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Yesterday I argued no one can accurately forecast the UK deficit or state borrowing for five years hence.The  deficit is the difference between two much larger numbers, total spending and total income. If spending is £1.3 tn and income £1.2 tn the deficit is £100 bn. If the forecast is 5% too low on spending which is £65 bn then the deficit is £165 bn, or 65% higher.

The OBR has to make a whole series of assumptions about what will be happening in five years time. If they decide productivity disappoints, as they did for this budget, there is a bigger deficit to deal with. If they think interest rates will be higher, or tax revenues lower, again there is a bigger blackhole to fill. For this budget they upped the forecast of tax revenues so there was a forecast overall win, not  a larger black hole.

Distracted by all this Chancellors spend time arguing over  the  assumptions which create big swings in requirements for extra taxes instead of concentrating on the much more important and real forecasts for the next financial year. The Treasury and OBR should  be able to provide fairly accurate spending forecasts for next year. Chancellors should be pursuing proper controls over immediate spending.

The black hole in five  years time approach can both lead to too many anti growth taxes and too little concentration on more immediate spending excesses. This last budget showed a Chancellor gaming the system with promises of tax rises to come and productivity gains in five years time to allow her to continue to spend and borrow too much for the rest of  this Parliament.

You do not need to be an economic “expert” to see what is wrong with the UK economy. The  government is spending, taxing and borrowing too much. As a result talented people leave for lower taxed new countries, businesses divert investment abroad, jobs are created  elsewhere. Meanwhile a badly run public  sector wastes and misdirects too much of  the cash it syphons off from families and businesses leading to yet more demands for higher spending and taxing.

The fiscal rules are meant to control this, but they do not. One of the main reasons is they are based on “controlling” the level of borrowing in Year five of the 5 year forecast. Under the system year 5 never comes. Instead of sticking with the Year  five figure and enforcing the control on borrowing when we get there, they keep rolling forward to always rely on a forecast 5 years ahead. This allows  regular increases to planned borrowing for the original year 5 forecast when the passage of time makes it the year 4 forecast then the year 3 forecast down to the current year. Spending and borrowing under control for year five are allowed to be much higher when they become Year 1.   Government relentlessly  pushes  up spending and debt every year.

Because the control is on a  distant year it makes it anyway a silly exercise. Neither the government nor the OBR negotiating the numbers for five years  time have a clue what the deficit will actually be then. Nor can the rest of us tell them, as it is beyond the capability of forecasters. In 2030-31 who will be the UK government? What policy will they be following to tax and spend? Who will be the US President? What policy will he or she follow on trade, tax and spend and energy? Will the world economy be expanding or contracting? What impact will AI have had on employment and productivity?How much extra pay  by then will doctors and train drivers be earning? How much more will HS 2 be costing?

Later articles will expose more of the nonsense of the fiscal rules. The Year 5 rule both seems tough to a Chancellor  making a budget, but ensures endless rises in spending and debts because a controlled Year 5 never comes. We need to concentrate on current year and next year, not year 5.

I was pleased to accept the offer of a seat in the Lords. I will continue this website as I did whilst I was serving as an MP. Being a member of the Lords will allow me to participate more in the work of Parliament and in the national debates about our  direction.

Today I invite your thoughts on the Lords, its composition, role and future. I believe in the supremacy of the elected House of Commons with the Lords as a revising Chamber which can ask the Commons to think again.I do not favour an elected second chamber. If elected at the same time as the Commons it would likely have a similar composition politically so what would it add? If elected mid term for the Commons it would likely become a block on the Commons governing.

The Lords can bring more expertise to bear on legislation and may have more relevant experience  to undertake a more detailed and less partisan examination of a Bill.

The Lords can sometimes open up new and wider topics for national discussion than the more politically  focused agenda of the Commons may cover.

The Lords can reveal bad problems with implementing legislation triggering government amendments. It may reveal substantial public displeasure with a measure, asking the government to think again.

Members of the Lords can help their parties in the Commons and can provide additional Ministers and Shadow Ministers

Reforms have removed the  hereditaries  , introduced a right to retire and a low minimum attendance to keep the seat.

I went to Parliament yesterday to make arrangements. I have asked for  a date when I can be introduced to the Lords to swear in, and have  been given an appointment next week to sort that out. I look forward to getting to work on  completion of the formalities to become a peer.

As readers know  I did not change the name or approach of the site when I received a knighthood and will not be changing it now.

As the Lib Dems, SNP, Greens and Labour enter a competition to see who can propose the most commitment to more EU taxes, tariffs and laws we need to remind ourselves of why we voted for Brexit and how it has already brought us some important wins. This is despite an establishment of civil service, courts, universities and too many MPs out to prevent  Brexit by tying  us firmly to the EU.

1. Large financial savings on membership costs. Had we stayed in with the increased budget it would be running at more than £21 bn a year of extra gross spend on EU matters including taxes we had to pay to them. Clearly  if we wanted to rejoin terms would be even worse, likely to be at least £25 bn.

2. Keeping all of our customs revenue and all our plastics tax instead of surrendering most of it to the EU, giving us £5 bn more.

3. Allowing us to sign trade deals with TPP and India promoting our non EU trade which is 59% of our exports. Trade has grown well since the vote.

4. Boosting our service exports, 57% of our total exports , by allowing us to insert service sector clauses into trade deals which the EU was reluctant  to do. There  has been great growth is service trade since we left.

5. Allowing us to develop the first anti covid vaccine and lift lockdown earlier

6. Allowing us to take VAT off green goods and female hygiene products.

7. Allowing us to take tariffs off all things we do not make or grow for ourselves, and off all materials and components needed by UK industry

8. Allowing us to reduce bad regulation of financial services to assist our successful financial sector

9. Permitted us to switch student support from Erasmus which mainly paid  EU students to come to the UK and some to UK students to study in the EU, to Turing where all the money goes to  UK students studying anywhere in the world.

10. We have been able to ban the export of live animals and improve standards of animal welfare.

According to the Budget Red book the government will  borrow £627.8 bn more over the next five years. 2029-30 shows the lowest additional borrowing as much delayed tax rises are meant then to come into effect,  after the election. Do people believe that?

At the same time the government over the five years needs to borrow at least £675 bn to repay debt that falls due. In total the bond market will be asked to subscribe for at least £1300 bn of new bonds. No wonder our government borrowing rates are the highest of the advanced countries.

So why does the Chancellor say our debt is coming down? Why so much extra spending? Why does she delay the main tax rises she wants until after the next election? How long will it take to revalue homes to be able to impose the Mansion tax on some 3 bed flats in central London? How long to consult and legislate to impose a tax on using battery and hybrid cars?

Why was there so little comment in her speech on how to control spending? Why no proper discussion of the productivity collapse this decade in public services? Why no detail on how she will spend the £3.25 bn planned for AI in the civil service? Why no plan to control steel losses? Why no mention of Bank of England losses? The OBR has upped its forecast of those losses to £288 bn from Q3 2022, or £164 bn net of earlier profits.

The extra borrowing she plans over 5 years would  mean at least £25 bn more in annual interest payments. So why does she go on complaining about the £100 bn plus the government is already paying each year to service the debt when she plans so much more?

She makes a great deal out of the fraud and wrong payments made under various covid schemes which Labour supported at the time. She is finding it difficult to get the money back. Instead of implying this was some unique incompetence of a former government, she should see the latest figures for the annual loss on benefit fraud and overpayments, running at around £10 bn a year on her watch.  Why doesn’t she stop that if if stopping fraud is as easy as she thinks it could have been for the one off payments on lockdown to compensate people for loss of working incomes.

The Chagos Treaty is still not ratified by passing a UK law to bring it into effect. The Lords is unhappy with it and it is subject to a legal case against. The government failed to consult Chagosians   properly who do not it given away to Mauritius.

The government is short of money so offering an annual subsidy to Mauritius to take over the islands is mad. This is valuable territory.

The government needs to reflect on President Trump’s  new world strategy. That makes clear it is in the US and the Western alliance’s interest to keep open the shipping lanes in Asia and to preserve the current status of Taiwan. The Chagos joint US UK base is critical to defending open navigation into the South China Sea.

Giving away the freehold means Mauritius, friend of China could grant fishing  rights in currently environmentally protected  waters. Chinese vessels could come close to the base. People could settle  on other islands close to Diego Garcia, creating tensions with the base.

At the moment this remote island base is well away from settlements and from prying  eyes. Changing it could be expensive and dangerous. There is no need to. Please government think again.

I would like the PM to offer us some optimism about our individual futures and about the mission of our nation. Instead the government offers us a mixture  of lies, false forecasts and gloom.

When talking about the future you can offer an absurdly optimistic forecast which is similar to a lie, you can offer an optimistic forecast which you might be able to hit which is spinning, or you can set out a positive direction which is safer.

The government’s problem is an increasing number of its promises are turning out to be lies.

The promise to avoid tax increases on working people has been broken.

The promise not to increase National Insurance has been broken with higher NI for those saving for a pension .

The promise not to increase rates of Income tax has been broken for the people who will be dragged into higher tax bands

The promise  to smash the  gangs shows no signs of being met, with numbers well up instead

The promise to get 1.5 m homes built is becoming increasingly impossible to keep

The promise to cut energy bills seems very difficult to keep

How many of these promises were lies?

When it comes to the past, lies are clearer  cut.

They lied over black holes in the finances to blame the previous government for their decision to raise taxes when higher taxes were needed for their large spending increases.

They lie that Brexit cut GDP by 4% and damaged our trade.

They lie that Truss crashed  the economy because she raised the ten year interest rate for one day only to 4.38%. All this year  the ten year rate has been above 4.38%, the Reeves penalty, but they say that has not crashed the economy. The Truss excessive deficit was reversed before it was implemented. Reeves makes excessive deficits regular features .

They lie they have stabilised the economy, when they have undermined the bond market, driven unemployment and inflation up and growth down.

The petty lies also serve to undermine the credibility of what they say. Rachel Reeves misled us about her past jobs, her abilities as a junior chess player and her compliance with rules applying to her as a landlord. Angela Rayner misled over paying taxes on her homes. The anti Corruption Minister had to resign before being given a 2 year prison  sentence for corruption abroad, a verdict she says is wrong .

Netflix has grown rapidly this century to a turnover of around $40 bn, more than five times the turnover of the BBC in the UK and worldwide. Netflix’s market value is an extraordinary $425 bn reflecting market views that this company has stellar growth ahead.

Netflix has now launched a bid to acquire most of Warner with its great back list of films and franchises. Many UK consumers go to see Warner films and pay for Netflix subscriptions. The UK has great talent and has some studio capacity, but the future of our entertainment increasingly rests  in US hands and is being determined by US companies.

The UK is failing to keep up or to provide any large company competitive challenge to the US majors including Comcast, Netflix, Warner, Amazon, Apple, Disney. The UK is held back by two major impediments.

The first is the institutional arrogance and lack of world  drive  at the BBC. The licence fee becomes a tourniquet  constraining investment in new technology and global expansion. BBC Commercial, non UK BBC, is a pathetically tiny £2 bn outfit in a world of giants. It should be offered more  freedom and should  raise substantial money on the London Stock Exchange to grow the business and get up to date.

The second is the raft of rules and taxes, many of them  stemming from past EU membership, that impedes or deters setting up and growing new media businesses from a UK base.

As government dithers or ignores the failure of policy, UK media consumers spend more with US companies and sign up to more US content and services  . The UK politicians and media debate how to regulate the US and think our traditional offerings are still fine and central to our media world. They should ask more UK families why Netflix and Disney, Apple and Amazon are what they want.

So Ofgem agree it will be another £108 on bills to increase the network capacity to handle all the extra wind farms and the gas back up. They try to sweeten the pill by saying without the extra investment it would be a £188 increase, presumably because we would be paying not use wind energy during good wind times because there was insufficient grid to shift it.

Mr Miliband keeps trotting out his double lies. He says energy bills will go down with more renewables, yet all the time in recent years with more renewables they have been going up. He tells us the problem is the price of gas, when gas is just one quarter of the cost of electricity per unit of energy and when guaranteed renewable power prices for new installations are well above the typical price of gas generated electricity today.

Claire Couthino the Shadow Energy Secretary has been right to call for stopping the latest bidding round for more renewables as they are proposing much higher guaranteed prices than current average energy costs, locking us into dear energy for many more years. They should only go ahead with renewables that will reduce energy prices because they are bid at lower prices.

We need to ask how  realistic are the grid plans? Can they really build all the envisaged grid by 2030 to meet their targets? Will they be able to build it for anything like the budget costs? How are they are going to overcome all the planning objections to many more pylons stringing their way across some of our best East Anglian and other landscapes?

The government is playing Russian roulette with our power supplies. The more unreliable renewables we have the more danger of power cuts when the wind and sun let us down. The more renewables the more the prices and costs go up if you add up the extra grid costs and the stand by gas power costs as well as the cost of installing and running the wind farms.

This is self inflicted misery. Realising we are fed up with rising power bills the budget is taking some of the current costs away to pay for the dearer renewables out of taxation. As most of us bill payers are also taxpayers this does not help us. It makes us angrier to have higher taxes as well as higher power bills.