued. Offering a list risks facilitating capricious nominations from those who can join in all too easily without properly informing themselves first.
October 15, 2023
@Ian wragg; Of course ‘we will’, but this site hardly forms a wide consensus, and why should Mr Average accept what you, Lifelogic, myself think? Would you accept the “consensus” of say a Socialist website asserting that aspects of Capitalism should be culled, I suspect not! @formula57 is correct, if you can’t suggest any Quangos now, unprompted, how will you know which to pick from a list, other than by way of their descriptions sounding suspect…
October 15, 2023
I suggest we keep the Attorney General, and get rid of the rest, 1,161 which are:
Attorney General 4 817 0 57.9
Non Ministerial Departments 3 9017 684.8 715.8
Cabinet Office 16 1518 68.35 434.63
Communities and Local Government 28 6240 2522.6 1104.7
Local Authorities 469 2927000 92490 145569
Constitutional Affairs 578 33097 1161.77 2404.47
Culture, Media and Sport 63 45545.25 1657.81 8412.84
Defence 48 41117 8877.3 4877.8
Education and Skills 22 12408 18887.4 19738.47
Enviroment, Food and Rural Affairs 107 29842 3337.51 5909.47
Export Credit Guarantee Department 1 0 0 0
Food Standards Agency 6 1478 33 91.33
Foreign and Commonwealth Office 12 10972 467.26 930.42
Forestry Commission (Great Britain/ England) 3 1255 23.11 52.36
Health 59 20050 818.6 3488.2
HM Revenue and Customs 1 4428 0 201.29
Home Office 33 59409 3538.04 3994.09
International Development 4 6785 15.78 137.5
Trade and Industry 66 244365 6161.77 23033.32
Transport 19 22030 2303.79 6502.22
Treasury 9 8222 317.58 920.46
Work and Pensions 23 115453 4817.08 7304.62
Scottish Executive 148 40169 6685 8434.9
Northern Ireland Executive 11 1357 8.18 36.09
Welsh Assembly 38 3241 1154.32 1234.86
Total Quangos, Agencies and Non-Ministerial Departments 1162
October 15, 2023
@Lynn Atkinson; A fine list, but how did you come to your decisions, blindfold and pins, by their descriptions, or some more detailed knowledge of each Quango. Thanks for making my point better than I did by the way!
October 15, 2023
Since there are about 1300 Quangos and the Government deliberately doesn’t make it easy to find a comprehensive list, it’s difficult for people not involved in Government to pick and choose those which could and should be scrapped.
However, two which are well known – and both should be done away with:
1. The Climate Change Committee, which is stuffed with Eco Nutters and those who expect to benefit personally from the Eco Lunacy.
The OBR. If the Treasury and B of E can’t run the economy effectively without a Quango “telling them what they can do”, perhaps they too should be abolished!
October 15, 2023
If there was a comprehensive published list of quangos, and the annual cost of each, it would be a fairly simple matter to select a number to be chopped.
October 15, 2023
If Sir John will allow, here is a download of the list (2009) c/o Gaundiard.
https://www.theguardian.com/news/datablog/2009/jul/07/public-finance-regulators
October 15, 2023
Totally agree. The size of the public sector and Government could be massively reduced and no-one would notice. Also unaffordable public sector pensions need to be subjected to the markets like those in the private sector.
October 15, 2023
@JoolsB
Yep …. public sector pensions seem to be a big problem.
With our hosts permission:
https://ifamagazine.com/cost-of-public-sector-pensions-bigger-than-uk-economy/#:~:text=The%20cost%20of%20pensions%20for,time%20
October 15, 2023
How do you axe the state pension? Since most people have been asset stripped paying 20% of their income in, they don’t have savings to live off.
You then just end up relabelling the money as welfare not pensions.
Notice too that John doesn’t talk about the big debt, state pensions. That’s on top of the massive civil service pension debt.
October 15, 2023
The Mod has a director of communications. As her staff are so overworked, she has taken them out for a buffet and games at the Plaza hotel. Re Guido. I was told that the Whitehall HMRC has more days out in the west country horse riding and other activities in order to encourage bonding between the hard working from home staff.
It’s a pity that they don’t have inflation linked capital gains tax. My CGT on property bought 31 years ago will inflate this tax by 300%. But then I’m not a bank or finance house.
October 15, 2023
Not linking CGT to inflation is taxing people on money they have even not made as is Osborne’s not allowing interest deductions for landlords.
Both can be over 100% (wealth taxes in effect) even worse than Denis Healey’s moronic 98% income tax was. Why go into business if you will be taxes on over 100% of the profit?
October 15, 2023
I like all those suggestions, Ian. Have you a bit of spare time to coach our PM in mathematics and perhaps teaching him a bit common sense as well!
October 15, 2023
He certainly needs it. I assume Sunak was not too good at maths or he would have read Maths, Physics or Engineering rather than PPE plus his performance at Chancellor shows this.
Did he even take Further Maths at A level?
October 16, 2023
Why would Further Maths be essential? Economics possibly!
October 15, 2023
@Ian+wragg – You seem to be suggesting we need a government that controls spending and lives within the means of what the Country earns. That is anti the Socialist WEF doctrine that this Conservative Government takes its orders from so fights against. It is clear that no political grouping that is empowered and paid by the people would contemplate such reckless acts.
October 15, 2023
@ian wragg; “If the government was a private company it would be declared bankrupt”
Comparing a countries economy with a private company is perhaps even more daft than trying to compare it with a Housewife’s household budget, but than, as that has been the norm in some circles for the last 45 years… đ
October 15, 2023
Totally agree. The however won’t until they suffer wipeout at the next election. Totally out of touch.
October 15, 2023
Excellent explanation I wonder whetherJeremy Hunt and the treasury ministers understand this? I suppose the only good thing about it is the same method can to some extent be used to deter Labour from even more waste when as seems likely they get in. The bank subsidies are particularly absurd.
October 15, 2023
Hunt doesn’t need to “understand” anything. He’s told what to say by the Treasury. When he was Health Minister he apparently wasn’t able to understand that cutting thousands of hospital beds would lead to reduced capacity in the next serious epidemic. But hey, he’s just a politician – the civil serpents run the country.
October 15, 2023
Trashing the economy in order to stop the other side from doing is absurd. That is why they must go !
October 15, 2023
Part of the context for the Autumn statement is where the opinion polls are. YouGov have Labour on 47%, the Tories on 24%, as of a few days ago. Hunt is not going to change that picture by merely claiming to ‘act responsibly’ with the public finances. He’s currently doing a good job of making sure people do not feel better off under a Conservative government. Whether there’s time for a tax-cutting budget next year, before an election, which would change that context, remains to be seen.
October 15, 2023
Offering people a bribe with a little of their OWN MONEY BACK via tax cuts is not going to work. High interest and high inflation has seen that what little, if anything, that can be given back is already taken by the aforementioned. And claiming, like Labour, that they have spent more of you tax and borrowed money on a poor performing and wasteful State isn’t going to work either.
You vote New Blue Labour, you get New Blue Labour.
October 15, 2023
There can be quite quick changes in public opinion if itâs seen thereâs a real change of direction. Iâd have thought itâs too late though for a gimmick like 1p off the rate of income tax to achieve a real turnaround. Iâm afraid last autumnâs ERM 2.0 has done for us as surely as did ERM 1.0 30 years ago.
October 15, 2023
Yes, the PCP are on a hiding. When Hunt stands up to speak we think of his admiring China comments and seeming desire for greater societal control (not to mention his robotic style); when Sunak stands up we feel he represents Davos man and will more than likely sell us out to the EU Politburo.
Sorry Sir J, your PCP front bench is simply not mainstream conservative party, neither are they trustworthy.
October 15, 2023
@Philip P – âact responsiblyâ the soundbite joke of the day
October 15, 2023
He has no time. All tax thresholds frozen for years under his stealthy raids. The fool thinks we don’t notice. Welfare anyone? Just roll up from anywhere for your free…. everything. The 46% can afford it. But not anymore I’d rather see Starmer than tolerate any more useless Tory’s.
October 15, 2023
A debt is still a debt and debt interest is still debt interest irrespective of how it is treated on the UK’s balance sheet. It demands repayment at some point and is a burdensome obligation for future generations. Do politicians in government care? No. Do Depts of State care? No. Both have their smelly, greasy authoritarian agendas and the taxpayer exists to finance their flights of fascist fancies.
We are governed by Oxbridge snakes who play games with our public funds, play games with our freedoms and play games with our lives like we are nothing more than chess pieces on a chess board.
October 15, 2023
This is an interesting piece, but I think it’s semantics. Debt is debt and those who had the foresight to buy long duration index-linked Gilts deserve their reward, but if interest rates get out of control it is this fraction that will bankrupt us. 13 years of government borrowing, taxing and spending have brought us to this situation; thanks to Sunak printing more money than any Chancellor in history, our national debt amounts to over 100% of GDP. The equivalent in America is 6.9% (source; Wall Street Journal)
Now is the time to pay down all personal debt – credit cards, bank loans, mortgages, overdrafts etc and buy gold bullion. Those holding hard assets in the coming hyperinflationary economic collapse will preserve their wealth and even prosper. Those holding debt will find themselves living in tent cities and scavaging in dustbins
October 15, 2023
If there is indeed hyperinflation those who have borrowed will see the debt decrease. Governments like inflation
If we are entering a period of hyperinflation I say mortgage yourself to the hilt. Unsecured debt is obviously better but will cost more in the short term
October 15, 2023
And EV cars – they will be so valuable when there is no fuel⊠đđ€Ł
October 15, 2023
Entertaining is a very expensive hobby.
How about inviting the whole neighbourhood in for permanent bed and board ( to the great disapproval of most of your family) and then finding that you canât meet your basic household financial obligations without borrowing?
In fact you canât even feed your aforementioned family!
So you have a big panic and cancel Christmas!
October 15, 2023
The Tory’s have invited the world free of charge.
October 15, 2023
They obviously believe in their ability with five small loaves of bread and two small fish.
October 15, 2023
The average tax payer pays ÂŁ5500 a year in taxes. When the Government letâs half a million uneducated people with dependents and children into the country EACH poor person, old person or child takes several hard working tax payers out of the system.
You soon realise the economics of mass migration will push taxes up to eye watering levels and will bankrupt the country.
When you add in the mix of conflict between nations at war you soon realise the Government has inflicted the worst political process since the civil war on this country.
October 15, 2023
@Javelin – Unfortunately according to the High Court in the last week this Conservative Government and the UK Parliament have made it against the law to send those that criminally enter the UK back to anywhere that they don’t have a connection to.
It could also be why according to the MsM the UK legal charities in Calais are advising these would be criminals to remove all identifying papers from their possession.
So we cant stop them coming and we cant get rid of them and it is not a ECHR situation as some would have you believe it is the UK’s own parliament in its refusal of its job.
October 15, 2023
Indeed plus they need houses, roads, healthcare, GPs, police, social services, schools, language training⊠people on minimum wages with zero assets and low skills are a huge burden on other tax payers.4
October 15, 2023
Why am I not surprised by this debacle! Just highlight that the chancellor is not fit for purpose. Confirming the treasury & BoE are in control. None of them including the chancellor have been elected by the people! A totally unacceptable situation & why Rishi has made the Tories unelectable next year!
October 15, 2023
@Jude – with out them(treasury & BoE) briefing against the alternatives he would not have a job. It is clear they saw a threat to the lofty positions they hold themselves in. This Conservative Government does not work for those that elect, pay and empower them but the unelected, unaccountable bureaucrats that they are the puppets of â they (this Conservative Government) simply refuses to ‘manage’
October 15, 2023
What happened to all their forecasts?
Crystal ball getting a bit misty?
Surely if you can forecast you can prevent?
Thatâs the whole point of forecasts.
Come to think. How much does govt. hand over for ooky forecasts?
Or are they homemade?
October 15, 2023
I could do some forcasts for the Government. They may be wrong but it would cost the taxpayer less, plus I’d get some of my taxes back!
October 15, 2023
Sir JR, completely off topic, apologies. You need to look at facts4EU today.
October 15, 2023
I don’t believe that our Government didn’t know this or their incompetence knows no bounds. Dishonest scoundrels need severe punishment.
October 15, 2023
Or as Dickensâ Mr Micawber said âAnnual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result miseryâ.
And never mind leverage and all that stuffâŠ.thanks to govt.sâ ideological embracing of debt the world is now an extremely miserable place. ( Lower for longer didnât help much either!).
The Westâs prosperity was ALL an illusion and now we are paying.
Dearly!
October 15, 2023
Good morning.
Essentially doing what was proposed by Liz Truss MP before she was ousted.
Not if you are going to splash any savings on Carbon Capture at a cost of at least ÂŁ20bn ?
And then there is all those illegals we seem to have to house – Why ? Why do we have to house them ? They have broken the law and should be treated as criminals.
October 15, 2023
Well they could set up a charity and ensure its funded by private donors by law? But they want to spend money they can take from you by force. They of course ensure they take out more to cover the tax and inflation on the rest. That is if they cant avail of a daily exemption they retain for themselves.
Who said taxes and inflation and grind them?
October 15, 2023
+1
Why should criminals be accepted into our society? If genuine they would go the extra mile to show how they are genuine refugees not get rid of ID papers! Hardly rocket science. No ID deport.
October 15, 2023
Thatcher was great for about 5+ years (making her a great PM) but then became more of a hindrance than a help to the UK – long-term. We needed a Michael Heseltine back then but a Heseltine who was PRO Sovereignty NOT pro EU / Single Market – and designing our economy / building up our resources so that we could finally afford to smoothly get out of the EU / Single Market. Only when we find such a politician (a Heseltine but who is PRO Sovereignty – and PRO High Tech which i think Heseltine is – his biggest error being pro EU) in the future will Brexit work (if it ever can now) and we get taxes and immigration right down, too).
October 15, 2023
And at end of day Heseltine has a proven record of building up a high quality, multi-million pound brand.
October 15, 2023
Good grief. You are conflating two vey different issues. Heseltine not wanted near controls of govt.- ever
October 15, 2023
He also got significant EU agriculture grants for his farm. I wonder if his support is a coincidence?
October 15, 2023
Like I said I DON’T support Heseltine for his PRO EU politics but I admire him for his success in business.
What’ wrong in this country? Is it not possible to have a nuanced discussion anymore?
October 15, 2023
âŠin other words we did not need Michael Heseltine âŠ
October 15, 2023
This government spent heavily on wrong as well as needless things recklessly, and continues to do so.
Too many misguided wasteful idiots have been in authority for too long.
Sensible people spending thoughtfully and moderately would not have caused the nuisance that now exists and shall linger for long ahead.
The wasters should be removed instantly.
October 15, 2023
Don’t forget the money that is paid to the Bank of England by the Treasury and then recycled to the Treasury:
http://johnredwoodsdiary.com/2023/10/08/the-chancellor-says-he-wants-to-increase-public-sector-productivity/#comment-1413279
October 15, 2023
The use of dodgy data is a speciality of the state and it’s institutions when it wants to justify a policy. Unfortunately too many voters remain unaware of this or can’t be bothered to find out. Thank you for your persistence in drawing attention to this pernicious behaviour.
October 15, 2023
The decision to cancel the second leg of HS2 isn’t going to save a penny if the plans Sunak announced to upgrade northern rail and road cross-country connections. We’re still on the hook to squander ÂŁ70billion+ on a completely unnecessary and pointless rail line between Old Oak Common and Not-Quite-Birmingham …. plus the additional money IF the Euston Terminal is ever built.
Meanwhile, the Not-a-Conservative-Government is continuing on its mission to further wreck our economy and standard of living with the Net Zero lunacy and seems to be completely incapable of shaving even 1% off the exorbitant level of State spending.
But I’m sure Sunak and Hunt will “miraculously” find scope to offer some tax cuts shortly before the next General Election …. providing we vote “the right way” of course. Won’t we be surprised and impressed (not).
October 15, 2023
And of course, there is the point, which you have made before, that the interest on Gilts held by the Bank as a result of its QE purchases, goes straight back into the Treasury’s coffers. Another reason not to sell these stocks at a loss.
There are two possible answers to the question: either the Chancellor lacks the competence, or energy, to challenge the phony statistics being fed to him, or he agrees with them.
October 15, 2023
Prison custody is one of the latest costs government canât pay.
Most criminals donât need imprisonment to prevent them reoffending.
The Home Office should create an L-plate flashing light helmet and uniform to identify offenders to the public wherever they go.
Judges should sentence non-violent criminals to wear the uniform at all times for years. The law-abiding public would instantly become aware of whom to be careful near or avoid. Criminals would soon learn from everyday experience the shame of their wrongdoing, and how they need to behave to earn trust. Anyone not wearing their uniform would serve the full sentence in prison in pink.
October 15, 2023
or a compulsory striped uniform for 6 months?
October 15, 2023
What we are told by this Government its never the truth the whole truth……..
October 15, 2023
this government, or all governments?
October 15, 2023
The bank of England should pay commercial banks the (median) average rate of interest paid on the customers’ accounts including current accounts.
Then the banks are not making a margin on money lent to them by their customers.
October 15, 2023
The BoE is not a regular bank. Sir J. can’t seem to grasp this. We use Fiat Money, of no tangible value, based entirely on confidence and good faith. The BoE literally creates and destroys this money. Having the BoE create more money to float around the system, giving it to the Treasury to pay government expenses, means higher inflation.
October 15, 2023
Sir John does not grasp this âŠ. đ€Łđ
October 15, 2023
If I were Hunt Iâd cut the 5% VAT on domestic energy, children’s homes, hospices, monasteries, nunneries and halls of residence for university students.
Doing the right thing will provide the incoming Labour Government with a more stable foundation to their benefit, so why are you allowing him to do it. Chasing votes away to a Labour government that is promising to grow and spend.
Where is their money coming from to build 1.5m homes for social and affordable homes in 5 years? Thats not private sector growth that is government spending?
Is this just one step in sending us down a deep well so the only way out of it is to attach ourselves the EU that can borrow trillions even though theyâre already neck deep in debt that suddenly we canât afford or manage or be allowed to do, unless youâre an incoming labour government of course or are the new labour government going to raid private and workplace pensions that Iâve read people have suggested. The main thing is getting us conjoined to the EU and paying part of their big bills because theyâre in more debt trouble without their 3rd biggest payer inner. People need to wake up and start asking questions. Jam tomorrow, we can do this because the country can grow, well why canât Hunt get the Country growing why doesnât he say he even wants to if its soooo easy. Apparently Reeves has just got to say it and it will happen.
October 15, 2023
Brilliant! You would leave the 20% VAT on energy paid by business and small businesses canât reclaim that 20%.
Canât see much difference between you and Hunt to be honest.
October 15, 2023
The sums due in interest are dwarfed by the losses you have pointed to before being deliberately and unnecessarily incurred by the Bank’s sales from its bond portfolio. If inflation indexed accruals are shown in expenses, why not crystallized losses on bond trading?
I recall the contrast between the Federal Reserve that paid interest to commercial banks and the years when the ECB did not was viewed by some as a reason banks in the U.S.A. were better capitalized than was typical amongst E.U. banks. With the write-offs due on their commercial real estate loans, perhaps the banks are glad of the income for the central banks?
October 15, 2023
I truly believe the Conservatives would be ahead in the polls by now if Tory âwe know bestâ MPs had not performed a coup on Liz Truss. At least she had a low tax high growth agenda, something socialists Sunak and Hunt have no understanding of whatsoever.
October 15, 2023
+1
JoolsB
Sunak and his backers wanted the job so badly they were prepared to say and do anything. And so they did.
October 15, 2023
How do you achieve a high growth agenda under war conditions. At this point were Truss or Johnson in Nr 10, the U.K. would be mobilising!
October 15, 2023
Does government not make accruals for future liabilities in its accounting?
These inflationary promises increase the debt owed (by 9.3 billion pounds in your example) so we are on the hook for a further ÂŁ9.3 billion at some point which will have to be borrowed to pay back.
It is right that this is accounted for. However maybe it should be shown as a non-cash charge so it is more transparent.
We ate incurring further debt and a company that did not include a liability such as this writing in their accounts that it would be borrowed later would rightly be charged with fraud.
Reply The amount we have to borrow this year is not pushed up by the inflation effect on indexed bonds . The future liability is a cash but not a real terms increase in the amount we will need to re borrow on repayment.
October 15, 2023
Thank you Sir John
Real terms or not, we will have to borrow further funds when repaying the bonds. Are you suggesting that it only hits the accounts when it materialises just like written off student debt?
I suppose we are not accounting for future pension payment liabilities, particularly within the public sector so your “account for it when we pay it” sole trader model for government is at least consistent.
October 15, 2023
Hi Narrow Shoulders, thank you for asking what I was wondering.
Regarding Sir John’s answer, I take the distinction made to indicate ÂŁ9.3bn added today will be easier to pay back tomorrow thanks to inflation.âThat is, the original debt gets indexed interest but the interest isn’t added to the debt to be itself indexed in later periods.âWhile this helps, it still shows inflation, high and long-term, is the only route indebted governments can seek.
There were those warning of a US Government debt spiral a couple of years ago; they were ridiculed.âNow it’s becoming a mainstream topic.â’It’s just math’, as they say over there.âAs the US dollar struggles, other fiat currencies will fail first as they’re not the world’s current reserve currency.
October 15, 2023
Remember when all informed sources were telling us to pile on the debt when interest rates were low .
October 15, 2023
Good morning Sir John
âThe best ways to do that are to control public spending better, and to grow the economy faster to increase tax revenues. Tax cuts are essential to a growth strategy.â
Pure Conservative philosophy that works over and over again â if you have an economy, if permit an economy to grow, permit the economy to become resilient and self reliant. You then have a Country funding its future.
The 2 Socialist Chancellors in this Socialist Con-servative Government see that more tax and spend, more uncontrolled tax an spend is good Socialism.
Not forgetting and we must never forget it is these 2 Socialist Chancellors at the helm that raised costs to Industry and Commerce, that caused inflation, that caused the high interest rate that the taxpayer now has to fund on top of all the other Socialist policies.
The ‘Conservative Party’ needs to wake up and smell the coffee, becoming just another Socialist Party removes choice.
October 15, 2023
“We read that the Chancellor is being told there is no scope for tax cuts in the budget because debt interest continues to leap upwards.”
Three questions please:
1. Presumably the Chancellor is merely being “advised” there is no scope for tax cuts…. advised by whom ….. presumably “advised” by HM Treasury ?
2. Interest rates are set by the “independent” Bank of England. Does this mean that the B of E is effectively in control of UK tax policy ?
3. Who the hell is running this country ?
October 15, 2023
It would be nice if our public sector economists could find some tax cuts to stimulate economic activity so as to increase the overall tax take. Do the public sector finance people need a crash course in behavioural economics ?
Should we be looking at a reduction of taxes on jobs (such as secondary national insurance) ….. and also looking at a reduction of taxes on spending (such as VAT) ?
October 15, 2023
Oldwulf
The World Economic Forum
October 15, 2023
It’s clear that they don’t want the economy to do well.
Any govt that wanted to be re-elected would be doing very different things. We can’t possibly outstrip the EU by a significant margin, that would thwart the rejoiner case.
October 15, 2023
Off topic:
Since the Home Sec has designated Wagner a terrorist org and states that they are funded by the Russian State… why has Russia not been designated as a terrorist State?
October 15, 2023
Because it has nukes and a lot of raw materials we need.
It’s all a con.
October 15, 2023
Because they would wipe us out?
October 15, 2023
Once again Sir John has highlighted the mistakes and wrong priorities in the management of our economy . Apart from announcing complaints in whatever means possible the public have no means of putting wrongs into rights . The most outstanding error is the economic knowledge of the Chancellor ; such an office should only be occupied by an individual whose record shows impeccable detail understanding of the whole of our needs and responsibilities ; sadly this is lacking in Hunt . Allowing the BoE to continue to make decisions with its present record of errors of judgement is unforgiveable ; Hunt must ” go ” or be pushed out .
October 15, 2023
I assume once Labour is elected the BoE will implement the measures you are suggesting but for the moment they want to keep the pressure on the Conservatives to ensure they are defeated. Ditto the OBR.
October 15, 2023
I would not bank on that.
October 15, 2023
The Chancellor, Government and Parliament should continually ask the BoE why they do anything because everything they do is not necessarily in the interests of the tax payers. And taxpayers can elect or reject governments but have no control over the BoE.
Is it not now time to have ALL such high positions within Government control put up for public election or at least, election by our MPs? This must also include the judiciary as some of their past ‘judgments’ have been outside of their legal jurisdiction.
October 15, 2023
It seems that, like love, running the Bank of England means never having to say you’re sorry.
October 15, 2023
Hi sir john
We will bring down debt and then labour will massively increase it next year when they win the next election this is a never ending situation in this country