Author: johnredwood

The recent revisions to the ONS GDP and national income figures for recent years show they do not know what has happened to our economy. It is good news the UK has leapt from bottom to third from top amongst G 7 nations for post pandemic growth. It is worrying the figures for the outturn alter so much. It makes it even harder for those trying to forecast what might happen next.

Meanwhile the OBR has regularly overstated the deficit for the immediate year by more than £100 bn .The Bank of England forecast inflation staying at 2% as it rose to 11%. It then said the rise would be short lived yet we are still way over target.

Despite this inability of these 3 bodies to tell us what has happened and  what will happen next, the  government remains wedded to tax and spend policies based on these inaccurate numbers. Worse still it accepts as the main  guide on whether tax cuts can be afforded the OBR forecast of the deficit in five years time. No one can forecast that accurately as who knows what world growth will be in five years time, who will be President of the USA or Chairman of the Fed or what their policies will be. To ask the OBR to get that right when they cannot get the current  year right and  then to rely on it as if it were right to a  few billions is absurd. The OBR task is made more difficult by past ONS understatements of GDP and therefore of productivity as these figures matter for the 5 year forecast . If you cannot rely on the Bank forecast of inflation you cannot know whether the Bank in 5 years time will need high rates to cut another inflation it has caused, or need low rates to end a recession it has brought on.

So what needs doing? All 3 forecasting and retro casting official bodies need to be asked to revise their models until they can predict and define the past more accurately . They need to back test their models and agree how to compute outturns.

The government needs to get rid of the 5 year deficit target. It should steer the economy with a 2% inflation target and a 2% growth target.  It should use forecasting models with a better track record than the OBR, and make judgements taking into account  money and credit conditions and allowing for how growth boosts tax revenues and can be boosted by lower tax rates. It should stop making tax the only flexible part of the package  and see the importance of better spending controls and priorities to good outcomes.

The law lays down that the maintenance and safety of school buildings is the responsibility of the Council acting as the Local Education Authority or the Educational Trust in the case of Academy schools. The Governors and senior management team of each school should also take a close interest in the state of the fabric and the safety of pupils, and are best placed day by day to see faults, cracks and problems with the building structure. They report to the LEA or Trust and should be accountable to them.

It was apparently well known and much discussed over recent years that any building built more than 30 years ago with RAAC concrete contains beams and sections in this material that may have gone beyond the end of its useful life. For some years those in charge of buildings or responsible for maintenance should have been on watch to see if there were any signs of loss of strength, cracking or other signs of degeneration in RAAC concrete components. It was clear to all concerned that if there were there might  be a temporary fix of providing extra support to beams or sections that could weaken or snap , preparatory to replacement.

It appears that the government was also monitoring this problem as it may well have direct responsibility for other public sector structures. It  decided it needed to intervene with schools, sending them a questionnaire to see how many RAAC buildings at possible risk there were. It then circulated more guidance about the issues this concrete poses and put in  Inspectors to review those buildings that did have RAAC. Now the government is being attacked for  telling the schools to take tougher action with some of these given recent evidence that there can be RAAC failures in beams or sections that did not show signs of decay. The government has also promised central taxpayer money to fix the issues.

Surely we need to ask how come more of  the expensive local bureaucracies that control our LEA schools did not take stronger action earlier, and why they had  not reviewed and surveyed on their own initiative? We have many examples of power delegated to local government or to quangos in the UK, yet whenever anything goes wrong blame is usually transferred by the Opposition and media back to the government. If the government is to be to blame for everything maybe we should save the money on the delegated authorities that are  not doing the job.

We need to ask what role did LEAs have in using RAAC concrete in the original buildings? Did they not keep a record of how the building was built? What actions had they taken in recent years when it came to light this concrete can deteriorate and has a limited useful and safe life in various cases? You would have thought LEAs and Governing bodies of schools would know the details of how the schools were built and the risks in the form of construction undertaken. They could have taken action to avert problems before the beginning of term.The idea of delegation is based on the simple fact that the school and LEA managers know these buildings and visit them daily or regularly. Ministers have visited very few of them.

A recent survey shows a further decline in Uk citizens professing to be Christian or religious in any way.

It is not surprising the Church of England has lost congregations and struggles to attract new supporters. It has used its presence in the Lords and its public platforms to be an ally of many Lib Dem causes, a party which polls around 10% in national polls. It uses its privileged position to promote more overseas aid, more migrants into the UK and to condemn government attempts to stop illegal and dangerous boat crossings from a safe country called France. It is not so keen to use its national pulpit to spread the gospel. It is reluctant to talk about its own extensive property estate  and  share portfolio. There are times when it turns out they hold shares that do not reflect their views on fossil fuels or other equality matters. The property estate has not been used to house many new arrivals in the UK at a time of extreme housing need given the numbers involved.

The decline of congregations reflects the hostility the Church shows to people with conservative  views , as those who were regular Churchgoers  have in some cases been put off by the criticisms.

As a democrat who believes people should be free to hold views and disagree with the government I do not object to the clergy who rail against the government. They should not however be surprised to discover that associating themselves with minority partisan views in their official roles will speed the decline of their congregations.Nor  should  they look hurt when those they criticise examine the Church’s actions and investments to see if they reflect the left wing political opinions  they espouse. Church properties do not help reduce our carbon footprint, nor are they made available to house the many new arrivals the Church supports.

The UK trade figures were altered as we finally left the EU, disrupting comparisons. We are told they were changed from an Intrastate  to a Customs basis, and were told there were missing numbers from the early months after the change owing to data collection issues. As many Remain MPs and commentators thought the issue of the EU was all about trade it is irritating that the numbers were disrupted just as we left.

Now things should have settled down a bit we can compare 2022 as we came out of covid lockdowns with 2019 before covid and before exit. The 2022 figures show goods imports and exports both strongly up . I use goods because the Remain MPs never seemed interested in our good surplus in services and our success in selling services to non EU  Countries despite the absence of services chapters in EU trade deals with other countries.

Non EU trade has continued t9 grow faster than our EU trade as it was doing when we were still in the EU, and is larger than our EU trade. Our imports from the EU are still very large. We need to adopt the various policies I have been proposing to grow more of our own food, produce more of our own energy and make more of our  own goods. Governmentb has promised the first two and needs to get on with the methods to do so.

It was always strange that UK pro Remain MPs and commentators always pretended the EU was just a free trade area when it was a customs union as part of a much bigger Union where the other members saw the importance  of wide ranging EU level government, single  currency, common debts, common foreign and security policy and the rest.Even on the issue of trade the Remain MPs were wrong.Our trade has not been badly damaged by the exit. It is up, though as in the EU we still import  more than we export to the continent  and need to tackle the imbalances.

In 2022 the US continued to dominate venture capital investment in growing companies and backing new ideas. Although well down on 2021 record levels the US invested $245 bn, four times much as China in second place with $61 bn. The UK was third with $31bn, twice the French level  and two a half times Germany who were in fifth and seventh place in the world league. India was fourth and South Korea sixth.

Strong venture capital, backing many smaller, innovative companies and companies needing restructuring is crucial to good levels of economic growth. Business constantly needs to adapt and to invest as technology revolves and consumer expectations change. One of the ways the US ends up with more the largest quoted companies is it nurtures a large population of growing and innovative companies to give it more chance of success with creating the giants.

Venture capital can be encouraged by allowing easy access to licences and markets for safe products. The EU is suspicious of the new and slow to permit. The UK has to establish itself as an independent regulator , striking a good balance between protecting consumers from harm and allowing  changes to product and processes to proceed quickly.

I have set out before tax proposals to boost self employment and allow the faster growth of small companies during their early stages. We need to be friendly to small business and to star6t ups, as they will be the seedcorn for the new larger businesses we will need in the years ahead.

If we take the market value of quoted companies as a measure of success for economies to create and grow major businesses, the US dominates. The  top ten biggest in the all world index are all US. 7 of the top ten are digital technology giants, with Goggle appearing twice in the list with its two kinds of shares both in the top ten by their individual value. There is then a car company, a financial company and a healthcare company.
You have to go to number 14 to find a non US company. That  is Taiwan Semiconductor. The rest of the top fifteen are all US, adding an oil company, a bank, and two pharmaceutical companies to the top ten.
So we see the pattern. The EU with its 120 million more people and its self promoted single market has not just missed out on the great growth opportunities in on line shopping, data search, software supply, social media and semiconductor design and production. It has failed to get a large bank, pharmaceutical or energy company using older technology  into the top fifteen as well.
The EU which has taken the net zero revolution more seriously than pre Biden America has not produced an electric  car company that can keep up with Tesla. It has let China dominate in producing solar panels and wind energy. So what is wrong?

The EU has gone for the high tax high regulation model. Much of the tenor of EU regulation is hostile to innovation, seeking to lay down  in law how the main companies currently design and produce a good, limiting the ability to change or challenge the established products and players. There is less entrepreneurship. Major companies have a long gone entrepreneurial past and a bureaucratic  present management reacting more to government than to customers. These  businesses often seem out of touch with consumers and so vulnerable to better and more modern US and Chinese offerings. There must be reasons why JP Morgan is bigger than any EU commercial bank, why Tesla not a German company pioneered high priced electric cars and why the main pharmaceutical companies and new drugs are from the USA.

The UK too lacks a top fifteen company. Its long association with EU laws has not helped, and its current business taxes are too high.

Consider the 2022 figures for GDP per head

USA.      $75 000

UK.         $45 000

EU.          $37 000

The UK has spent the last 50 years trying to align itself more and more in trade, economic regulation and general laws with the EU on the grounds that this political direction and sacrifice would help our economic progress. The way the US has pulled ahead and stayed ahead of Europe shows this was a generally mistaken view. The US per capita figure is twice the EU.

I am not suggesting we should instead have sought a close political link with the US or should have accepted their law codes . Better would have been to make our own laws, set competitive taxes and traded as freely as possible with the wider world. The  Republic of Ireland showed how simply setting lower tax rates can make you prosperous and greatly boost tax revenues. Their 12.5% tax rate meant they attracted massive turnover and investment from the US giant corporations, delivering $ 105 000 per head of GDP last year, almost three times the EU average.

The truth is the US has set a legal, tax and educational framework that has produced all the great non Chinese world companies of the digital age. Apple, Microsoft, Google, Amazon, Netflix, Meta and Nvidia are the US giants that have generated so much cash, made so much investment and created so many jobs, boosting US success.

The EU and UK should be alarmed that they have produced no trillion dollar tec successes. I will write future pieces on why. Today I just wish to remind the UK it is free to set a competitive tax rate. As Ireland shows that allows your economy to get a boost from US success.

The Prime Minister has made clear Ministerial wishes. The asylum backlog of cases must be brought down. The NHS waiting lists must be reduced. Secretaries of State working within the relevant departments have reinforced these message and gone through plans with senior officials.

Large extra sums of money have been allocated to the NHS budgets, and specific additions added to cut waiting lists. There has been a surge in spending on asylum seekers, their lawyers, claim processing and their  care. Ministers have  not cut budgets or refused extra money when needed.

Staff numbers in the NHS have risen substantially in the last three years. There has been a  major recruitment of more people to process asylum claims more recently. So why are the trends still going in the wrong directions? How much of this is down to Ministers, and what should we expect of well paid senior managers in the NHS and the Home Office  now they have a clear Ministerial direction, extra money and extra staff?

Of course asylum claims need to be carefully assessed, to be fair and to avoid more legal challenges. They also need to be conducted with commonsense. Why were so any Albanian claims allowed to build up, and why were so many granted rights to stay when it is a safe country? Other Eruopean countries were firmer and quicker in saying No. Why can’t the staff prioritise the many easier  cases from safe countries and get on with making the decisions? It is not fair on the individual to keep them in a hotel for a couple of years and then to tell them No. They should be told much earlier.  It is also important not to delay unduly difficult cases where the answer is going to be Yes, as they have suffered already and would like to be put out of the uncertainty of waiting to hear how their case has been treated.

Either the management needs help from Ministers with better incentives to clear these backlogs, or it needs changing.