Why spending an extra £5 billion is a stupid idea


            Last night news broke that some Ministers think the government should kick start the economy with an extra £5 billion of capital spending. The BBC’s Economics Correspondent waded in giving it some credibility, revealing her lack of understanding  of the public spending figures and the economic situation.

             The UK economy is slowing down despite a massive £10 billion a month fiscal stimulus , all borrowed, planned for this year. It is slowing down despite the extra £10.6 billion of public spending the Chancellor put into this year’s spending plans in the March 2011 budget compared to the June 2010 budget. The UK economy is slowing down despite the boost given to capital spending in the March 2011 budget of £5 billion.  Yes, the BBC’s Economics Corespondent seemed unaware that the government has already tried the £5 billion capital boost, and the economy has slowed down markedly  despite it. (Red Book page  93  Public sector gross investment) She seemed unaware that the government upped the spending figures in March, with so little favourable effect.

               Instead of pretending that an extra £5 billion would sudddenly do the job, those wanting this change should ask why all the boosts to spending so far have not carried us to faster growth. They should ask why just £5 billion will make such a big difference, in a £1.5 trillion economy where £5 billion can be a small  error in the figures.

                The truth is this economy is not short of public spending. What the economy needs is a private sector led recovery. That requires different policies towards the banks, as this site has described in recent weeks. This economy is not going anywhere fast with broken banks under a regulatory cosh. It needs some new banks with new capital raised from private markets, to lend to decent prospects and to people who have income and want to buy homes, cars and other items.

                 The private sector needs more confidence, more orders, less tax and a sensible regulatory framework. It does not need higher interest rates, which will come if the government relaxes its pretty loose fiscal policy any more.  If all goes well the government plans to borrow a whopping £485 billion extra over five years. Given slower growth the government has already said it will borrow more than this to allow for the loss of revenue. How much more do these people want the government to borrow? Why would an extra £5 billion make such a difference? At what point do they think the UK would lose the confidence of the markets and face rocketing interest rates like Italy and Spain?

                   An extra £5 billion was tried in March 2011. It didn’t work. It’s time to try something else. It’s time to have some  more private capital raised for some better, more competitive banks.

                   The IMF’s recent study forecasts the Uk borrowing 0.7% of GDP more in 2011, and 1.3% of GDP more next year as a result of slower growth. That’s another £10 billion stimulus followed by almost £20 billion. Their figures show the UK borrowing more than Greece as a percentage of GDP  in 2011  and 2012 combined.



  1. lifelogic
    September 21, 2011

    Absolutely sound banks that lend to sound businesses and individuals who have sensible things they want to do with it. At the moment most banks (government owned RBS/Natwest in particular) are just pulling money back from businesses, forcing the business to cancel investments, sell assets, down size or put developments on hold. Property development funding is almost unobtainable and very expensive and on low loan to value ratios.

    The bank regulatory framework needs to encourage such sensible lending on things that will produce a good return in the private sector. Edinburgh trams, HS2 train tracks, new tax inspectors, wind turbines, subsidies for pointless green house bling and similar are the last thing needed.

    Switching a few pointless traffic lights off and silly bus lanes (many clearly designed to cause congestion) might be a good idea though.

    1. lifelogic
      September 21, 2011

      I see that even Shirley Williams, of all people, found Huhne’s combative comments about taxes, Eurosceptics and the TEA party “unhelpful”.

      Surely the one thing that is a plain as day is that we are “Taxed Enough (to much) Already” and this is damaging the economy. What on earth is the point in the 50/52% tax if it produces less tax revenue and causes huge damage to industry. Where is the morality in causing such pointless damage, just for a superficial political appearance of fairness? It is just pathetic.

      How is the report coming on it should only take an hour or two to research!

      1. Andrew Smith
        September 21, 2011

        As a member of the TEA Party I object to having Mr Cameron compared to our views. The additional spending and continued additions to business regulation under this coalition government clearly show where the Prime Minister’s preferences lie.

        Even in a coalition government, the PM cannot deny his support for all ity does; if he were to strongly disagree he should either remove disagreeable ministers or call a general election or simply resign himself.

        The longer this goes on with pretence laid on pretence while more damage is done though regulations, energy levies and fudge, the longer it will take toi rebuild business confidence which is slipping away daily.

        We saw in the 1970s and 1980s how difficult it is to fire up the economy and this time there is no Thatcher and Lawson (even Howe at certain points) to deliver it.

        1. lifelogic
          September 21, 2011


          All we get is more silly employment laws, silly gender equality insurance laws, restrictive banking, more so called “equality” nonsense, and endless tax and waste everywhere.

          1. lifelogic
            September 21, 2011

            Just £16 billion borrowed by HMG this month mainly to waste – only about £250 for every man/woman pensioner or child for the month.

            Current expenditure grew at 7.2% per cent – clearly cutting too much to quickly again!

    2. Disaffected
      September 21, 2011

      Mr Redwood spot on, once more. Why are they not listening?? I genuinely think these ministers are putting their own interests and political ideology before the national interest. They must surely know the figures that you have pointed out on this blog, they must have read the Red Book.

      Huhne must know his green policies are costing us a fortune on our energy bills each month and there is no proven evidence that carbon emissions are causing global warming. Wind farms cost more to build are less efficient and more carbon emissions will be let off to build them than they will save during their 25yr life span. They are an unreliable source of energy and are totally reliant on the weather. The BBC and Huhne talk about the capacity of wind machines but they know the weather will not allow them to reach maximum capacity all the time. They know this, but still continue to meet a pointless EU target that will make no difference to the world we live in. The true benefactors will be Germany and Sweden who build wind machines and are subsidised by UK taxpayers to build and sell them to us. Unbelievable that intelligent ministers (who recieved the best education) could behave in such a stupid intransigent way.

      1. ted Read
        September 22, 2011

        We have beenover this argument a dozen times in the pub. Our only conclusion has been if they ain’t stupid they must be crooked. It’s just a case of looking for what’s in it for them!

    3. Mark
      September 21, 2011

      I believe that commercial property prices have been largely allowed to correct, unlike for residential properties. The process may not be complete, but they much closer to fundamental value. I’d argue that LTV should be seen relative to fundamental value, not bubble valuations.

    4. Robert K
      September 21, 2011

      It was silly lending that created this problem in the first place. If companies want to expand there are other sources of capital than bank lending, if their business plan is up to it. A company that can only survive by extending its credit lines is in trouble anyway.

    5. lifelogic
      September 21, 2011

      Nick Clegg just now:

      “You never, ever play politics with people’s jobs”

      How on earth does he square that with his 52% income tax nonsense?

      He does however sound rather more sensible than any other liberal I have heard so far – not that there is much competition.

  2. Mick Anderson
    September 21, 2011

    “….does not need higher interest rates”

    We already have high interest rates if you want to borrow. Out here in the real world, the only time that interest rates are low are if you are prudent and have savings.

    What we need is an improvement in the bank regulation so that there is a far smaller margin for the banks. I mind less whether it is done by improving the rates for savers or making things more affordable for business to borrow.

    Perhaps consider the commercial market separately to domestic – give individuals a good return on savings but expensive borrowing to discourage personal debt, but the other way around for business to encourage investment. If this means that business men take money out of the company to put it into higher-paying personal accounts, the Chancellor wins again by taking tax from the transfer.

    In reality, we have never had a single interest rate for everything. Why not accept this fact and use it to advantage?

    1. lifelogic
      September 21, 2011

      Indeed in business you probably have to pay a margin of 3.5%+ over libor, plus fees and if you take say a 10 year fix or swap then with fees and costs you end up paying about 8%+ (16 times the 0.5% base rate).

      That is if you can find a lender at all.

      1. Mick Anderson
        September 21, 2011

        3.5% over base? And the rest….

        A builder friend needed £50k for six months to finish refurbishing a £2.5M building on which £500k was already secured. By the time all the charges were tallied, the banks effectively wanted 19% – I don’t even mean 19% APR, they wanted £9k5 for the loan.

        Non-bank lending were happy to lend him the money at 10% for up to a year.

      2. Javelin
        September 21, 2011

        That says as more about the viability of costs in a Western business model as it does about Government debt. Forking out 5 Big ones to an economy that is no longer competitive is no longer the best option for banks. Banks are global now and will invest overseas where labour is cheaper and taxes are lower.

        Politicians just don’t get it – banks try to invest wisely. Unless they are coerced by Governments to invest in dodgy mortgages or sovereign bonds.

        Truth is the Governments have been trying to prop up their own profligate manifestos for years by coercing the banks to invest in bad mortgages and sovereigns. They need to understand that investors money is flowing out the country because the profits are elsewhere.

        1. a-tracy
          September 21, 2011

          I’ve often wondered why the bankers haven’t responded to all of the accusations about their practises. I haven’t seen any ‘right to reply’ exercised by our national broadcaster. What Goodwin and Applegarth did appeared to be totally irresponsible yet they were both encouraged to slink away quietly by the last government with big payoffs and have since landed responsible roles in other large organisations, amazing.

          I’ve been told this week that a young man who declared bankruptcy having taken out loans for holidays, living beyond his means and a car that he wrote off without sufficient insurance in place has just received a £3000 pay off aided by a company that is suing banks for dodgy arrangements on loan insurance that he can keep after paying the company £1000 – what is all this about and how regularly is it happening I wondered? When I exclaimed how the heck is he being allowed to keep the money I was told it was the banks fault for lending him the money in the first place they should have checked his credit card debts and earnings better – unbelievable.

          Savers and investors in our banks seem to be getting stuffed from all directions. We’re going to hell in a handcart pushed along by a bunch of spendthrifts that don’t want to say enough is enough you irresponsible lenders.

      3. lifelogic
        September 21, 2011

        I understand that HSBC are doing very little development lending at all and are inundated with lending requests many pushed away from the state owned RBS/Lloyds.

        If there is one positive thing the government could do now it would be to cut government expenditure and waste and use the money to get round these Basel III banking regulations in some way or other and thus enable the banks to lend to sound borrowers now.

        If people cannot even borrow, when they have good security available, what chance is there for any real growth in economy.

        1. Javelin
          September 21, 2011

          HSBC (I’ve worked there) are pushing their loans out to Asia. The returns are so much better.

    2. Mark
      September 21, 2011

      The large margin (and hidden annual subsidy of £100bn as reckoned by the BoE) is to permit banks to recapitalise and meet the new gearing standards. There is also substantial cross-subsidy towards residential mortgage lending that has been politically driven. If we are to see banks lend on more favourable term to business, the politicians have to be prepared to let them stop subsidising mortgages with the consequent rise in repossessions and squeeze on incomes, especially for the over-borrowed. Mortgages are crowding out businesses. It might even teach some that over-borrowing comes with consequences when governments do it as well as themselves.

    3. APL
      September 21, 2011

      Mick Anderson: ” .. bank regulation so that there is a far smaller margin for the banks.

      This is government policy. Back door recapitalization of the banks through screwing the borrower and lender alike.

      High interest rates for the borrower, low interest rates for the prudent saver.

      Destroying future prosperity into the bargain and entrenching the fat cats bonuses at senior levels in the banks.

      A policy that could have been cooked up by messers Brown and Balls. Oh it was and our supposedly Tory administration hasn’t changed it.

    4. Robert K
      September 21, 2011

      Forget regulating interest rates for banks. Simply tell them that the government won’t bail them out if they mess up.

  3. Scott
    September 21, 2011

    And what do you suppose the level of growth would have been without the £10 billion per month and the £10.6 billion in the March 2011 budget?

    The automatic stabilisers, coupled with the structural deficit, have prevented a collapse into a deflationary spiral. Instead of anaemic growth, we would have suffered a much sharper contraction, and very possibly depression.

    The sort of expansionary fiscal contraction Osborne has opted for is only possible if there is sufficient demand in the world economy to boost exports. In the absence of that, there is nothing expansionary about it whatsoever.

    It’s just plain old contractoon, with all the consequences for growth and jobs that implies.

    1. Brian Tomkinson
      September 21, 2011

      I guess you think another £5billion of government spending is mere chicken feed. How much extra would you like – £10billion? £50 billion?£100billion? Whilst you are thinking about it, give some consideration as from where it will be borrowed and what the effect will be on government bond interest rates and just how you think it could ever be repaid.

    2. lola
      September 21, 2011

      Well, forgive me for lapsing into technical language on a public blog, but that is know in the trade as ‘talking cobblers’.

    3. norman
      September 21, 2011

      Let’s hazard a guess then, but instead of just saying ‘things would have been worse if we didn’t do this’ look at some evidence.

      On BBC radio this morning, I heard a talking head on Wake up to Money talking about Ireland. He said that Ireland’s bonds have been the best performing in the world over the last 6 weeks, that their economy was starting to turn the corner, they were winning plaudits all round and that, although things were still tough and they’ve had a torrid time the last two years, it looks as though their policy of fiscal contraction is bearing fruit.

      Now, let’s look at Greece that was in a similar position, has promised reform and cuts but procrastinated and not actually done anything yet but are still stimulating away like there’s no tomorrow, their bonds are going through the roof, they are having to go cap in hand to the ECB over and over, their economy is performing worse than ever and it looks likely they won’t manage to pay the bills next month.

      Scaremongering is all good and well but our problem is we’re spending too much, not that we’re not spending enough.

    4. Simon
      September 21, 2011

      Spot on.

      All of the increased borrowing is going in to the huge hole in tax receipts left by a £400 billion drop in GDP.

      The market does not expect any real growth any time soon. Nor does it expect the current level of inflation to be sustained. It sees an indebted population with its real income dropping unwilling or unable to spend more, and a similar situation across much of Europe and the Americas, killing hope of an export led revival.

      It’s completely unsurprising that all the cash that was floating about went into Guilts (at negative returns!) and Gold – it only makes sense to invest in production if you can find customers for it.

      Add in the increased taxes on investment (capital gains up to 28%) and spending (VAT up to 20%) and it’s a wonder there’s any growth at all.

      That said, a £5 billion spending spree is a drop in the ocean, even targeted at house building.


    5. JimF
      September 21, 2011

      There is sufficient demand out there in the world if we have sufficient supply at the right prices. A smart government would be trying to get our productive trade balance stabilised by removing the taxes and barriers instead of stoking a consumer who has no confidence and no money.

    6. Winston Smith
      September 21, 2011

      1 Q Why does the Govt need growth?
      A To increase its tax income.

      2 Q Why does the Govt need to increase its income?
      A To reduce the large gap between its income and expenditure.

      3 Q Why do they need to reduce this gap?
      A They are building a huge and unsustainable debt.

      4 Q What happens if the debt becomes too large?
      A They are unable to pay the interest on the loans, cash dries up and there will be instant drastic cuts and the whole economy will nosedive. It will be seriously bad.

      5 Q What happens when they inject fiscal stimulus into the economy?
      A The Govt borrows more money to spend

      6 Q What happens when the Govt borrows more money?
      A It increases the gap. Return to no.3

    7. APL
      September 21, 2011

      Scott: “have prevented a collapse into a deflationary spiral. Instead of anaemic growth, we would have suffered a much sharper contraction, and very possibly depression.”

      If the prescription had worked so far then there may be a point to trying the same medicine again.

      But it hasn’t and it can’t.

      Suppose the government borrows twenty percent of GDP and spends it into the economy, if we suffer a similar experience to Greece where through reckless government spending we can no longer fund government debt we end up with an immediate 20% contraction anyway.

    8. sm
      September 21, 2011

      I tend to agree. ( but im surprised we cant cut £5bn of waste?.Ref Fire HQ white-elephants (£0.5bn).

      £5bn particularly if (debt free) and not borrowed (spent on the national grid or a bridge or a nuclear plant) wont produce inflation.

      We have a worldwide banking problem debt problem. Its this debt deflating in value, but seemingly being slowly transfered to the public debt.

      The problem appears to be fractional reserve banking protecting private interest rather than the national interest. Who decides the loan decisions and are we sure conflicts of interest are ruled out. Should inhouse loans be allowed?

      However we are stuck with a monopoly of ‘money creating ‘of FRB banks and laws which are effectively appropriating wealth by inflation and indirect subsidy.

      Whats £5bn? JR when viewing the support to the banks/bondholders?

  4. Peter Campbell
    September 21, 2011

    What is plain is that government spending is the problem not the cure. It sucks life from the productive private sector and gives it to the bloated public sector which produces nothing. Not only is tax a problem now but it has to increase all the time this ridiculous deficit continues. The future will be worse because of the massive interest payments on present debt. Our children will be saddled with our bills.Not only is that immoral it ensures that the economy will suffer and we are all less likely to get any help in our retirement. All western governments are locked into this debt/ devaluation spiral that will end in currency collapse. What will all the big government, big spending enthusiasts say then?

    1. Robert K
      September 21, 2011

      They will say borrow more and spend more. Look how well it worked in Weimar Germany and Mugabe’s Zimbabwe.

    2. javelin
      September 21, 2011


      The more I look at this crisis the more I can see the build up to the collapse of the USSR. Then the USSR raised their public spending on defence to 27% of GDP to match the US 7% GDP spending. This spending on unproductive aspects of the economy eventually pulled the Union apart. The minor economic tinkering of perestroika feels like the tinkering of the Euro leaders.

  5. Ralph Musgrave
    September 21, 2011

    John Redwood’s four ideas for improving things are not much use: “The private sector needs more confidence, more orders, less tax and a sensible regulatory framework.”

    Re “more confidence” – great idea. How do we effect that – take cocaine?

    More orders – great idea, but the US and Europe in the doldrums, so where do the orders come from? Of course we could boost demand in just this country, but there is a problem here: there is a limit to how far we can do this without the rest of the world doing likewise. Second, I though half the thrust of JR’s article was that spending and extra £5bn (which would create “more orders”) was a BAD idea!

    As for “less tax”, in the past, highly taxed countries like Scandinavia have done just as well as more lightly taxed countries, so “less tax” is irrelevant.

    As for a “sensible regulatory framework” that is so vague as to be scarcely worth commenting on. With the exception of bank regulation which clearly needs sorting, our regulatory framework is not much different to what it has been for the last fifteen years, so it’s clearly not the source of the problem

    1. forthurst
      September 21, 2011

      ‘More Confidence’ – a meaningful concept to businessmen if not to self-certified Economists.

      ‘More Orders’ – the state of the world economy does not prevent businesses competing for orders either here or abroad, but lack of finance for expansion does.

      ‘Less Tax’ – That Scandinavia had ‘high tax’ with comparative success is irrelevent. That does not prove it was unharmful. Furthermore, when money is invariably taken from businesses and individuals who work to give to a lumpen underclass of scroungers, international parasites and the like, or used to interfere in productive businesses, this is far more disincentivising than simply recycling money to more or less the same groups. Furthermore, the fact that EUSSR regulations on Energy, Working directives etc increase costs for businesses and individuals means that they are equivalent to taxes, in the same way that excessive property and rental costs are.

      ‘Sensible Regulatry Framework’ – the situation has substantially deteriorated in the last 15 years. The Labour party was under the impression that form filling and box ticking was a valid substitute for good administration; furthermore, small businesses have been almost buried under an avalanche of rules and regulations without any understanding of the time and resource constraints under which most small businesses operate.

    2. Electro-Kevin
      September 21, 2011

      It depends on how well the tax is spent. Our country seems to be awful at it.

  6. Gary
    September 21, 2011

    There is no growth because the credit boom and low rates caused a misallocation of capital into non-productive enterprises. Banks did not have to do any due diligence, they just made as many loans as they could, mostly to people who has no hope of repaying and no chance of growing gdp. Most loans went into houses. Completely non-productive.

    Now, instead of liquidating those bad loans and bad enterprises, we have the govt trying to levitate the housing bubble, trying to prop up insolvent banks, and now want to throw money at projects by govt decree.

    They are clueless. We have no chance.

  7. waramess
    September 21, 2011

    Fact is that none of them have any idea now why their stimulus is not working and have no idea what to do next. They have egos however and encourage themselves by thinking how much worse it might have been had they handled matters differently.

    Banks are not lending because of the serious amount of bad assets they are carrying and are now so stuffed full of bad assets they are given to cherry picking new business.

    These Keynesians and Monetarists read far too many books and are not willing to resort to thinking. They only need to look at what has happened to Japan to see what a mistake it was to follow the thoughts of Chairman Keynes.

    Not one Austrian or Smithsonian on the B of E Monetary Policy Committee should tell us something about their arrogance whilst all they can think about doing is the same thing again and to hope for a different outcome.

  8. javelin
    September 21, 2011

    5 billion ? – Wasn’t that the same sort of figure Osborne was taxing North Sea Oil by and losing in investment?

  9. alan jutson
    September 21, 2011


    Yes I viewed with dismay the interview yesterday as well.

    They just do not get it do they.
    That or its a deliberate attempt to support more socialist ideas with the big state should provide all mantra.

    The sad fact is the media (newpapers, radio and TV) have not reported actual facts for years, news is now more like an entertainment show, with so called experts (who clearly are no such thing) interviewing more for effect than substance, and then giving their own views as to hypothetical situations as a summing up.

    Its lazy uniformed reporting.

    Oh for the day of Robin Day in his prime.

    The reason why Labour will still get votes after the most disgracegful financial mismanagement of the century, is simply because the majority of the people have absolutely no idea of the true facts, and the magnitude of the countries present situation.

    When the TV companies started recruiting people for the “F” factor some years ago, it unfortunately did not mean financial experience.

    I have said it before, but we need a State of the Nation speech from our Prime Minister every six months, broadcast at the same time on all TV channels and radio.
    Yes aware that this sounds a bit like the communist party properganda, and aware that people can still switch off, but at least he would be speaking directly to the voters uninterupted, should they wish to listen.

    1. Bob
      September 21, 2011

      The military humiliate and degrade a new recruit in order to rebuild him back up into a component of their fighting force?
      Well imagine an organisation wanting to rebuild an entire nation? For example the UK? Where would they start? Education? TV? the Judiciary? Police? the family unit? public morality? Have you watched the BBC lately (esp. BBC3)? are you aware of some of the bizarre judgements handed down by our courts? and the European Court of Human Rights? ever expanding “social services”? Have you noticed how schools now teach children what to think, rather than how to think? Do you see how the state has taken the place of the parent? Notice how victims of crime are as likely (or more likely) to be arrested as the criminal? Telephones in prison cells? Jail sentence flimflammery (1 year = 6 months)? Early release of violent criminals, bizarre government spending priorities? the continuing onslaught of political correctness and “new speak”?
      I could go on, and I’m sure you could add to the list yourself, but you get the gist – it’s a demolition job in progress, to make way for the brave new world to come.
      Google “fabianism”.
      Recommend reading “Wild Swans” by Jung Chang.

      1. forthurst
        September 22, 2011

        ‘Cultural Marxism’, brought to you by the usual suspects, an intergenerational criminal conspiracy that specialises in wrecking other peoples countries and (worse-ed).

  10. Frank Salmon
    September 21, 2011

    When will the Keynesians realise that it is profit which creates growth, not increased government borrowing and spending. The word profit has become sullied and we have completely lost direction. Unless we create the conditions for profit making businesses to thrive we will not turn this around. Borrowing more to spend more just makes the pain greater in the end….

  11. Adam5x5
    September 21, 2011

    The government needs to spend a LOT less, and lower taxes.

    This would encourage growth and sort out our economic mess. The main area for a tax cut should be fuel duty. This would have a quick impact and help cut living costs and inflation drastically.

    This of course, won’t happen as the government is too keen on being ‘ green’ and apparently wants to drive living costs up further and the economy into the ground. Seems to me that the people running the show went to the Mugabe school of economics… inflate your way out of debt.

  12. javelin
    September 21, 2011

    The truth is the real crisis is in the heads of our political leaders who just cant seem to get their heads in the real world where real standard of living rises by wealth is creation and not debt creation.

    It just seems like the political leaders can’t show conditional (fatherly) love to their voters and have to show them unconditional (motherly) love. Politicians treat voters like children and just cant say no. They they are surprised when the population acts immature and selfish. The whole Labour concept of “fair” taxes is such a motherly view of the world. What we need is a balance with a fatherly view of can work, don’t work don’t get.

    A father role has been absent in politics since Marget Thatcher. Now I don’t think everything she did was right, but the essence of the woman was to be the nations father.

    She told us we had to invest and save and we listened to her and I think everybody respected that side of her. The West is suffering from too much unconditional love and mothering. Politics has since the 1970s been gradually inflitrated by unconditional love. It’s the essence of political correctness, Government indebteness. Socialism and the Left has been hijacked by Motherly love.

    Ask your self this question – when you are put on the spot by an inteviewer and they ask “Is it fair that …” – are you talking to that person on your mother. My gut feeling is that you feel the softness of the question and you feel you are being harsh not agreeing to the unconditionality of the giving.

    Not that I think unconditional love is a bad thing. Compassionate Convervatism is all about motherly love. But voters now expect to be loved unconditionally, like children – and that has created an unbalanced economy and society. Its a real shame we have come to this point. Leaders need to lead and that means being fathers and not just mothers.

  13. Richard1
    September 21, 2011

    There needs to be much more focus on the propensity of the BBC to parrot Labour / left-wing economic policy. Perhaps its because there are strong personal connections between many key BBC figures, such as the economics editor, and senior Labour figures. But it really isn’t acceptable that the publicly-owned, virtual monopoly broadcaster of current affairs and political debating programmes, funded as it is by a mandatory poll tax, should adopt such a partisan position.

  14. lola
    September 21, 2011

    Or tpoto put is very simply the ‘cure’ is to cut taxes and cut government spending.

  15. Iain Gill
    September 21, 2011


    Exactly, well said.

    The economy may well never be able to recover since we are handing our most important leading intellectual property over to our competitors in the midst of this.

    Keep saying it!

  16. Nick
    September 21, 2011

    With some friends, we are looking at setting up a business. Between us we are capable of borrowing very cheaply (less than 2%) a million. We’ve the ideas and the skills to implement.

    However, we’ve come to the decision that we won’t. Why should we risk a million, when if it works, the government is going to take 50% of the profit. It makes it completely none financially viable.

    We might be able to do it. With one Brit, one Irish, a Czech, a Pole and a South African on board, we can look at doing this with an off shore company. Given we can arrange that it looks better. The government gets 50% of nothing.

    That’s the extent of government policy. You are spending other people’s money, and there is a clear reason now not to do business in the UK.

  17. Alex
    September 21, 2011

    There is good empirical evidence from economists (looking at the impact of changes in government spending in different economies) showing that in the UK’s situation, any additional government spending will have at best a small short-term benefit and may make things worse. That is not even taking into account the fact that we then have to pay off the additional debt in the future. Neither does is take into account the fact that, as Mr Redwood points out, the moment there is a perceived risk in our ability (or will) to pay off the debt there will be a rapid rise in the price at which we can borrow (see Greece, Italy etc etc).
    The BBC don’t get this; but then the BBC have a simple view of the economy …
    Public sector = good
    Private sector = bad.

  18. Electro-Kevin
    September 21, 2011

    If it’s going to happen then at least ensure that it gets spent on useful infrastructure improvements with a mind to an optimistic future and that contractors aren’t allowed to rip the system off. Also provide incentives to use British workers so that they pay tax properly and wages don’t get sent ‘home’ instead of spent in shops here.

    Otherwise I’m in full agreement. Any recovery needs to be led by the private sector.

  19. Brian Tomkinson
    September 21, 2011

    As well as reductions in personal spending power from higher taxation and rising inflation there is now much uncertainty and lack of confidence. The Business Secretary should be changed immediately. His performance has been abysmal and this week far from inspiring a vision of confidence he was a prophet of doom and despondency. He would be much happier leading the backbench LibDem revolt and cosying up to his real pals in the Labour party. Huhne’s removal would be another major step to inspiring confidence that we are not just being bled dry on the alter of climate change. The government got it wrong from the outset as it continued to spend more instead of reducing spending and instead chose to clobber the taxpayers with the deficit reduction burden. In the process they have given the impression that cutting government spending is what they have been doing and it isn’t working. When in fact they have been increasing it and that is what is not working.

  20. JimF
    September 21, 2011

    For “It needs some new banks with new capital raised from private markets, to lend to decent prospects and to people who have INCOME AND WANT TO BUY HOMES CARS AND OTHER ITEMS.”
    don’t you mean
    “It needs some new banks with new capital raised from private markets, to lend to decent prospects and to people who have IDEAS AND WANT TO INVEST IN BUSINESSES.”???
    Any recovery has to be producer-led, not consumer-led. We don’t want the banks freed up, liberated and ready to lend to people ready to trade houses at ever-inflating prices and fill them with consumer goods bought from China. Let’s get our trade balance with the rest of the world back to positive first, please, Mr R!

  21. oldtimer
    September 21, 2011

    BBC reporters live in the BBC bubble, a world of their own making, removed from reality.

    The £5 billion story was, no doubt, dreamed up by someone to big up Mr Clegg and give him something to say in his conference speech. There now seems to be some backtracking, according to Adam Boulton on the Sky morning news programme. Perhaps someone has had sight of your blog post!

    There are things the Coalition could do, provided dogma is not allowed to preclude them. A few examples follow. Spend less on the aid budget. Dump uneconomic energy policies that require subsidies for wind farms and solar power schemes. Remove tax penalties on UK energy exploration and extraction; the UK actually has significant reserves which, if developed, would substitute for foreign imports, and possibly provide a lower cost source. British Gas already does this very successfully elsewhere around the world (eg USA and Brazil to name but two examples); the technology is well established. Simplify the tax and regulatory regime; enough studies have been completed to make a serious start on this.

    This may be too much for the current Coalition. If so there needs to be a change of leadership to those who understand what needs to be done and have the will to do it.

  22. English Pensioner
    September 21, 2011

    If there are any USEFUL projects the government might carry out that would benefit the economy, they must stop an equivalent number of USELESS projects. Today’s papers tell how the last government wasted £500 million on useless centralised regional fire control rooms, which have never been used (or wanted) and are still costing £4 million a month to maintain. If they have no use for them, they should be sold or demolished; we should not be spending £48 million a year maintaining a white elephants (or are Civil Servants secretly hoping to reinstate the project when they get a chance?). How many other useless projects like this are still taking place around the country?

    Tax needs to be reduced so that the public can spend – I’d love to employ a gardener for a couple of hours a week as I can’t really cope these days, but taxes are preventing me. I’m sure there are thousands of self-employed people and small companies looking for work, but people can’t afford to employ them.
    Small domestic building projects get far more people into work than the equivalent spend on some major civil engineering project because the latter is highly mechanised and employs relatively few.
    Get tax and government expenditure down and the country will grow fast!

  23. Sue
    September 21, 2011

    I just can’t believe with are saddled with another government that just hasn’t the slightest idea of what its doing. NuLabour was bad enough but this coalition is a complete disaster.

    The latest fiasco with the controversial new EU employment laws for temp and contract workers is only the latest in a series of empty words and promises.

    The EU has made our government sterile, it no longer has any power.


    You lot may just as well resign, get proper jobs and save us all a hell of a lot of money and grief! l

    1. Bazman
      September 21, 2011

      Steady job and income Sue and/or rich husband or relative Sue? Good for you.
      No hire and fire worries.

      1. norman
        September 22, 2011

        A bit like the 7.5 million Labour were happy to see stuck on the welfare scrapheap – no hire and fire worries for them either!

  24. Quietzaple
    September 21, 2011

    A 2.5% VAT cut would reduce inflation and induce investment while increasing spending: Growth!

    Set the example and tell others to adopt the same strategy.

  25. Caterpillar
    September 21, 2011

    Well, I would ‘hope’ that the Government’s enthusiasm for cash splashing is a means to discourage the MPC from another inflation inducing round of QE.

    There are two background points I think that the Government and MPC continue to ignore;
    (i) Inflation above a 2 or 3% threshold slows growth, as does inflation below about 1% (ECB research).
    (ii) UK is among the countries in which there was evidence (1960 to 2005) of crowding-out not crowding-in (ECB research).

    This suggests that for the UK that smaller public sector and on target inflation would be the approach for medium and long term sustainability and recovery. (It is not clear for all countries as some have crowding-in effects). There is of course a problem of navigating back to this from the current starting position, when the previous Government tended to break (ii) and the MPC has tended to break (i). The concern held, is I guess, demand recovery – some will argue that this can only be achieved by breaking (ii), whilst the BoE’s recent unconvincing article on QE (BoE Quarterly Bulletin 2011 Q3) supposedly shows GDP growth through QE despite a ‘successful’ addition of between 0.75% & 2.5% to inflation due to QE (…there appears to be a satisfaction in the report that printing money can create inflation, even though it turns out it wasn’t needed).

    So the problem appears to be that Government, Opposition, MPC, BBC are all arguing for at least one of the two things that empirically are not expected to work, which leaves only a muted voice crying out to set the private sector free. My view would be to tighten monetary policy (or at least not loosen any further, see the aside below) and, as JR, has argued many times free up the private sector.

    I don’t know how to upload a diagram to JR’s page, so I will describe the two positive feedback loops I fear and where I think the MPC policy response fits into this. I hope I am wrong.

    +ve feedback, loop 1:
    Real Wage (or other income) down then Quantity Demanded down, Quantity Demanded down then Excess Capacity up, Excess Capacity Up then Real Wage down

    (this loop seems to have been in action during the past few years where those in the private sector have been willing to take pay freezes, cuts or reduced hours to maintain employment levels – see e.g. Bill Martin’s July 2011 Centre for Business Research Report)

    +ve feedback, loop 2;

    Real Wage (or other income) down then Quantity Demanded down, Quantity Demanded down then (with delay) Monetary Loosening up, Monetary Loosening up then Exchange Rate down, Exchange Rate Down then Price Level up, Price Level Up then Real Wages Down.

    The above two +ve feedback loops drive each other, if monetary policy is loosened further then the UK will go around again, however the MPC seems to believe (via a mixture of unclear transmission mechanisms) that there is a balancing loop that counters this.

    -ve feedback, loop 3;
    Monetary Loosening Up then Quantity Demanded Up etc. (just connect to rest of model).
    (The belief would seem to be that this loop dominates the loop containing price level).]

  26. A.Sedgwick
    September 21, 2011

    Agree totally, it will be revealing to see how many MPs break cover at the Conservative Party Conference and denounce this disastrous coalition. In any other walk of life the comments that senior Libdems are making would render the coalition deal finally untenable, but hey ho this is politics.

  27. Mark
    September 21, 2011

    I’m sure there are MPs salivating at the prospect of being able to argue for their share of £5bn of pork. Isn’t that why it’s such a small sum? Just under £100m per Lib Dem MP….

  28. Neil Craig
    September 21, 2011

    £5 billion could buy about 6 off the shelf AP1000 nuclear plants or X-Prizes sufficient to give us sheap daily flights to orbit & probably a Moon settlement.

    If the point was to produce a “stimulus” either of those would get us out of recession (though more would be required to produce good growth) and would thus be what the money would be spent on. £5 bn on business tax cuts might even do it.

    If the purpose is purely to lay more state parasitism on the people (the purpose of government spending is to pay government employees and their friends”) then it would be spent as per “(Red Book page 93 Public sector gross investment)”.

    Gross indeed.

  29. Bernard Otway
    September 21, 2011

    Would I hire any of these ingrates to run any of my previous businesses NO NO NO,an extra 5 billion is like …ting in a thunderstorm,better still standing slap bang in front of a category 5
    Hurricane and expecting it to MISS YOU.Why is it john that it takes YOU and then the overwhelming majority of your posters to see what you say and our supposed representatives
    do not.I hope to God they NEVER have to represent us in negotiating with an Alien
    civilisation that has just arrived from the other side of the galaxy and has NO idea of what we as a race are like,we might as well just hand the planet over for them to do as they please.

    1. Electro-Kevin
      September 21, 2011

      I think Mr Redwood would probably be the best qualified to represent us if the situation ever arises.

  30. Robert K
    September 21, 2011

    The focus of debate needs to shift from what the government can do to stimulate growth to how it can get out of the way of a private sector recovery. It is impossible to tell what impact a fiscal “stimulus” has. However, it is easy to calculate how much it costs. Every pound spent in “stimulus” is a pound of taxation that is unavailable for spending in the private sector. Moreover, Messrs Cable and Clegg and their cohorts always forget that it is not their pound they are spending – it is a pound excised from the person who went out and earned it. As far as possible, it should be left to the person who earned the money to decide how it should be spent.

  31. James Reade
    September 21, 2011

    Of course, I should condition what I’m about to write: I’m assuming you’re equating a budget deficit with stimulus? Nothing in what you wrote suggests otherwise.

    I would have thought someone who supposedly understands economics, and suggests he is more knowledgeable than the BBC’s economics correspondent (only via making such bizarre assumptions as this), would know this is plain wrong.

    The fiscal stance (expansionary, contractionary) is not the same as the fiscal balance, and since that’s in any econ101 course, I would have thought even a politician with a rudimentary grasp of economics would know that.

    It’s also econ101 that a pound spent in one particular area may have a dramatically different impact than a pound spent elsewhere, particularly on output. So, a pound spent providing public goods is different to a pound spent on unemployment benefits.

    To honestly, and without any smirk, suggest that Osborne is stimulating the economy, and thus argue that this extra £5bn is a stupid idea is nothing short of disingenuous, and almost certainly stupid itself. The extra £5bn would be spent on such infrastructure projects, while the £10bn “stimulus” each month is spent on pensions (about a quarter of total spending), benefits and the like – hardly stimulatory, especially since for most folk there’s been no change in these payments for a long time.

    The propensity to consume out of these extra pounds is also likely much smaller currently due to the kinds of public pronouncements of government ministers (Osborne in particular), and the resultant growth forecast downgrades from international organisations – the kind of lack of confidence which is hardly likely to foster the kind of private sector boom that you hope for.

    The £5bn idea may or may not be stupid, but what is stupid is to suggest that Osborne’s current budget is stimalatory just because it happens to contain a large deficit, caused almost in full by the depressed state of the economy (unemployment above 2.5m etc).

    Reply: The current deficit is not just cyclical, and is usually seen as stimulatory. It includes a £5 billion boost to cap ex from the March budget, which you yourself admit is stiumulatory.

    1. James Reade
      September 27, 2011

      So are you accepting my econ101 point, that the fiscal balance does not equate to the fiscal stance?

      Reply: Of course you need to judge the fiscal stance against the background of the cycle. It is, however, a judgement, as on occasions the UK has been too optimistic in assessing capacity and trend growth, which then attributes more of the deficit to the cycle and less as structural.

      1. James Reade
        September 27, 2011

        I guess that’s as close as I’ll ever come to getting a politician to accept my point. Still not particularly close though.

        You judge the fiscal stance not by the cyclical or structural balance but by the intent of the fiscal policymaker. Given how much you bemoan the Coalition’s inheritance, I’m really surprised you’re unwilling to fully accept this.

        Reply: You could do that, but sometimes the intent is not reflected in the numbers, or sometimes the government is misleading people. I think it safer to judge the fiscal stance by looking at the level of borrowing as a proportion of GDP, and making allowance for your estimate of how much below capacity you think output is.

  32. Single Acts
    September 21, 2011

    OT but congratulations on once again being voted in the top 20 political blogs on the internet. All the more so considering you are the sole author and there are blogs out there with thousands chucked at them.

  33. M Hall
    September 21, 2011

    Finally a Conservative with some common sense. The real issue in this country is the public debt levels and the punitively high taxes. We spend far to much on people that could manage on their own and we fail to target much of this spending onto what works. On top of that, and this is the really big issue, there is often a big entitlement culture on the part of some with a corresponding lack of responsibility and work ethic. Yes we should give people what they are due but not at the expense of all of the tax payers!

  34. REPay
    September 21, 2011

    OMG!!! We could loose the credit rating, Balls will cry U-turn and it still won’t help. If they want to attack the government, why won’t the BBC and others ever attack the government for spending even more than Labour! The myth that pulic spending is the key stimulus needed for the UK will not die. Comicon here we come!

  35. uanime5
    September 21, 2011

    If the Government clamped down on tax evasion they might be able to get some £35 billion that was uncollected last year. Then they wouldn’t need to borrow £5 billion.


    1. Mark
      September 21, 2011

      Taxes are set with their effectiveness (or lack of it) calculated into the regime: if collection were perfect, rates would be lower. HMRC is a quangocratic empire, keen to build itself up, so no wonder they like to pretend that boosting their numbers and pay would make everything wonderful. I would suggest that pitching taxes more cleverly so they didn’t discourage economic activity and divert revenue abroad would be more productive than 2,250 people wielding Morton’s Fork in a desecration of the economy.

      The forecast tax revenues and forecast spending give a forecast budget deficit, which is a macroeconomic stance. Looking at the most recent figures in Table PSF3 on the government finances, we find that current spending was 7.2% higher in August than last year, while tax receipts are up 5.9% (but income tax fell by 7.2% – despite NI raising 7.9% more: yet more evidence that high income tax rates are costing revenue).

      The budget plans were for an increase of 3.8% in current spending and a 7.1% increase in tax receipts including 4% more from income tax. Spending is higher than plan, while taxes are below plan – particularly income tax. If income tax receipts were on target, then overall tax receipts would have been ahead of plan and 9.3% higher than in 2010. That still leaves spending running too fast ahead of plan though.

      Reply: Indeed, what matters is the month by month numbers on spending and revenues, to compare to plan.

  36. Sue
    September 21, 2011

    Actually, they had better save the money. The EU is going to cost us dear pretty soon. They have decided to impose the Financial Transaction Tax (FTT) whether we like it or not. They are intent on ruining our Financial Sector.

    Even if we vote this down, it’s now going to be forced upon us by ‘enhanced cooperation’.

    So well done, carry on… you lot will ruin the UK sooner than you think!

  37. Rebecca Hanson
    September 21, 2011

    However making money available for one-off grants or loans to individuals and/or small organisations to help them get going, apply for patents, make wise investments, overcome cash-flow issues and cope with short term issues associated with the supply of finance and so on is worth considering.

    Can we have some information about what the government is doing along these lines John?

    All we seem to get are endless proposals to cut income tax for derivative traders to encourage more of them to relocate to Britain. Not all of us live in the London bubble you know.

  38. Rollo Clifford
    September 21, 2011

    10/10 John! When will the BBC get someone with even rudimentary grasp of economics? Don’t they ever look at their pay packets and ask where the tax goes to?

  39. Elliot Kane
    September 21, 2011

    Completely right as usual, Mr Redwood.

    Govt can’t possibly lead a recovery because it generates no money of its own, only takes money from the people or racks up debts that have to be paid back by taking even more money from the people. How any of that is supposed to generate new wealth creation is beyond me.

    All the things the govt CAN do – reduce fuel costs, vastly reduce red tape, cut employment costs – they aren’t doing. All things deterring new businesses and causing older businesses to close or move abroad they are either ignoring or (In the case of lunatic new EU regulations) newly implementing. It’s just crazy…

    1. Iain Gill
      September 21, 2011

      there is limited scope for “investment” that really would produce a return, for instance increase the loft insulation in every home up and down the land, would not only look green but would reduce the national power bill into the future

      the A1 could be turned into a motorway all the way from Edinburgh to London, saves fuel and time and casulaties now and into the future

      stuff like this could easily be cost justified

      the more likely stuff they will spend it on however will just waste the money

      1. Elliot Kane
        September 21, 2011

        I’d agree with that Iain, yeah. The govt can provide infrastructure that helps business (And thus employment) – and indeed should.

        But like you say, govt is more likely to waste the money, sadly.

  40. Javelin
    September 21, 2011

    One of the advanced indications of a collapsing fianncial system is a run on the banks.

    Yesterday we found out ..

    * Siemens, pulled €500 million form a large French bank 2 weeks ago

    * ING Bank’s holding of Italian sovereign debt fell by 2.5 billion euros to 1.9 billion euros over the past 2 weeks

    * Today Lloyds of London told the markets it had moved money out of low credit risk banks (i.e. Southern to Northern Europe)

    And this is just the tip of the iceburg.

    It looks more and more like Lehmans by the day. I would save that £5 billion for credit in the UK credit markets and not splurge it too soon on infrastructure.

  41. Dr Bernard Juby
    September 21, 2011

    You really should start the Commonsense Party and become Prime Minister. Our country needs you!

  42. Lindsay McDougall
    September 21, 2011

    It’s easy enough to work out what a non-inflationary fiscal deficit is. Size of the UK economy = £1.5 trillion. Average compound GDP growth rate is 2.1 % per annum (30 year average under two different types of government). So £1.5 trillion x 2.1% is the extra money that you can print without causing inflation. Result = £31.5 billion. If you want, for some reason best know to yourself, to have 2.5% inflation, then the permissible fiscal deficit rises to £69 billion. We are still well above that.

    All sorts of people will descend upon me saying how unsophisticated I am, that control of the money supply via the Bank of England means that it is nothing like that simple. Well, let’s have a look at the BoE’s track record. It engineered a massive loss of control over house prices and monetary policy up to 2007. It still holds base rate at 0.5% and talks of introducing more QE, in spite of the fact that inflation is running at 4.5%, 2% above target. Believe me, there is plenty of liquidity. And it still uses a neo-Keynsian economic model that consistently overestimates growth and consistently underestimates inflation, without the slightest hint of ‘mea culpa’ passing its lips.

    When are people going to get it into their heads that government and public expenditure are the problem, not the solution. If you want confidence in the private sector to pick up, cut the government down to size. The Tea Party has got it right.

    1. sm
      September 21, 2011

      Banking bad debts when written off would also contracts the money supply which is why official inflation has not skyrocketed already. Hence the real fear of debt writedowns that are large in relation to capital particularly in fractional Reserve banking. That why mark to market for some assets is an issue.

  43. crowbait
    September 21, 2011

    There is no point in calling for David Cameron to sack Cable and Huhne.
    He would much rather be in Government with these people than with real
    Conservatives who are likely to ‘bang on abour Europe’,demanding referendums,
    less state spending,lower taxes and less regulation etc

  44. Thomas Ec
    September 21, 2011

    I agree that we need to sort out the banking sector.

    I’m really not sure that this is not a distraction, I think a few billion on stimulus here or there is going to have very little effect on the economy. It may help or hurt at the margins.

    But the questions we need to ask as a people are:
    1) are all expenditures of the government necessary?
    2) What can we do to sort out the monetary and banking systems, so they operate effectively?
    3) How do we get people working again and
    4) How do we tackle the long term problems: climate change, defense commitments, population demographics and the aging population, and corruption and lawlessness.

  45. Susan
    September 21, 2011

    I think we all know by now what the possible solutions are to get the British economy growing as they have been expressed many times.

    However, perhaps it is time to examine how much the Coalition itself is holding back recovery. Potential investors like settled Government, they like to know in which direction Government is likely to go on issues such as regulation, taxation, etc. In other words they need to have confidence in an economy. There is not this confidence in the Coalition, as two parties have come together who have very little in common. There is very little real settled policy as one side or the other is forced to compromise. Indeed, it is very difficult to decide in which direction the Government will go on most important issues. It is virtually impossible to keep such separate identities, as the Conservatives and Lib/Dems have and expect the World to look on and believe that this is a credible Government. At times of crisis in a Country, it is necessary to have clear policies coming from Government and a set vision for the future. This Coalition does not inspire this belief.

    Furthermore Mr. Osbornes sudden taxation on both the banks and the oil companies did little to improve this lack of confidence.

  46. Fiona Maddock
    September 21, 2011

    QE 2

    Quantitative Easing

    Queasy Economics

    Please, please, please, don’t do it.

  47. Bernard Otway
    September 21, 2011

    Went for an eye test between my first post and this one,persuaded both young + – 26 yrs old
    opticians one with a 26 yrs old Fiance to go to AUS/NZ,26 yr old fiance is a qualified midwife
    told him HOW much she would earn as a Flying Doctor [extra],he has family in Sydney and was there 4 months last year loved it.While Nero [the politicians] fiddle as indicated in this post the UK/EU/USA burns,while AUS in particular has supply contracts for raw materials
    so far into the future it is scary,plus they are almost self sufficient in all kinds of food.As for NZ I think it is Paradise on earth and will get increasingly difficult to enter,they value their way of life. NUFF SAID

  48. Kenneth
    September 21, 2011

    This morning on the Today programme all the pressure from the BBC toward Danny Alexander was in the direction of spending (yet) more taxpayer money. Comments from the interviewer like “the suggestion is you could do it [spend more on capital projects] without damaging deficit reduction” were relentless.

    Why did the interviewer push in one direction only? At no time did he say: “are you worried, Chief Secretary, that any suggestion of extra spending will spook the bond market and threaten our recovery?”

    This was followed by the BBC twisting comments by the IMF to push for “more action” to increase spending.

    The BBC has no right to attempt to push an elected person into one direction in this way, with complete disregard for any balance.

    This is plain and simple bias by the BBC and people should be losing their jobs over this performance.

  49. oldtimer
    September 21, 2011

    Slightly off topic. I spent the afternoon listening to some investment trust managers and industry advisers commenting on the current state of play. The message was simple. The developed world faces about ten years of next to no growth; the reason was the excessive level of personal and sovereign debt. The investment objective was simple: try not to lose any capital and to keep dividend flow going. UK companies with well developed or fast developing sales in emerging markets are the best investment bets, or funds invested diretly in those emerging markets. They are the only markets with reasonable growth prospects. Much will depend on whether the European sovereign debt defaults can be managed in an orderly way or whether there will be a disorderly collapse causing yet more panic and another stock market collapse.

    In the context of your post the implications for government policy are very clear. It should adopt policies which reduce business costs not increase them, as current energy and tax policies, and the regulatory burden placed upon them so obviously do. Such changes would actually reduce government/business/consumer spending on unproductive subsidies and release useful, productive activities such as encouraging the development of efficient UK energy resources. The people who populate the DECC do not seem able to grasp this point or to understand that uncompetitive energy costs will drive businesses away from these shores. Is the rest of the Coalition in similar denial of the realities of life in this modern, competitive world? What is it that is so hard to understand?

  50. Bazman
    September 21, 2011

    5 billion of spending on tax cuts for the rich would be a poor investment too. Lets face it if you put that amount of money directly into an economy and there is little growth what does that tell you about the efficiency of established businesses to create jobs never mind multi millionaires just trousering more money without giving any guarantees as to how many jobs they will create. If any.

  51. BobE
    September 21, 2011

    I like many people I know have reverted to cash or barter swaps. Why give these fools our money to waste. Use cash or barter to deny them this money to waste.

  52. Ratcatcher
    September 22, 2011

    Much has been said about the government spending money on infrastructure to boost the GNP of the country, but QE through the banks is not the way to go. The infrastructure projects that are really needed are, more railway passenger rolling stock, not super fast passenger trains. Connect the North and South West to the Channel tunnel network and reinstall many of the railways closed by Beeching. Build new gas power stations in the regions and more nuclear on the existing sites, and construct a huge tidal power station in the Bristol Channel that will double as a road and rail bridge and facilities to accommodate fish farming on a grand scale. Then perhaps the country will get a positive return on it’s borrowing.

Comments are closed.