Rachel Reeves was given a lot of extra freedom by officials and the OBR with their new fiscal rules. They built into the new model the ability to offset assets created or acquired by the borrowing, arguing markets would appreciate state capitalism in action. Why not credit government with future revenues from investments made?
The problem is the quality and risk of the investments. Two of the government’s bigger ones, British Steel and the Post Office are absorbing about £500 m a year each instead of generating dividends for taxpayers.The investments in renewable energy require guaranteed prices and subsidies which the government wants to partly shift from bill payers to the Treasury as costs. Carbon capture and storage “ investments” just mean dearer energy.
The government as it desperately seeks new investments through the National Wealth Fund and Great British Energy is likely to get shares in the more risky projects the private sector is nervous about. Government will become a shareholder as bail out financier of last resort if the project goes wrong.
Its money spent on rail will be subsidy, not an investment bringing profits and dividends. HS 2 is the biggest so called investment they blunder on with. There is no likelihood of profits or dividends with no trains running before 2040!
Building 1.5 m homes this Parliament as promised looks impossible. They now need to build 350,000 a year when they are only doing about half that.Council homes cost too much to build for the government to make a big dent in the target by building more of them.
The decision to spend to invest can only work if government reverses the habit of a lifetime and backs winners that can turn a profit. There is no sign of this happening. Borrowing more on this pretext will not bring growth or confidence to a flat lining economy suffering from dear energy and high taxes.
August 6, 2026
Indeed. When governments talk of “investment” they mean piss down the drain. Worse still they invest money they have taken (or will take off people who spend or invest it far better than government will. So the net effect is huge disinvestment. The bond market are not fooled by the government pretending they are “investing”.
“There is no likelihood of profits or dividends with no trains running before 2040!” Indeed and it will never make any profit and the disruption it will and has caused is a huge negative. Finished value will be about 5% of the cost – assuming it is ever finished.
August 6, 2026
The markets will see this fiddle as by an irresponsible credit card holder trying to max out while going bust. Interest will be raised even higher.
August 6, 2026
I hate that term; “Investment”. It was started, I believe, by Gordon Brown. What he should have said was, “Spending”. But “Investment” sounds nicer, but it is all the same.
August 6, 2026
Agree with your comments John, have never understood why employing more state employees, like civil servants, is also regarded as an investment when it just simply adds to the overall cost of so called “management”, not just with their wages, but office equipment, furniture, space (buildings) and the additional use of energy, and eventually their pensions.
Simply a complicated Smoke and Mirrors policy by the deluded, designed to cover up the reality of additional cost to the taxpayers.
August 6, 2026
Does the government really think that keeping Lucy Letby in jail is a good investment? This when all 15 convictions are so clearly totally unsafe. It will probably end up costing nearly £10 million in the end – trial costs, prison, appeals, compensation eventually (if lucky)… what a dire justice system and dire judges we seem to have to suffer under.
August 6, 2026
The only investment these cretins are doing is in feather bedding the Public Sector and the dole dodgers.
The time is rapidly nearing for the Great Reset and I don’t think it’s the one the Marxist/Fabians were expecting. It’s more likely a Bond strike with massive cuts in Public spending being necessary.
The sooner this happens the better.
August 6, 2026
Maybe we ought to take some comfort from the fact that we are now nearly halfway through this nightmare, barring an unlikely GE appeal by Burnham.
House building is bumping along the bottom – a nearby Berkeley Homes site has had no activity for a couple of years at least. Admittedly negative but is our best hope to run the clock down on this crazy left wing outfit ?
August 6, 2026
Building 1.5 m homes this Parliament as promised looks impossible.
You’ve more chance of finding Hens teeth or a fable Unicorn than this government or any other government to build 500000 thousand homes let alone 1.5 million
August 6, 2026
Good morning.
We, or the government, are happy to throw good money after bad because they are suffering from, “Escalation of commitment.” They are so ideologically committed that, with a few more billion pounds spent it will work. But it is not only our money, but also our future and future generations future.
Someone needs to say; “No!” and it does not look like the OBR or any other ship of fools.
August 6, 2026
correct governments rarely pick investments wisely. in our case there have been many classics they threw cash at which lost money.
however we do need some new reservoirs, prisons, navy ships, etc so we should get on with it. there are plenty of public sector waste which could be cut to make the books better.