The Coalition when it came to office had sensible aims to rebalance the UK economy. It wished to cut the state deficit, and create a better balance between the productive sectors paying the taxes, and the state sector spending them.Ā It wished within the private sector to increase manufacturing as a percentage of the whole.
Almost five years on the government has made progress in cutting the share of GDP spentĀ by the state, but has further to go to eliminate the deficit altogether. The private sector in the second half of the Parliament has grown much more quickly than public spending, adjusting the balance between the two in a welcome way. It has also seen aĀ manufacturing revival with some notable success stories,Ā but not sufficient to increase the proportion of manufacturing in the total.
Rebalancing the private sector is more difficult for a government to achieve than rebalancing the state sector versus the rest. The government has considerable control over the size of the state sector, so can vary that as it sees fit. It has little control over the sizes of the manufacturing and service sectors. When trying to shift the balance it should want to do itĀ by helping grow the manufacturing sector more rapidly, rather than by cutting the size of the service sector through adverse taxes and regulations.
As someone who has led manufacturing businesses in the past, with more than a decade of experienceĀ in senior positions atĀ Ā industrial groups, and who believes in making things, I do not need convincing of the desirability of expanding industry here. Nor is it difficult to say what other measures would help. As I have often pointed out, the single biggest stimulus to more industry here would be more reliable cheap energy, as the USA is discovering. Better purchasing by government would also help, so that more state spending could be used to buy things we need that are made here, without infringing competition rules. France and Germany seem to find ways of buying more of their own goods.
The boundaries between service and industry are not well defined. If a large industrial business decides to contract out its cleaning, catering and other back office services, the national accounts are likely to report a decline in manufacturing activity and a rise in service activity, though nothing real has changed. If an engineering business decides to buy in engineering consultancy to design its next product or solve some of its technical problems, again the figures flatter services and reduce manufacturing.
Sometimes the UK discovers that some of its engineering talent is drawn to the city where they can command higher salaries. Some people think this wrong, but they are adding value and earningĀ their living. If those same engineers are better paid by working for an engineering consultancy, which in its turn can be hired by UK manufacturers, that may be a sensible model for advancement.
January 8, 2015
the govt does control the private sector by the amount of debt the govt issues. The central bank does repos on the debt, creating new reserves which lowers interest rates across the board and destroys private sector capital.
The service sector is not preferred to manufacturing, the barriers of entry to services are low. Manufacturing is difficult, requires a lot of capital, long lead times, highly skilled engineers and export markets. All of which the govt destroys. Flipping burgers won’t save us.
This govt, and all the prev post war govts are killing the economy, and they probably dont even known it. They can’t even eliminate the deficit, they won’t even mention the debt.
January 8, 2015
Indeed, but they do mention the debt when they falsely claim that “We are repaying the debt!” they are of course actually increasing it.
Anyway it is clearly the tax payers who will have to repay the debt not the “we” of the Tories, Osborne & Cameron I doubt they will be using their money.
January 8, 2015
You say the government has little control over the sizes of the manufacturing and service sectors.
Well it could at least stop kicking them. Cheap energy, fewer regulations, easier planning, simpler taxes, no enforced pensions, easier employments laws, less EU nonsense, stop forcing them to employ people who simply cannot do their jobs properly, get some real competition in banking – these might be a good start. Companies are being forced to become social workers, rather than manufacturing companies.
Some more decent schools, better, quicker, clearer & cheaper legal system, cancel HS2 and lower taxes/NI – this would all help.
Alas the Coalition just like pissing money down the drain, over regulating everything, forcing gender neutral insurance & pensions, forcing companies to employ the obese, disabled and elderly (who often simply cannot do their jobs properly), forcing companies to use expensive energy for religious reasons. Is it any wonder so many fail to compete in the world. We end up with endless Lawyers, HR experts, tax experts, grant experts, HR experts, H&S experts, bureaucrats etc. and very few engineers and people actually manufacturing anything.
January 8, 2015
Perhaps, given the events in Paris, the coalition government might reconsider its taxpayer funding of religious schools? Do we really want these cleavages in society to be augmented and magnified using tax payers money? Have we learned so little from Northern Ireland?
We can but hope I suppose. I suspect that in the UK we are rather more likely to get yet more laws attacking free speech and more thought crimes – we have far too many already.
January 8, 2015
The culture, values and heritage of our country should be promoted and not apologised for. Those who wish to come here should not be allowed to impose their culture, values or religion that is alien to our own and which threatens our security and peaceful way of life. What has Cameron actually done about the scandal of white female child abuse in such large numbers, the murder of Lee Rigby, Islamification of schools ie Trojan Horse, Islamification in universities separating men from women at lectures etc. What has he and Clegg actually done to prevent radicalisation and protect us? Why is he allowing Sharia law or any form of it in our country, our laws apply to everyone. Like the economy, immigration, crime and disorder, I suggest he has done sweet FA only meanngless hot air. Was it not Merkel who only days ago was condemning and labelling peaceful protesters exercising their freedom of speech against Islamification of the West? Now she wants to talk about it! Credibility- nil. What message does this send to Islamic extremists? Where is the debate and moreover where is the action by Cameron? It strikes me Cameron, Clegg and Miliband only like freedom of speech if they approve it, as we saw with Levison, otherwise people are given a labels as a fruit cake or closet racist.
January 8, 2015
More likely that a pathetic UK government will pass yet more laws against freedom of speech and a “protection of religious sensitivities” act I suspect. Given the UK’s usual direction of travel.
January 8, 2015
Yes segregation of kids along religious lines into different schools should be stopped, its crazy. Some parents will fight for the status quo as for many its their only way of getting their kids into a half decent school, this can be fixed by giving proper parental buying power and allow both schools and parents to select on merit. And remove all catchment areas, let parents and schools select each other regardless of all that nonsense.
January 9, 2015
Perhaps the single best thing government could do would be to keep religion out of state funded schools. If children (or more likely parents) really want to engage in religion they can do it in their own time and at their own expense. The last thing we need is artificial cleavages in society on religion lines.
Get the Bishops out of the house of Lords too. They are nearly all lefty and totally irrational. They never say anything much that is remotely sensible. If we keep the C of E there, all the other religion will want to join them soon.
January 9, 2015
Lifelogic
We have a two tier democracy – one untouchable ideology which is unmolested by satire or criticism.
The ‘fight’ for democracy is already lost. Protestors, newspapers and broadcasters are censoring themselves for fear of violent reprisals and are too scared to display the offending cartoons in defiance of Muslim radicals. I don’t blame them one bit. (The ‘peace loving’ Muslim majority should relish the opportunity to demonstrate their famous tolerance if papers started showing us the cartoons so that we could see for ourselves what the fuss was about – so damaged is our democracy that we are not allowed to.)
When such a relatively benign movement as Ukip is ridiculed out of existence whilst another ideology is protected at all cost we know that only one culture is going to win out.
It’s over, mate. Democracy, our culture – the lot.
The Tories aren’t going to save us. In fact they’re making it worse by making us think that we have too much to lose by voting Ukip.
And what of Mr Cameron stating that he refuses to partake in an all party debate in which the Greens are not included ? When was it in the interests of a Tory PM to do that ?
Yet again the man insults our intelligence. He is beyond belief.
He knows that he, Ed Miliband and Nick Clegg are not enough to take on the mighty Farage. He wants the feisty Green’s attack dog there to take the heat off of him.
Dr Redwood. For our country’s sake. What are you doing belonging to a party so weak and inimical to the survival of our country ?
January 8, 2015
Certainly nothing wrong with Engineers, Mathematicians and Physicists working in the City they should go where they want to and where the financial demand is. The real problems is the relative lack of numerate intelligent people with these skills.
The Maths and Science GCSEs and A levels at schools are now absurdly dumbed down as compared to the ones of 30 years ago. Have people become so much dimmer, I do not think so. So why such insultingly easy papers mainly of pure regurgitation? The questions are too simple to separate out the good from the less good.
Very little thinking involved and rather little meat there to inspire people to want to study the subjects. Further Maths A level is rather simpler than the Maths A level used to be. Indeed probably about the level that the Additional O level used to be.
More numerate people and scientists in parliament would be very good too. Just having JR and Peter Lilley and a handful of others is far from enough.
January 8, 2015
Time and time again I see tick-box mentality now amongst engineers and technicians under 35-40. If you can’t select it from a range of options or program it, it can’t be done. Thinking out-of-the-box, which was our bread and butter at that age, is less and less an option to them.
I guess once the tick-box taught become the teachers, the game is up.
January 8, 2015
Having said that, this seems to be a function of the education system and once into the real thinking world (used to be Schools and Unis), they can be changed, slowly.
January 8, 2015
You have struggled to understand measurements of electricity in the past and seem unable to see past your own deluded prejudices in particular financial and energy issues. This the level of education you want?
January 9, 2015
I understand electronics perfectly well in fact it is my degree & specialist field.
I am not sure what you mean (as usual) by “measurements of electricity”. You tend to measure Voltage, Power, Current, Energy and Charge – you cannot measure “electricity” as this means nothing at all.
January 9, 2015
Being pedantic and pointing out that there are various measurements of electricity and it cannot be just ‘measured’. Neither can wood in that case. How typical of you, anyway you have said in the past that a windmill cannot produce kWh which is just foolish. Explain why a windmill cannot produce Kwh or fractions of a KWh for all us non scientist/engineer types?
January 10, 2015
Lifelogic: “… as this means nothing at all.”
Credit where it’s due, he is consistent.
January 11, 2015
Bazman: “Being pedantic and pointing out that there are various measurements of electricity”
Precision in measurement is a necessary characteristic of science and engineering. Getting your measurements right is important.
When you complain that an engineer or scientist is being pedantic when he or she insists on precision in language as well as precision in measurement of the physical universe – well it shows you have no idea of what you speak, and are perhaps singularly unqualified to discuss science or engineering.
January 12, 2015
Understanding KWh would be something which he did not and is now telling us about other measurements and what an expert he is in this field. What does that tell you?
January 9, 2015
There is little motivation to follow a STEM career, the children have seen how their parents in these areas have been treated in this country and instead see all the rewards going to bankers, landlords and celebrities.
January 9, 2015
Some truth in that but maths, physics and engineering do allow you to do (and understand) most things far better than many people do.
The reason is engineers have to compete in a world market. Lawyers, Medicine and Bankers often do not have much in the way of open competition and are often artificially protected. The government needs shake these professions up and change the absurd legal structures. We have far too many lawyers for the good of the economy load more then Japan for example.
The best way to get rich is inherit it, marry into it, or get very good at football, tennis, comedy, acting or golf perhaps (leaving out the illegal options).
Failing that just run your own business and do it a bit better than the others do. It is not so hard if you put your mind to it. It could of course be far easier if the government stopped kicking, over regulating and over taxing you.
January 10, 2015
Where do landlords fit into this Rigsby?
January 8, 2015
I see Cameron is now trying to avoid a debate with Farage unless he has the Greens to help him interrupt and shout down Farage. This as he threw that last election with Clegg on TV and his cast iron ratting.
Was UKIP not first, Labour Second and the Tories third in the last national election? The greens and indeed the Libdums are clearly irrelevant.
Cameron is, for once, being very sensible here. Although he can be good at debating he has to be. This as the positions Cameron tries to defend are simply indefensible.
He is wrong on the EU, wrong on open door EU immigration, wrong on the green crap subsidies, wrong on expensive energy, wrong on gender neutral insurance and pensions, wrong on his 299+ tax increases, wrong on his IHT ratting, wrong when he claims “we” are repaying the debt, wrong on the size of the state, wrong on the second rate NHS, wrong on Grammar schools, wrong on HS2, wrong is claiming he halved the EU surcharge …….. He has little sensible that he could defend.
Not quite as useless as Miliband would be about all he could claim.
January 8, 2015
Easier employment laws meaning hire and fire at will without any recourse to law for the employee? What else can it mean given we have the most lax employment laws in the western world? Never reply to this do we?
January 9, 2015
Well thats not correct Baz is it?
I have replied to you several times on the increasing legal requirements of employing another person in a business.
The list of administrative burdens are long, complex and come with bug fines if you get any of them wrong.
If we have the most lax rules as you claim, which I very much doubt us correct, then I would love to see the most strict.
If you had ever run your own small business you would realise just what is involved.
January 9, 2015
You just have a contract agree between the two parties and enforce it as written – without the the additional pointless burdens the government add to it.
The only real protection for employees is the availability of other jobs. The government restrictions on contracts make this far worse not better.
January 9, 2015
There cannot be more jobs than employers and this is like saying womans rights legislation makes for less rights for woman. An old chestnut you will not get past anybody as it is clearly wrong.
January 9, 2015
Britain has one of the lowest employment Protection in 2008 in OECD and selected non-OECD countries. You cannot accept this and cannot of course cannot accept that though itās not just the law that causes headaches for employers, the legal process can be burdensome too. Here too, though, the UK compares favourably with other countries. It is well known that if you say something with sufficient confidence people will believe you. Facts become unimportant so long as they remain hidden and you and lielogic play on this.
Him with his contracts between two parties a cleaner and a large company say. Who would have the upper hand there you reckon. This is why he is saying this or he is just deluded. he reckons a significant part of the national workforce is slacking and could do with a bit more fear. To be fair, it was a British naval tradition every now and then execute an admiral to encourage the others, as happened to Admiral John Byng in 1757. Firing an occasional worker for no stated reason would surely encourage the others?
Blathering politicians and their deluded followers sticking doggedly to their principle of āignorance is blissā, blissfully spout that excessive employment protection is disadvantaging British industry They claim The OECD, the club of high income countries, produces various economic measures and reports, including an index on employment protection. Far from having excessive protection, UK employment law provides the third weakest employment rights in the OECDās survey of nations.
Even in the Tory party there are signs of exasperation at business bosses whining. We already have one of the weakest employment protection regimes. We already have about the lowest corporation taxes in the G20. The Tory cabinet minister William Hague commented, referring to Britain’s bosses “They should be getting on with the task of creating more of those jobs and more of those exports, rather than complaining about it.”
January 8, 2015
Agree. The biggest disgrace is the fact that we have to pay extortionate amounts for energy when we have the resources to make it much cheaper. How are we supposed to compete with the likes of China? Just the fact that at the moment petrol prices are cheaper is enough to give people a feel good factor. If we feel better off then that bounces onto other things. We can afford to spend a little more on things we would like to instead of things we HAVE to. My oil bill is a little cheaper and I am saving on diesel at the pumps. If this were permanent I may just go out and get a new television or revamp my home. We have shale gas and probably oil and just like the USA we should be reaping the benefits. Instead we are paying subsidies for an unreliable source of energy. I thought the only way a nation benefitted was to move with the times. With the discovery of affordable energy so much changed in our country and now we are going backwards. I am glad you are one of the politicians that actually recognise this fact. Please try and get others around to your point of view.
January 8, 2015
I think the question of consultancy being a service etc is at the margins. The central issue is the vast number of British manufacturing companies which have either disappeared or been broken up and sold off to foreign ownership since the postwar heyday of our engineering in the 1960s, and why this was ever allowed to happen.
How is it that the French still have a major motor industry, a thriving nuclear industry and are able to build cruise liners for the UK ? Could it have anything to do with the fact that France is run by technocrats from the Grandes Ecoles who want their country to remain an industrial power house by all means, but the UK is run by…….. ( insert usual dismissal of arts graduate British politicians ). It is only the older generation who can recall the days when we made almost everything we needed for everyday life ourselves, in our own factories, and exported all over the world without interference from Brussels, and were proud of it.
We cannot expect to have thriving manufacturing if we first get rid of most of what we have thanks to the benign neglect of governments and the misguided mantras of the FT and Economist (“It doesn’t matter who owns what” – try telling that to the Japanese, Germans, French, etc). And if we then encourage school leavers to get degrees in Beatles Studies rather than train a phalanx of degree engineers and the equally important technician level which used to be qualified by ONC, OND, HNC etc.
I suggest you get hold of a copy of the catalogue of the Festival of Britain of 1951 and ask yourself what happened to all these companies and why? The Left blames it all on Thatcher and the Right blames it all on Trade Unions and there is a grain of truth in both arguments. Personally I put it down to a combination of British bloody-mindedness which prevented harmonious labour relations and a constitutional inability to stick at something difficult for decade after decade until it comes right. It also has to do with the excessive dominance of the City and its demands for a quick buck and an often impossible return on assets. If our industries were so useless why did foreigners rush to buy them?
January 11, 2015
The simple answer is that France subsidises these industries massively in particular the nuclear industry. Its suspicious how cheap some French cars are too.
France is however a very much divided country with high unemployment and social segregation, but basing an economy of the City is dubious as we have seen. Wealth for the few and crumbs for the rest particularity if you have no wealth and work for a living. Wealth can mean just owning your own home and having no debts enabling you to be your own landlord and telling employers where to go if you do not like the deal they are offering. I have been told to my face I am dangerous because of this. Got that right.
January 8, 2015
Good morning.
If Government wants to help industry it could do some of the following:
1) Reduce energy costs by ending subsidies for expensive renewable energy.
2) Reduce Corporation Tax and Employers NI.
3) Reduce regulation. This can be done, in part, by leaving the EU. Most business’s are SME’s and are bound by EU regulations even if they only trade within the UK.
4) Reduce NGO’s and giving tax monies to fake charities. If a so called charity cannot survive without government / taxpayer handouts, it ain’t worth saving.
5) Reduce or eliminate ALL government / taxpayer subsidies.
6) Introduce more competition into the Public Sector by opening up the management of services to the Private Sector.
7) Leave the EU. No explanation needed.
Have a good day.
January 8, 2015
Indeed all those, plus get rid of most of the daft employment laws and other stupid regulations and simplify and speed up planning.
January 8, 2015
Brilliant.
January 8, 2015
Agree with much of what you say John, that is why it brings a smile to my face when politicians say they will create jobs, because the only jobs they can create are those which cost the taxpayer ever more money.
Yes a government can help create an environment which may lead to real job creation by manipulation/modification to the tax system to encourage work/self employment etc, but it cannot create actual jobs in the private sector unless it spends taxpayer money purchasing goods or services within that industry.
The best way to encourage employment to is encourage companies to relocate and set up in the UK, and the easiest way to do this is to have a competitive tax and low overhead structure, of which the cost of power is but just one element.
January 8, 2015
Indeed Governments can only create jobs by taxing or borrowing first, This invariably destroys far more jobs in the first place. Beyond law and order, defence and a few roads and some basis infrastructure not much else is actually needed.
Every green job “created” surely destroys at least 5 times as many with high energy prices and the taxes taken to fund the absurd green subsidies. Ed Davey/Huhne/Vince Cable types are clearly huge job and growth destroyers.
January 8, 2015
“Indeed Governments can only create jobs by taxing or borrowing first”
Is this really true -generally? For example, the Greek government is in a big mess, as we all know. Because it is a user of the Euro what you say is true. It can’t get money from taxation on basis that you can’t get blood out of a stone, and it can’t borrow money because the interest rates are prohibitively high.
So its best option would be to leave the Euro, or get thrown out and set up its own new currency. Say its called the New Drachma. The ND doesn’t yet exist. So the Greek government cannot possibly get the ND from taxation, nor can it borrow it. It just has to create it. Just like all currencies are created. And yes, I know, if the Greek government issue too much they’ll be calling on resources in the Greek economy which are not there and they’ll create too much inflation. On the other hand if they don’t issue enough they’ll be no better off than they are now with recession and high unemployment.
But if they get it right they can create the right conditions for a successful economy and the jobs that would go with it.
January 8, 2015
Take a look at the chaos going on in the NHS and the passport office to see how much nonsense this statement is and with potentially billions going on foreign owned built and run nuclear plants which have yet to be built how many jobs will these be destroying. Private healthcare costing the state more in the long run. Paid for rubbish collection and the massive rise in fly tipping affecting landowners.
Massive subsidy is OK if you agree with it is what you are saying.
January 10, 2015
Bazman: “and with potentially billions going on foreign owned built and run nuclear plants which have yet to be built”
Wasn’t it the Blair administration that sold off Westinghouse?
January 8, 2015
I’m sorry I must have missed the “progress” that this government has made. We run a catastrophic deficit only made possible by massive money creation and accounting fraud which robs savers and investors of their rightful rewards. The national debt- not the deficit- increases every single minute. Every statistic issued by government is heavily biased and doctored. If they were still calculated the same way as they were in the eighties our unsustable wreck of an economy would be so obvious even a politician couldn’t ignore it. The establishment is terrified that the Chilcott enguiry will be released before the election because it would advertise the depth of incompetence and (poor conduct ed) that taint so many in government.
If this is progress I’m not too keen.
January 8, 2015
It wished to cut the state deficit, and create a better balance between the productive sectors paying the taxes, and the state sector spending them. It wished within the private sector to increase manufacturing as a percentage of the whole.
This is all quite straightforward. The Government needs to act to lower the value of the Ā£. That way imported manufactured goods become less competitive relative to locally made products. As the pound falls the trade deficit will fall. At a certain level exports and imports will balance. Go below that level, and exports will exceed imports and there will be a trade surplus. All countries that run a trade surplus manipulate their currencies downwards to keep them cheap. China does it now. Germany did it for years when it used the DM.
Money stops net flowing out of the country to pay for imports, which is not available to be collected by the taxman. Instead, money , starts to net flow in from abroad and so does become available to the taxman. Tax is collected from the income paid to the workers for making those exports, for example. Consequently the government’s deficit is replaced by a surplus too.
Personally, I don’t think it’s a good idea. In the matter of goods and services its better to receive than give! It means we have to sell real things like cars, rather than government bonds, and which is a net drain on our economy. But, if the majority opinion is the other way around, that’s what needs to be done. Not suddenly, but over a period of several years. What’s the problem?
January 8, 2015
A UK programme of import substitution would be a good idea, alas, we do not have an economic management system in Westminster / Whitehall that has the competence to manage that. Punch & Judy we are stuck with.
Having a large net import bill means other countries, end up with a lot of our Pounds Sterling. You can see it happening in the ONS Trade data. “3spoken” does a good graphic of it as well. You really want those Pounds recycled into the UK rather than the rest of the world “saving” them. So why does the UK government pay such people NOT to spend those Pounds, by issuing interest paying bonds (Gilts)? And, the higher the interest rate, the more you are encouraging them not to spend.
The WTO reckons that 92 – 94 % of currency trades (FX market) are purely speculation leaving circa 6 – 8 % for transactions for paying invoices. That means that the value of the Pound for instance is not set by fundamental balance of trade requirements. Specialists tell me, in their opinion, the Pound is currently overvalued by around 10 – 12 %. This appears to be supported by the REER being at an index value of circa 110 %. A stronger Pound, caused by the prospect of rising interest rates means, we will be tempted to importing more of them 60 inch plasma TVs.
As Neil Wilson says, “Stronger currencies can buy more goods and service from overseas, and so tying the two ends together you end up with the government paying foreigners more currency so that the country can import more goods and services. With current budget balancing policies it seems to me that means taxing the citizens of your country so that you can subsidise imports and close down substitute domestic production. That’s crazy isn’t it?”
There is a case for shutting down the process of controlling inflation by a central bank controlling an economy wide sledgehammer interest rate. That tool could be taken back into the Treasury and used as a substitute for taxation if / when needed.
Remember, the country (its central bank to be specific), that is trying to force your currency up in value, is the country that sells you their exports.
January 8, 2015
I would offer financial support to UK students studying subjects that give them useful skills such as science,engineering, and medicine. I would also continue to rebuild the apprentice schemes for those less academically inclined.
January 8, 2015
Exactly science (excluded most climate science which is now more of a religion than science), maths, physics, engineering and medicine and some other practical skills.
Those wanting hobbies should pay for themselves or just buy themselves a few books.
January 8, 2015
The costs involved in taking on an apprentice is for the one man bands a non starter. All the extra insurance, stamps, health and safety it is just too much.
That is one reason why we are now getting college trained starter tradesmen/women who have never if really experienced working in a customers house.
When I started out 53 years ago the examination was just that fail and you were out not the multi choice questions of today. The new breed might have all the badges on their vehicles but their knowledge base is very basic.
January 8, 2015
JR: “It wished to cut the state deficit”
I seem to remember a pledge to eliminate it by 2015. Furthermore, I remember that Alistair Darling’s target of reducing it by 50% was ridiculed by your party.
January 8, 2015
As someone who works for a manufacturing company I see much to agree with here, especially the final paragraph.
I would like to add that, from my personal experience, the role of ‘engineer’, i.e. someone who uses their skills to make or repair things to a high standard, in the UK seems to be much less appreciated than in many other countries. This has an effect through education where fewer skilled people (both academically or manually) see going into a manufacturing business as a desirable career. Not only this but having a target to put 50% of people through university must be encouraging too many people to spend 3 years of their lives following studies that are not best suited to them or society when they could have been learning more valuable skills in, for example, an apprenticehip (and not racking up a huge debt a well!).
This loss, of various reasons, of the best people means it’s harder for manufacturers to get the best people to ensure the factories run efficiently and are thus competitive.
I would also be concerned that not enough students do the science / maths topics vs the humanities as they are seen as ‘harder’, but yet I would suspect the average person with say 3 B grades at A levels in say maths, physics, computing is probably likely to earn more over their lifetime than someone with 3 A’s in English, History & General Studies, yet it won’t look so good in the league tables etc… Of course earnings is only a part of what can contribute to leading a fulfilled life.
January 8, 2015
I agree with upgrading hardcore skills yet other subjects are also useful in helping students understand and use language correctly, learn about emphasis and the downgrading of phrases in texts preparing them for a life as a voter and able to manage in a multi ethnic society where English is still the language spoken.There are more voters than academics.
January 8, 2015
What I want ‘government’ to do:
+ Take us a lot more seriously and yourselves a lot less, and consider the remote possibility that we can order our affairs to our satisfaction without a vast army of overpaid, under-worked and barely, if at all, competent jobsworths micromanaging unaccountably every aspect of our lives and extorting criminally large sums from us should we fail to observe their diktats in every detail and to the letter.
+ Slash the public sector to the absolute minimum necessary in the shortest time possible and practical, without worrying that those sucking at the public tit may shout a bit and wave a few placards, perhaps throw a few bricks. Although causing a great deal of pain in the short-term, doing so will eventually result in a very great deal of nett gain.
+ Leave us, the people, to get on with the job of ‘rebalancing our economy’.
+ Ask us what we want you to do, and do it, honestly and transparently.
That’s the essence of what I’d like government to do. However, I’ve rarely been given what I wished for and invariably had to put up with what I’ve been given so I’m sure I’ll have to continue to suffer the undesirable consequences of ‘government’ trying ineptly to ‘rebalance’ the economy.
January 8, 2015
Actually the government directly controls the levers which impact manufacturing.
Every single notch extra of emissions regulations incentivises companies to move production from here to jurisdictions with less tightly enforced emissions regulations.
Every single work visa it hands to a foreign national from those countries known to be stealing our intellectual property on an industrial scale leads to more of our best leading techniques appearing abroad to undercut us.
Price of power, subsidising wind farms kills industry directly, and so on.
And so very much more.
January 8, 2015
And as for the City a large part of its supposed “success” is again engineered by government. Doing deals to, for instance, print more work visas in exchange for the City being able to sell more services. The City is not a wholesome product of hard work, it is a manipulation of the political classes as much as anything to the detriment of other parts of the economy.
January 8, 2015
Well said Iain. The list just seems to go on and on and on!!!
Take away the 100 odd like minded JRs and it would be dire.
January 9, 2015
It is dire despite the 100. Endless career politicians and sheep, as we saw with the wars, EU arrest warrant and the climate change act.
January 8, 2015
Re the final paragraph, I think this is conflating two separate issues.
Engineers working for a consultancy rather than an engineering company may or may not be a good thing; probably “we – the UK” would be better off if most worked for an engineering company.
Where the engineering consultancy is located is an entirely separate matter. The best location from the point of view of the engineering company would convenient to them, which is unlikely to be in the city. Further, if consultant’s salaries are higher then so are their fees, which does not help the engineering company’s competitiveness.
And there is the more general point that London has such a large, inherent advantage, by virtue of being the Capital, that the last thing we should be doing is to facilitate growth of that advantage.
January 8, 2015
There are a lot of people in the Reading and Wokingham area working for consultancies such as Foster Wheeler AMEC and Jacobs on projects around the globe. This is entirely a good thing.
My concern would be that without a manufacturing base our ability to offer useful consultancy in some areas will be gone in a generation – the consultants have to gain their skills somewhere.
January 8, 2015
While I’m pleased to see the progress achieved since 2010, I’m suspicious that a great many of the “new private sector jobs” are actually outsourced public sector jobs so fit into your model of not really changing things in favour of genuinely new manufacturing or other “productive” jobs.
What Government really needs to do is (for example):
– stop the hands-off approach to UK companies being sold off to foreign investors. Whatever it is that the French and Germans do (because these companies are “of strategic importance”), we should do the same and level to playing field
– this weeks’ news on car sales and Rolls-Royce’s record performance too are heartening for British workers but not for the Treasury if the profit is taken back to Japan and Germany; we have to get our fair share of tax earned on sales made here
– bulk-buy Government’s own energy needs and help industry with its energy costs
– do what Cardiff Council is now doing (unforgiveable that it didn’t do this years ago) and sell off its land and property assets to the private sector for brown field developments
– continue to provide infrastructure improvements, particularly road and rail, with the M6 Staffordshire logjam and the need for A303 dualling as the top issues costing businesses millions annually
– encourage more bulk transportation by rail, especially the daily grind of stocking supermarkets – eg is it only Tesco who use Stobart Rail or do other supermarkets move their goods by rail too? Or do they know something Tesco don’t given the latter’s problems?
– reduce our dependency on overseas recruitment by getting through to our youngsters at school that they aren’t all going to make it big on X-Factor or our TV screens, that there’s life after the media and entertainment industries
– have a fund to help young entrepreneurs with IT and internet-based start-ups
– encourage apprenticeships and hiring young people through vocational training
– work closely and consultatively with industry on their export plans and potential and help them close deals overseas (probably outside of Europe). I believe Cameron and Boris do quite a lot of this, great, let’s get a few other ministers doing it too and make a bit of noise about your successes.
January 8, 2015
Services, especially technical ones such as IT, finance, R&D, professional work and consultancy, enjoy higher margins than pure manufacturing and are also less capital and energy intensive. The West began its development by developing basic industries such as textiles and then moving up the value chain into high tech goods and then services. China is now giving up basic manufacturing, which is moving to poorer countries such as Bangladesh and India, so why would any country with a strong position in high value services want to turn the clock back and return to metal bashing?
January 8, 2015
In an advanced, innovative engineering country, “metal bashing” moves from manual labour to machine labour. In fact the skill level remains high but the nature of the skill changes; no longer wielding the hammer but programming the computer to drive the robot that wields if for you.
January 8, 2015
I have zero confidence in statements by politicians that they “create jobs”. The best thing they can do for job creation is to get out of the way as far as possible. Getting out of the way means lower taxes, a smaller state sector, fewer pettyfogging regulations, the avoidance of subsidies, and the creation and maintenance of a level playing field for private enterprise. Unfortunately too many politicians think they know best and interfere by raising taxes, increasing the size of the state, adding more pettufogging regulations and scattering subsidies far and wide for their pet projects and prejudices. The free enterprise system constantly surprises with its capacity for innovation. The political class would be wise to let it get on with it; unfortunately too much of the political class is too stupid to realise this.
January 8, 2015
Services are also harder to copy. Any country with the money can set up an advanced industrial plant or reverse engineer technology. But it’s extremely difficult to reverse engineer a law firm or private equity firm.
January 8, 2015
Because their are legal and other barriers to fair competition.
January 8, 2015
In my view (external) consultants are a mixed blessing. This applies to engineering companies, and even more so to Government Departments and Quangos.
If expertise is required on a specific aspect of a project, then it probably makes sense to buy-in that expertise in the form of an external consultant, especially if the need is a one-off rather than on-going.
But you can not run projects where the only source of expertise is from outside the organisation.
MOD(PE) struggle where they have to hire external consultants to write their procurement specifications for them because they do not know what it is they want. And then they have to hire yet more consultants to evaluate the bids as they are unable to judge their technical merits.
From what I have seen of OFCOM, they lack the necessary expertise in-house and rely heavily on external consultants.
And the more the expertise is concentrated within few consultancies the more difficult it is to find one that does not have a foot in both sides of the “contract”.
January 8, 2015
You rebalance the economy by rebalancing democracy.
Stop rewarding the wrong people for doing the wrong things !
(And that includes people who guard themselves from scrutiny by satarists through serious threats to kill them.
You people in Parliament are still thinking and behaving as though the nature of Britain isn’t being changed beyond recognition.
From the outside Westminster looks like a mental institution packed with the delusional.
January 8, 2015
‘From the outside Westminster looks like a mental institution packed with the delusional.‘
Most of those feeding themselves there at our expense should be in either a prison or a lunatic asylum. They’d cost us less and cause us less harm.
January 8, 2015
The key is education. We are churning out too many graduates with pointless ‘soft’ degrees. I see their CVs in job applications. So many have no direction and no skills for business. We need more students studying ‘hard’ subjects that are needed for the Nation to prosper and, subsequently, reduce the need to import people, with all the consequential effects on services, housing and infrastructure. Only one party is offering a policy of cutting tuition fees for these degrees and that is UKIP.
January 8, 2015
We are churning out too many indigenous graduates who know little if anything of any worth – and are too often incapable of constructing an intelligible sentence – and too many foreign graduates who know how to outperform and undercut us, and can often speak and write our language better than many of our own kind.
A nation that educates its competitors to a higher standard than its own offspring isn’t going to last long, and the situation can only deteriorate when tuition fees are such that they discourage applications from our young.
January 9, 2015
Our offspring has recently spent a very large sum on tuition fees and expenses at one of our best business schools and has at last found a job in internet sales googlebending. He was previously educated at one of our best comprehensives..
This Christmas my present was a book by the chief Greeny, (Al Gore? ed), who believes in the imminent demise of our planet and worships the hockey stick totem. We also found the offspring was not washing his mug all day and the toilet blocked owing to his efforts to save water. He has refused to learn to drive so far but has at last accepted some lessons. When asked whether he wanted to learn manual or automatic, he wanted electric. And he thinks Thomas Piketty is brilliant.
January 9, 2015
One key is education but why should I subsidise a student who will hop it abroad to better STEM opportunities?
The simpler solution is that the government should not provide funding for degree courses beyond a core set. The eductaional institutions then have the option of dropping it entirely or charging the student the full cost.
Another issue is that if you are over 19 and already have a degree then your access to further education to change skills, start a business etc are very sparse and not funded at all. There is a lot of free material available on STEM subjects, but most subjects need practical tools, equipment and activities to be worthwhile yet are inaccessible to non-students.
January 8, 2015
It is difficult to believe that the government is trying to rebalance the economy and reduce the deficit when every week it takes unnecessary actions that achieve the opposite.
Take for example the recent stamp duty changes. While I entirely support the basic revision and the flatter duties resulting, I do not understand hy it was necessary to increase the deficit by 1% at the same time. This could have been avoided by simply ensuring that the new rates raised by simple 2% increments and introducing one extra band (8% I think).
There is a huge danger with an election imminent that politically motivated changes will cause the deficit to rise rather than fall.
January 8, 2015
There is a lot of drivel talked about making ‘things’ and not money, as if the two were mutually exclusive, or services being in some way inferior. Is software a ‘thing’ or a ‘service’ in this construct? Which part of a smartphone is desirable ‘thing’ as opposed to undesirable service? (A: a small %age of the value).
Its fairly simple really. We want as many people as possible in the UK doing something, whatever it is, which somebody else is prepared to pay for with their own money. Of course we want the state to hire people to perform certain functions, such as MPs and soldiers. But we need to minimise the extent to which the state forces us to pay for people we don’t need and wouldn’t pay for if left to our own devices. And we need to remember that the more people who derive their income from govt mandated expenditure as opposed to proper market pricing, the more distorted and in the end the poorer our economy will be.
January 8, 2015
There is a difference though you are right in that they can overlap each other. in IT we have off the shelf solutions which have been manufactured, once they have been designed and implemented then you need to drive it which becomes the service.
January 8, 2015
“There is a lot of drivel talked about making āthingsā and not money”
Yes that’s right. You can have a successful economy which doesn’t make many “things” at all. I’m told that ships arrive at UK ports full and often depart empty, so maybe the UK economy isn’t far from being in that category right now. It’s not necessarily something to worry about.
It’s fairly simple really. We want as many people as possible in the UK doing something, whatever it is, which somebody else is prepared to pay for with their own money.
That’s right too. It is a complete waste when people are hanging around doing nothing. They may start off by being unemployed but if they are unemployed for long enough they end up being unemployable. Instead of being a buffer stock for the labour market they end up being a dead weight on the economy. Long term unemployment may lead to criminal convictions and an anti-social lifestyle. If jobs do arise they end up being overlooked in favour of immigrant workers.
So, where I may disagree with you is that something needs to be done, and it can only be done by government, to prevent this. If there is insufficient purchasing power in the economy then it isn’t just a question of what ” somebody else is prepared to pay for with their own money”. They don’t have that money.
Something needs to happen to break the cycle of deprivation. The problem may not be so apparent in Wokingham but it’s all too apparent in many less affluent parts of the country.
January 8, 2015
Absolutely. I was reminded of this comment just now by seeing a TV ad where HM Government is spending money that it has borrowed to tell us how excited they are by high speed broadband. How this campaign qualifies as a good use of resources is beyond me.
January 9, 2015
I haven’t seen that. If thats what they boast its a fraud. Broadband is pathetic in the UK esp in rural areas. Its a major competitive disadvantage and the govt would do well to sort it out.
January 8, 2015
The government should stick to what it can do and reducing the budget deficit is certainly part of that. Reducing taxes is also important and I welcome the fact that ātax freedom dayā now comes slightly earlier than it did in 2010. I also welcome the reductions in the state sector under this government, though itās clear there is much more to do. The state taking thirty five per cent of GDP is not nearly as low as it should be.
But please can we refrain from this talk of ārebalancing the economyā, whether that is rebalancing between regions or rebalancing between sectors. There is a profit mechanism in any functioning market economy and this should direct resources to those firms which are successful and enable them to expand. Let it do its work.
By all means reduce taxes and regulations on energy and encourage the development of fracking within the UK. But this should be part of a general programme to lessen the burden of government on people. Governments have had a woeful record of spotting the future economic winners of the British economy. I well remember Jim Callaghan banging on about how we needed more engineers in the 1970s. Is engineering the equivalent of education for politicians? You canāt have too much of it? Let the politicians replace āengineersā with something else like ā software developersā to remind themselves that the internet was invented 20 years ago. At least it would be a change.
January 8, 2015
JR (The government) … It has little control over the sizes of the manufacturing and service sectors.
I believe Mr Redwood forged this view in the 1980’s…..and we know what happened to the manufacturing sector then. Uk Steel, textiles, car manufacture, domestic goods etc. went into a sharp decline . It was an understandable although foolish over reaction to the disastrous nationalisation that happened in the 50’s to the 70’s in my view.
Some of the changes are for cultural reasons to do with low moral and productivity but this doesn’t explain all the losses. Germany and it’s government took a much more long sighted view of it’s manufacturing sector (rather than the hands of British approach towards the late 80’s) and has been much more successful.
Reply The manufacturing sector declined more sharply in the 1970s under Labour, and continued to decline under Labour 1997-2010.
January 8, 2015
A small point in the bigger scheme of things, if the govt was more serious about helping UK manufacturers if would place large orders in the UK rather than go abroad. To name a couple I can think of train carriages which went to Siemens instead of Bombardier and some new Navy support vessels which went to S Korea.
I appreciate they may have got cheaper deals but surely better to try to spend taxpayers money in the UK if there are UK Manufacturers which can deliver
January 8, 2015
I suspect the highest earners in this country have few academic qualifications e.g footballers pop stars , models, actors etc
January 8, 2015
Years ago, UK manufacturing ticked along very nicely. Quality procedures were governed British Standards and all worked well.
Then came the tsunami of red tape from Brussels that turned the efficiency of our own proven and time tested system on its head. And all with increased costs making our factories less competitive in the process. EU meddling is relentless yet nobody in Government does anything to stop it.
Remove the burden of the Brussels interfering, busy body attitudes, dreamt up by desk jockeys who have never run anything in their lives and we shall see a resurgence in British manufacturing.
Until then, many in the UK will farm out their production to cheap, overseas organisations who can undercut our own workforce because they do not have the heavy, rusty chains of Brussels holding them back . When is somebody going to stand up for us, the British citizens and turn their backs on these incompetent, profligate amateurs?
January 8, 2015
When the leader of the UK and Europe met David Cameron this week she made it very clear that their would be no changes to the free movement of people. DC then said that Britain will be better within europe. So I place no credence on any promises to change anything from the conservatives. Maybe a new leader, after May, will alter things.
January 8, 2015
They have rebalancing your economy, the establishment the governments and ceo of companies have working flat out for over the last 70 years to get you to were you are today. How can you say that the people in charge with all there money and education have got it wrong. It must be right with all the quangos and marters of the universe it must be right they got the money to show for it. If you work on a quango one day a month at 175,000 a year you must of got it right, fly in to the uk for two days have your meeting, go out shopping and then dinner and fly out the next day. How can you say they got it wrong. As john points out he has been working flat out for 40 years for the people this country, how can you say that he got it wrong. So have all the rest at the top. The whole world say that we have the smarts and best educated people in the world, they cannot be wrong they must be right. It”s the 40 million english people that are left that have got it wrong, they are thick, there education must have been poor, they cannot read the signs or must be blind. 75 years ago they loaded up big ships with children from london and sent them down under on there own, they could have sent them to wales or scotland, in the end they cannot be wrong. Everything they have done has been for the good of the country as the media keeps telling you. Why disagree with them they must be right as the people of the world say we are the best.
January 8, 2015
Dear Mr Redwood, Yes, rebalancing the private sector is more difficult. It requires the Cabinet and Whitehall to take the same attitude to British companies as MPs such as yourself take to their constituents: serving them.
In previous periods of intervention, Whitehall decided what companies should be doing and told them to do it. No wonder all parties have since taken a magisterial but equally disastrous policy of hands-off disinterest.
Of course ministers can have a dramatic impact. Lord Young of Graffham destroyed the once-leading UK brewing sector almost single-handed. Mr Brown and his acolytes largely destroyed the once-leading UK nuclear companies (part private, part public). Then there was British Gas Corporation, National Power and BT, deliberately forced to shrink and/or break up in the name of domestic competition, as though the UK was the only market that mattered.
Lord Heseltine had the right idea when he chose to be “President” as the most important job in government. Sadly, his main legacy was to shut down most of Britain’s coal mines at the wrong moment and fail to find a capable buyer for what remained.
Much of the rest of the UK’s corporate infrastructure has disappeared over 25 years: important multinationals such as GEC, ICI, British Oxygen, BPB, RMC, Blue Circle, Pilkington, as well as nacent multinationals such as Thames Water. Just look at the constituents of the FTSE 100 index today.
New companies and SMEs are vital for many reasons but the big investments in new technologies typically come from the biggest companies redeploying capital released by cost savings in their mature businesses. Much of it is simply not there so we rely on inward investment, more of which leads to consolidation than increased investment in a relatively low-growth economy.
There are some shining examples too, not least in the car industry, where Mr Cable has done some good work, but these are exceptions. Rebuilding the productive economy, whatever the sector, would take decades, far beyond the time horizon of ministers.
January 8, 2015
Okay, so the latest wheeze (spin) is to constantly refer to government spending as a proportion of GDP. This is nothing but a transparent attempt to make it look as though the government is not so massive.
What if a million more people work part time earning less than 10k a year? GDP will go up but government income won’t go up by anything like as much as it would have once – as these people will pay no income tax.
…Almost five years on the government has made progress in cutting the share of GDP spent by the state ..
Surely this is patent nonsense. The government can’t ‘spend GDP’ – it has to raise tax before it can spend a penny. The relationship between government income and government spending is what is really important … i.e. HOW MUCH ARE WE BORROWING?
January 8, 2015
Mass production is very unlikely to succeed again in the UK.
Land costs, energy prices are too high, labour costs are uncompetitive, Government regulation is too complex and taxation is still high.
And there are no tariffs on cheap imports.
But lower volume, high value manufacturing has a good future with high investment in equipment and a highly paid skillful, well trained, workforce.
We should encourage self employment and small companies instead of focussing on just the biggest firms.
Most people work for companies who employ under 50 staff.
Fundamentally the State needs to be more efficient and concentrate on providing essential needs of its citizens.
This is what businesses have to do and have done to survive in the private sector to meet the fast increasing standards of quality and service demanded by their customers.
Its time councils quangos and charities did the same instead of always simply crying “we need more money”
Most business people put in charge could save 10% of State spending and improve service to citizens very quickly.
Just keep out of the way and the private sector will continue to do what is has done so well over the last few years during a difficult time, and create wealth taxes and jobs.
January 8, 2015
Iām all in favor of deficits and hence a rising debt as long as creditors lend to the UK government at a negative real rate of interest (i.e. the rate of interest less inflation is a negative number). That was the situation between 2011 and 2013.
If anyone wants to lend to me at a negative real rate of interest, please feel free. Of course should you start demanding a positive real rate when itās time to roll over the debt, Iāll give you your money back.
January 8, 2015
You will have to tell us how private energy fits into this John? The sky high bills and lack of generating capacity it will not wash green or otherwise and massive subsidy to state owned foreign companies promised bill payer funded tariffs is not green, cheap or private. A few windmills and solar panels pales into insignificance compared to this. Political nonsense to right wing idiots who are against any green issues for no other reason that they are ‘green’ regardless of facts who when told the facts go quiet will not power anything.
Solar power can be used at night and wind power both are viable in many places depending on application? Fact. Anyone want to disagree with this statement as it stands? It is fantasy, lies and propaganda?
Do not tell us about green nonsense when you cannot accept facts. No problem in accepting anything about nuclear or fossil fuels fact, fantasy or otherwise.
January 9, 2015
Bazman
Perhaps the real key, and a way to an absolute fortune, would be for somebody to invent/develop/evolve a competitive way to store energy, like a super efficient battery, then any surplus power could be stored and then used when required.
Batteries are getting more and more efficient, so perhaps it is only time before a real breakthrough occurs for larger installations.
January 10, 2015
Battery technology is in my opinion for what its worth, a dead end.
January 9, 2015
What are you going to power all the planes, ships and HGV’s with Baz, in your fantasy wind and solar powered world?
January 9, 2015
I have never said it is a total solution only a solution in certain applications like in all engineering. Not knowing and pig ignorance with refusal to accept facts no matter what the evidence is are two different things. Should any breakthroughs be made they will have forgot their deluded anti intellectual anti technology stance and use the technology freely telling everyone about the power of the free market in producing such things when thsi may not be the case. The government forced it by legislation in many cases.
January 11, 2015
Answer the question.
Even energy experts say renewables can only be a small percentage of our total requirements.
So what are you proposing to use to replace fossil fuels?
Nuclear?
Some yet to be invented new energy source?
And yet you have the nerve to call others deluded and pig ignorant.
Hilarious.
January 9, 2015
John I see that the truth was too much to print!!
January 9, 2015
Regarding your last paragraph – a problem is that technology exporting companies must compete with London on salaries but with the developing world on costs. It’s not the talent that get’s drawn to London that’s the issue but the wider effects on costs and property.
January 9, 2015
Incomes in the City exceeding engineering incomes has gone on for a very long time. When I graduated as an engineer in 1967, my salary was Ā£975 per annum. Graduates going into the City were making between Ā£1200 and Ā£1400 per annum.
However we do it, we need to get government income tax receipts up. And if oil prices stay low, the Government (any Government) will raise fuel excise duty, but not until after the election.