Author: johnredwood

There are three main kinds of roads.

There is the national network of motorways and trunk roads. These should be vehicles only. There has been some expansion of capacity by adding lanes and improving some junctions. More needs to be done as these are much used and crucial to our economy. Their capacity could be helped if Rail freight could be be boosted by more sidings , single waggon marshalling and other ways to make it a more practical and viable option.

There are the local strategic roads, usually A designated. These should primarily be for vehicles. They should have mainly roundabout not traffic light junctions as these are better for flows. Road schemes which seek to remove capacity by narrowing, putting in exclusive use lanes , more lights and partial barriers should be discouraged. Junctions often need improving by increasing capacity . Lights need automatic sensors to switch to green where vehicles are waiting when they are no vehicles using the green that is available.

There are local roads which will often be mixed use. Here there may need to be further schemes to allow safe use by a variety of users, or to restrict parking where that creates obstacles to use.

The big change that is needed is to understand we need more capacity, and to see that making it easier to get through junctions on large roads  is a way to improve safety and reduce driver error. If the government wants economic  growth it needs to increase capacity of the national routes and the strategic local networks , issuing new guidance on junctions and budgets to get rid of bottlenecks, inadequate junctions and capacity shortages.

If you want an economy to grow faster you need to create transport systems that allow people and goods to get about easily and at sensible cost.

For years under all 3 main parties in Parliament the U.K. has followed an anti car,truck and van policy. Nationalised roads have been kept in short supply. Road management has often been designed to impede vehicles seeking to use them

Despite this people and companies have continuously decided road vehicles are the most flexible and useful means of getting about for all but the shortest distances where walking is best. People value the way their car or van is always available when they want it and will leave when they wish. They like the ability to get to virtually every address in the country allowing door to door travel,

Governments prefer rail. Rail does not allow address to address travel unless you live next to a station and want to make a visit to a business or company next to another station, You are limited in what you can carry onto a train and place in the rack, whilst you can get plenty of things in your car or van. Rail only goes when they want to, and may let you down with delay or cancellation. You need to work out how to get to the departure station and from the arrival station. The fare can be high.

Sending more goods by rail could be an excellent idea but it needs sidings for the delivery point and single waggon marshalling to allow smaller consignments than a trainload. It is possible to use containers, picking them up with tractor units for short end delivery trips.

It is not going to be practical to go shopping by train. Trains dont have stops at schools for the school run. The small business providing service at home for people needs a flexible van to get around and fit enough in during the day. Tomorrow we will look at how to configure our roads for growth,

The U.K. is short of homes. We have often agreed here that much lower numbers of migrants would help reduce the shortage. The danger now is the new government may continue with the old government’s high migration policy and perhaps add to it with new safe routes and an amnesty for illegals. This makes expanding the private rented sector even more important. Public  sector budgets are not going to stretch to building many more Council houses.

The government plans to increase the protections for tenants, extending the past governments plans. Whilst this may be good news for those who have a long term tenancy, it is bad news for those needing to find a house to rent or needing to renegotiate an expiring arrangement.

There is likely to be a further reduction in homes to rent as landlords sell up or find less regulated uses for their property than letting it out to someone for their home. This will increase rents again and leave people in need of a home scurrying round when a tenancy does become available. Government needs to get to a balanced regulatory system ,protecting tenants against bad landlords but leaving landlords with sufficient rights over their property to make it a worthwhile investment.

A better private rented policy needs to be allied to helping the building industry train enough skilled staff and invest in sufficient building materials capacity to expand new homes output.There needs to be an increase in new homes to rent as well as to buy.

On its own logic, model and data the Bank should have kept rates at 5.25%. The CPi they say is about to go up again from a brief encounter with its 2% target. It has fallen thanks to world prices, not thanks to domestic inflation. Energy prices will go up again.

Services inflation and wages came in higher at  5.7% and 5.6% implying more inflation above 2% to come. There was no mention of the consequences of the big inflation busting pay awards for the public sector which is a new inflationary force let loose. The Bank knew all about it as they say they were briefed by the government. There was no analysis of the lack of funding so far identified to pay  for most of the planned multi billion  increase in spending  announced by the new government. Surely this is also a concern?
The MPC  failed to consider the impact of its damaging losses on bond sales, putting this off til their next meeting so they can carry on claiming huge taxpayer bail outs.

If the Bank believed inflation is a monetary phenomenon they could have made a case for easing. It would be best to do that by throttling back the bond sales they call QT. They are having to set up a generous reverse repo facility to deal with possible lack of money in the system brought on by QT. As they do not so believe they should be alarmed by the continued elevated level of pay growth unmatched by productivity and the way in which a big unfunded public sector pay rise could force more in the private sector to match the inflationary increases.

The MPC  was split 5-4. The minority saw the illogicality of the majority and argued more the case I have set out above. The minority too ignored the QT bond sales and the liquidity squeeze in their minuted remarks.

48 years in the Common Agricultural Policy did considerable damage to U.K. farming, and led to a sharp decline in the proportion of temperate food we grow for  ourselves.

The BSE disease was used by the EU to help shrink our beef herds by prolonged bans after the disease had gone.

The U.K. was kept short of milk quota, forcing us to import milk or milk based value added products like yoghurt and cheese.

Grants were given to get the U.K. to grub up orchards to be replaced by French and Spanish imported fruit.

The Dutch flower industry had advantages which took out much U.K. production.

The Spanish vegetable industry took market shares away from U.K. market gardens.

Now we are out of the EU the U.K. could replicate some of the subsidies, favourable pricing, lower energy costs and regulations that have benefitted  continental competitors  to U.K. growers. The farming budget needs to be reorganised away from granting subsidies to landowners not to farm to rewarding and supporting those who will invest in more U.K. food production. Modern vegetable and fruit growing can be done in controlled conditions minimising water and feed inputs, and protecting crops from weather and insect and animal attacks. This takes investment which the agriculture budget could assist with.

Growing more at home should also satisfy the greens, as it will mean less CO 2 generated by all those transport movements to import bulky food items and keep much of it refrigerated on the  journey. It would mean growing less in countries with bad water shortages.

The U.K. has a good climate and soils for growing timber. Despite this we end up importing many of our needs from northern softwood growing states where it takes longer for them to grow and adds cost and carbon generation to transport the wood to the U.K. We even import the wood to burn in the large Drax power station.

The state has made some attempts through the Forestry Commission to boost timber sales from domestic woods,  but on a small scale. There have been some tax advantages given to woodland but not enough to generate large forestry businesses here.

Given government enthusiasm for more woods it would be a good idea to review the package of licences, tax breaks and help available. The U.K. needs more than lots of extra trees. It needs bigger scale forestry to back house building, furniture and other wood using industries and to power the Drax fires.

In 2010 when Labour left office the inflation rate was 5%, the deficit in the past year was 11% of GDP and unemployment was 7.9%.
In 2024 when the Conservatives left office inflation was 2%, the past year deficit 4.4% of GDP and unemployment 4.4%.
Growth in Q1 2024  was 0.7% after little change over a year. Growth in Q1 2010 was 0.2% after the Great Recession.
Which was the worse inheritance?

The UK and EU governments have launched an assault on domestic car manufacture. There need to be urgent changes to save what we have got.

The tax on producing too many petrol and diesel cars – or on producing too few electric ones- must be removed immediately. It is a great way to get people to close car plants here.

The subsidies for electric car and charger roll out should be removed. There needs to be further improvement in the technologies and products  before urging people to own these vehicles. It may well be that a cheaper and better way of going to net zero for autos is to work with the aviation industry on carbon free synthetic fuels, or with the haulage and heavy plant people who are favouring hydrogen. Until we are much further advanced with these possibilities it  is premature to force people into expensive and unpopular battery cars.

It is strange that green campaigners split transport and recommend syn fuel for planes, hydrogen for trucks and batteries for cars. There could be synergies and cost savings if a common set of answers was worked on to the issue of energy for propulsion. Instead governments rush to adopt answers that do not work well and are unpopular with those who need to buy them.

The UK is in danger of losing out badly in auto manufacture by creating such a hostile environment for petrol and diesel vehicles which remain popular and we  have been good at.

The USA and Saudi Arabia have high GDP per head in part because they are the world’s two largest producers of oil and gas. The UK has inflicted harm on itself by running down its North Sea oil and gas fields prematurely, and refusing to explore and produce onshore gas in significant quantities. The main political parties have conspired against the oil and gas industry in the name of net zero. They have failed to grasp that keeping our own gas in the ground means we simply import a lot more in the form of LNG which generates a lot more CO 2 in its production than piped gas from local sources.

If we are serious about growth we need a major reversal of policy. President Trump saved the West worse outcomes by insisting on greatly increasing US output of gas and oil when he was in office. As a result the US could sell plenty more gas into Europe when the Russian invasion of Ukraine led to the cancellation of much Russia supply. President Biden said he would take net zero seriously, but went on adding to the drilling and production licences so US output continued to rise, though at a slower pace. It is part of the reason the US is richer than we are, and helpful to the US now they are pursuing an active policy of onshoring more industrial production.

The quickest way to boost the UK economy is to get rid of the windfall taxes on oil and gas, leaving in place the double corporation tax on profits, grant many more exploration licences and speed up production licences for the established fields. Where there are discovered reserves but no plans to produce government should discuss with the industry what it would take to get it into production.

The UK needs a larger and faster growing self employed and small business sector. I have long campaigned for the end of IR 35 which impedes winning new customers for the self employed. I have championed a higher VAT threshold to allow further expansion before needing to get involved in all the extra electronic paperwork to pay VAT on finished work and reclaim VAT on inputs.

Use of physical property is important for retailers and some service providers. Further cuts in Business rates and further rises in exempt smaller properties would b e helpful for those sectors. I do not favour replacing lost Business rates with a new turnover tax on on line activity. That just boosts prices and creates added business complexity. I have set out plenty of ways of the sate spending less to be able to reduce taxes modestly.

The entrepreneur does have some options to protect himself from excessive capital gains tax if he is successful. Wealth taxes do put people off coming to the UK to invest, or deter people from taking risks with their money if the government intends to take too big a share of their success. The capital gains tax threshold should be raised considerably from its current very low level. People are now reluctant to sell shares that may underperform or sell a spare holiday or second  home they no longer need to avoid the tax. People do not exchange properties for ones that suit them better if there is a CGT liability. As the assets were bought out of taxed income in the first place there is a resentment about double taxation on those savings if a gain is recorded.

Setting up and growing a business is risky and hard work. It is a public spirited thing to do as the rest of us depend on people doing so to supply us with the goods and services we take for granted. A heavy handed taxman makes less attractive and  less worthwhile. The taxman says if you fail you fail alone. If you succeed I will be a partner in your success demanding a share of the profits.