Author: johnredwood

US GDP per head of $83,000 is already well ahead of the UK at $58,000. It is almost double the EU at their pathetic $43,000.

So why does the UK government want to lock us into a failing poverty machine called the EU instead of adopting US policies which promote growth and greater prosperity?

The US  has just gone for lower taxes. No tax on tips and overtime. What an incentive . The UK with its growth busting tax raising budget last year is planning another higher tax teach the rich a lesson budget.There will  be fewer and fewer rich to do detention in the government low growth school.

Why are so many in the UK establishment wedded to the notion that tying us to low growth low income EU will make us prosperous? Why do they not see the US has outperformed the  EU all this century to date. With the tax cuts coming and the dominance of US digital and AI the US  will again this Parliament beat the EU and UK in a big way.

The government does not understand the energy market. They say if the market stopped making gas generated  power  the  price determinant for electricity all those renewables would take the price down.

Instead it would usually put the price up. Most renewables are supplied with a guaranteed price under the old renewable Obligations scheme or the  newer contracts for difference.For most years of these schemes the renewables price is higher than buying gas based electricity. There are also the other green taxes and subsidies putting up power bills.

Renewables are unreliables . Solar delivers on average just 10% of stated capacity. Onshore wind 30%. Gas power is made dearer by having to keep it on stand by. The UK has dear electricity because it out in so many heavily subsidised wind and solar generators. It now faces a huge bill for more grid and storage to try to get them to work better.

The ten year plan cuts the numbers of extra staff needed in the next ten tears from the much advertised  and long delayed 2023 Manpower Plan. It says it can do this because the NHS after six years of plunging productivity will over the next three years suddenly deliver 2% per annum productivity growth, with more to come over the following seven years.

How will this happen? Is this based on less recruitment, staff reductions, or a big surge in output?

The Plan says government will end past practice of bailing out Trusts who run out of money in year.

How will it do this? Will Trusts running out of money have to turn patients  away and sack staff?

There are three big themes.

1. More to be done in the Community, less in hospital.Money will  divert from hospital trusts to Community care. The government will set up Neighbourhood health  centres which will combine GP consultations and prescriptions with more treatments . They will first be rolled out in deprived areas. How will this work better than multi GP surgeries? Who will want to undertake basic surgery there and how will they be remunerated? Will the facilities all be owned by the state, unlike many GP surgeries? How long before sufficient exist to make a difference to workload at A and E departments?

More prevention, less sickness. That is what successive governments have wanted. The measures look puny, concentrating on food retailers and alcohol and smoking issues as an indirect way to get people to drink, smoke and eat less. The health  crisis is seen with obesity at its heart. Limited response to the surge in demand for mental health services

Digital, not analogue

AI is seen as the answer to most things.It is implied it will boost productivity and quality. It will empower patients who will know more and control more through a powerful NHS app showing them their records and giving them better access to care.

So how come the NHS will quickly be able to come up with a patient friendly digital  control, information and access system that all parts of the NHS will adopt? Is this to be centrally designed and mandatory? How big a project and contract? If the boost to local and community health decisions and delivery is genuine how will the NHS ensure common functioning across borders?

Where AI is to be used to make medical staff more productive  and to raise quality of diagnosis and surgery, how will the medical protocols be amended? Will the medical profession endorse an enhanced role? Presumably trained staff retain responsibility and can override computers  and robots?

It reads more like a mood board or general essay than a working plan about to be unleashed.

 

As readers know, this site does not provide investment advice. It is,however, a site that analyses public policy and public investments.

Over the last two decades advanced country governments have used subsidies, managed prices , tax breaks, direct state investment and regulations to achieve a large surge in capital spending on renewable energy, especially wind and solar electricity.

They have also used higher taxes, windfall  taxes, regulations, managed prices and bans to put their oil and gas industries into decline. President Trump in the US has opposed this approach. China which claims to back net zero has expanded  its own use of coal.

So what have been the investment results so far? Taking the  Clean Energy Index  and comparing it with the Global Energy Index  whose top four holdings are big oil companies representing 40% of the index we see both long term and over the last  four years the oil rich index has greatly outperformed the clean energy index

Global Energy                   2021      +43%   22  + 42 %   23  + 4%     24 -0.9%

Global Clean energy         2021   – 24.1%    22  – 5.6%      23 – 20.5%  24 -26.1%

 

Figures from ishares website

Global clean energy has provided a return of minus 5.5% a year since 2007 prior to bank crash. Global Energy produced a return of minus 0.3% a year since 2011, a start date after index recovery from banking crash.

Past trends are not necessarily guides to the future. They do show us throwing so  much money at renewables and transition has led to no longer term returns on quoted energy investments, and to a last four years when the Ukraine war helped drive oil and gas prices up in the west giving fossil fuel companies a boost.Each year the world has used more fossil fuel despite government attempts to stop it.

 

Whilst Labour MPs were undermining their government over its clumsy welfare cuts, another UK refinery went bankrupt.

A hand wringing Labour Minister blamed the management and promised to get involved in either finding a new owner who thinks they could turn a profit, or looking at some other use for the site. This latter offer implies acceptance that 440 good industrial jobs will go as the refinery closes. The Minister claimed credit for a government meeting with the industry prior to this collapse. Clearly the likely meeting  messages from the industry about high energy costs were ignored by a government determined to deindustrialise us to hit unrealistic carbon targets.

The predictable collapse of refineries, ceramics, vehicle manufacture, petrochemicals and other energy dependent industries is proceeding apace. The government sheds crocodike tears and blames others. The prime cause is sky high energy prices. The main cause of them is the high taxes and subsidies needed to supercharge decarbonisation. It makes us hopelessly uncompetitive. It also adds to world CO 2 in a cruel irony of total policy failure.

 

Some of you have written in querying the Motability scheme. This allows people on disability benefit to acquire a new car on  a lease from the Motability  charity. For people on the highest level of PIP mobility payment there are 48 cars to choose from where the Pip payments will cover all the lease costs. The charity is free of VAT on buying the new cars and those on the higher payments can qualify for Vehicle Excise exemption.

The original idea was for government to allow tax breaks to cover costs where a physically disabled person needed expensive modifications  to a standard car for a wheel chair and or different controls. The Motability  charity also now qualifies for the tax exemptions to lease a standard  car to a benefit  recipient.

Motability  now accounts for 20% of all new  car purchases in the UK. People can lease dearer cars on the scheme by putting in additional money. The car has to be returned if the individual loses benefit entitlement.

What changes are critics wanting to see? Should the scheme be limited to vehicles needing modification? Should all Motability cars be bought VAT free? Should they be for the disabled person to drive and not for others in the family?

Unemployment up

Inflation up

Dear energy got even dearer

New UK oil and gas stopped for the year

Ban on new petrol cars brought forward to close UK factories sooner

National Insurance hiked for self employed and employees, hitting jobs

More tax on the rich led  to many more leaving the country with loss of tax revenues

Disabled threatened with benefit loss, then a partial U turn

Refusal to enquire into rape gangs delays getting to truth

Gave away Chagos needlessly

Committed to paying Mauritius for 100 years

Gave in to EU demands with no legal agreement to any improvements for UK

No growth in their first six months thanks to run up to budget and budget tax rises. Further fall last month after some Q1 growth

Claimed they inherited  too much spending and borrowing, only to make very large increases  in both

 

 

 

 

Of course most of the tax revenue needed has to be paid by the rich and the better off. The art of  taxation is to set rates that maximise revenue without killing enterprise and forcing out the wealthy.

You do not make the poor rich by making the rich poor. If you try to tax the rich too much you drive them abroad. They do not  have to stay to pay. They do not have to pay  to play here when there are plenty of lower taxed places to go. They also have the option of paying more to hire better defences against a predatory state.

The current Chancellor inherited taxes that were already high as a result of the over spending and fall in tax revenues brought on by the covid lockdowns. She was warned upping the rates would be damaging. She ignored the advice and now  watches  in horror as the billionaires and the millionaires flee the country in increasing numbers.

The Office of Budget Responsibility is poor at forecasting revenues. It often underestimates the negative effects of high rates on revenues and exaggerates the revenue likely to accrue from higher rates. Even the OBR will have to tell the Chancellor before her next budget the bad news that higher wealth taxes have driven away too many better off people, and higher National Insurance has destroyed jobs and business profits. As a result higher NI has reduced income and business tax revenue.

If the Chancellor wants to raise more revenue she needs  to do a  U turn on her tax rises last time. She needs to ask herself why Ireland has been raising four times as much business tax per head as the UK with a much lower rate.

Yesterday I proposed a big saving on prisons by deporting many more foreign criminals. Today I propose welfare reforms.

The priority task should be to greatly reduce the flow people onto benefits.

Illegal migrants should never qualify for regular   benefits. If they have to stay for a bit before leaving the state needs to find a cost effective way without allowing them to establish benefit entitlements.

People seeking entry on work visas should not qualify for benefits. They should be self sufficient on the pay they are receiving and should return home when the contract ends. We need to prevent  low pay migrant jobs  which get in the way of better pay for others.

The government needs to review eligibility to come in as a dependent to make sure they do not go straight onto  benefits.

The government needs to improve support for those seeking work. It needs to cut taxes to make it more  worthwhile to work. It needs  to ensure those on benefits who can work are actively seeking work and not turning down jobs they are offered.

It should not allow a sicknote for life to be granted to younger people with mental health problems, unless their condition is acute and likely to be incurable..

 

 

 

 

There are over 10,000 foreign prisoners in UK jails. In a recent poll more that 80% of those polled wanted serious offenders deported, including 80% of Lib Dem and Labour. voters with a higher percentage of Conservative and reform.

It us expensive to keep prisoners in jails. It is very dear to build extra orisons to keep up with surging demand. Successive government have been returning modest numbers and this government is now talking if sending some out of the country earlier in their sentence.

Why not take tge public advice and send more out of the country more quickly after conviction. Why do  taxpayers have to pay  more than £50,000 a year per prisoner, or over £500m a year to keep these people? Building new  places for them is £600,000 per place or £6 bn to provide for 10,000.