Time to end the squeeze on the private sector

It is time to end the large squeeze on the private sector. Many in the media seem to be unable to distinguish between the private sector squeeze, and cuts in the public sector. They regard the two as the same thing, and often seem to equate what public sector spending cuts there are with the feeling of the many that we are worse off. This feeling has been brought on not by the spending cuts but by the tax rises and the high inflation eroding the purchasing power of our incomes.

As Table 1.1 of the Treasury’s own Autumn Statement book makes clear, in 2011 private consumption fell sharply. Business and dwellings investment also fell. The public sector, taking both current and capital spending together, showed a real increase. Would commentators please just read Table 1 and understand they are quite wrong to keep on talking about the deep public spending cuts so far? Overall there have been none, so the “cuts” cannot be the reason for poor economic growth.

The growing share of the public sector is astonishing. It has been shielded from all overall real cuts so far since the recession hit in 2008. The Treasury figures show that the public sector spent 41% of our total national output in each of the years 2005-6, 2006-7 and 2007-8 before the recession hit. It shot up during the recession and is now running at 47%. Because the public sector so expanded its share of a falling total, the squeeze on the private sector was intensified. The private sector not only had to absorb the hit from recession, taking away revenues from its businesses and employees, but also had to absorb the hit of a large increase in tax revenues to help pay for the expanding public sector. This year taxes will be £46 billion higher than in 2008-9, despite national income being lower than at the pre recession peak.

Some of this change was of course the so called automatic stabilisers. Public spending does go up in a recession as more people lose their jobs in the private sector and rightly qualify for benefits from the public sector. Some was a planned fiscal or Keynsian boost to demand, which did not succeed in preventing a sharp reduction in private sector demand. It did help intensify the tax squeeze and inflation squeeze on the private sector.

So let us assume that the high levels of public spending achieved under Mr Blair and Brown before the recession struck are the desirable norm, the levels the UK public wishes to vote for. That means getting UK public spending back to 41% of our national output, from the current 46% planned for this year. In order to do this without making any real cuts to public spending the UK private sector needs to grow more quickly.

If the UK economy grows at 2.5%, its old pre crisis growth rate, the UK could reach Labour’s preferred level of public spending by 2016-17 by freezing current real levels of public spending and allowing the private sector to grow. If the rate of growth of the UK economy is now around 1%, as some fear, by 2016-17 UK public spending would still be a very high 45% of national output without real cuts.

All agree we need more growth. The way to achieve it should not be in doubt either. It is back to our old favourites. Cut tax rates on earning and making profits, reward savers better, fix the banks, and get many more of the costly but less desirable regulations out of the way. Public spending has risen, continued to rise under the Coalition, and needs to fall as a proportion of our national income. It is easier to do that if the economy is growing.

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.


  1. Mick Anderson
    Posted January 3, 2012 at 6:51 am | Permalink

    So let us assume that the high levels of public spending achieved under Mr Blair and Brown before the recession struck are the desirable norm

    Let’s not. Aim for a State spending of 30% or less.

    It’s still impossible for most of us to differentiate between the policies of Mr Cameron and Mr Brown. The few savings made so far in the Public sector have been more than matched by extra waste.

    • lifelogic
      Posted January 3, 2012 at 8:13 am | Permalink

      Indeed even rather 30% is too high. A state sector size of 40%+ of GDP of itself prevents the private sector competing. Add to that the fact that the banks (RBS in particular) have been pulling back and restricting funding to the private sector and thus forcing them to reduce their activities anyway you have two main problems.
      Add to that expensive Huhne energy over regulation all round and a daft absurdly expensive legal system and employment regulations.

      Who would want to run a business when the government is clearly so anti-business and the two problems above prevent you from competing with overseas business.

      • Disaffected
        Posted January 3, 2012 at 12:14 pm | Permalink

        No private business would have the same proportion of back room staff as the public sector has. Private business is all about front line services to get a profit. If public sector bodies matched this ethos we might, just might, get the services we deserve. The government for years have tried to say to public sector bodies they need to be more business like (impossible but that is what they say).

        I would challenge the government to look at the established strength of the police together with support staff 30 years ago and compare the same figures today. The government idea was to put more officers on the beat by its civilianisation programme by putting civilians in back office jobs thereby releasing officers to the beat. It has horrendously failed. There are an equal amount of support staff to police officers in some forces and fewer officers on the beat than 30 years ago. The bean counters and so called specialist roles are out of control. The inspectorate bodies (more non-jobs) achieving nothing in the improvement of services for the public. The same could be equally applied to other public sector bodies. Why do hospitals need terrorist officers?

        I invite you John to go on the NHS job website and look at the variety of roles that could be got rid of overnight and have no impact on health provision.

        The public want teachers, nurses, police officers delivering a good quality service, not a army of bean counters fulfilling the Government’s insatiable appetite for statistics, so Cameron and Miliband can act like adolescents at PMQs or provide sophistry, deceit and lies to the public on the statistical information they have been provided. We could have more front line services at the expense of back room non-jobs and it would not have to cost us any more money. John, when you make the point that public sector bodies seem unable to provide better quality services for less, your criticisms should rest with the government for making the system. It has the power to make the current inefficient services what they are and it has the power to change them. Hold ministers responsible for the crap services their department provides. Start holding them to account to be responsible for the service they are providing the public ie the home secretary, health secretary, education secretary etc. Stop blaming low ranking oinks and start at the top. Politicians use the word leadership let us see it in action.

        • lifelogic
          Posted January 3, 2012 at 5:39 pm | Permalink

          It is not just that services are delivered inefficiently, many of the “services” delivered are pointless, back door licence fee or fine taxes or worse still positively damaging activities like Huhne’s house bling subsidies or the “Equalities and human rights commission” (properly called the department for the incubation of racial disharmony).

        • uanime5
          Posted January 3, 2012 at 10:28 pm | Permalink

          “I invite you John to go on the NHS job website and look at the variety of roles that could be got rid of overnight and have no impact on health provision.”

          Perhaps you could post these roles and why you think they’re unnecessary.

        • John Wrexham
          Posted January 3, 2012 at 11:56 pm | Permalink

          If private companies don’t have back office staff, how come they employ lots of people in buildings that are manifestly not open to their customers. Please advance your arguments with a few more facts and rather less opinion!!

          • David price
            Posted January 5, 2012 at 7:16 am | Permalink

            “Disaffected” didn’t say private companies had no back office staff, but that the proprortions were quite different.

            One government document I have been able to find so far that discusses ratios between back office and front line staff is – http://www.hmg.gov.uk/media/52718/benchmarkingthebackoffice.pdf

            This document only considers the HR function but it does helpfully tabulate ratios to full-time employess. In health there are examples of 7% of staff being HR (PMETB) and 5% in a quango (the Independent Regulator of NHS Foundation Trust Hospitals) – both on page 52. I haven’t done a thorough analysis, the above data is for 2009, but the average seems to be around 2% whereas the benchmark average in the private sector is apparently around 1%.

            The point is that the data for the HR function alone, it doesn’t include the other non-medical functions so the ratio of all back office to front line staff will be much higher. If you can identify any other sources of information on public sector ratios I’d be interested.

            In the meantime this data suggests the Health service could cost less or deliver more for the same money.

        • James Young
          Posted January 4, 2012 at 5:55 am | Permalink

          Hear hear! An excellent post.

    • Single Acts
      Posted January 3, 2012 at 8:43 am | Permalink

      I agree, let’s not assume that 45% of GDP state spending is a good thing.

      O/T but did anyone else smile at Lady Thatcher apparently offering to buy her own ironing board as disclosed by 30 year rule documents, and contrast that with recent events?

      • Johnnydub
        Posted January 3, 2012 at 10:07 am | Permalink

        As the saying goes, Form is temporary – Class is permanent….

    • Duyfken
      Posted January 3, 2012 at 11:22 am | Permalink

      I suggest it is unrealistic to aim for 30% unless that is a very long-term goal. The last time that was achieved was 1939 and 1940 (about 29%). In more recent times, a figure in the region of 35% – 39% resulted in the Major/Clarke years and in the early years of Blair/Brown/Prudence. It all went to pot in the later years of Blair/Brown and the higher ratios which we now have (2008: 39.75%, 2009: 44.53%, 2010: 45.45%) will or would surely take considerable effort, pain and time even to reduce back to around 35%.

      • Mick Anderson
        Posted January 3, 2012 at 12:37 pm | Permalink

        Yes, I’d accept 30% as a long term goal, perhaps between now and 2020. However, as they have yet to start reducing overall spending, it’s hard to see Mr Cameron or Mr Osborne even bothering to try.

        Lifelogic – Yes, 30% is higher than I would like. However, as it has been achieved in the past it can be considered a realistic target. Once 30% is close, we can make the target even smaller!

        • lifelogic
          Posted January 3, 2012 at 5:49 pm | Permalink

          Recent governments seemed to work on the basis of the maximum they can spend (without actually slowly killing the private sector they bleed) perhaps about 36%. Currently they are way over this level and so the private sector is being bled to death as one would expect.

          In fact the “maximum benefit for the maximum number of people” should really be what politicians are aiming for. Which is well below this equilibrium, perhaps only about 25% and where the government just delivers what it actually needs to deliver. But one would never expect many politicians to actually deliver the “maximum benefit for the maximum number of people” would one.

          • Disaffected
            Posted January 3, 2012 at 7:12 pm | Permalink

            Blair and Brown expanded the non-job public sector and immigration to win votes and stay in power forever. They got it completely wrong and it is time we had the change Cameron promised us before the election.

            I also note Maude recommended Dr Leah for a knighthood for enlarging the EU which was approved by Cameron. Eurosceptic my foot. Why would Cameron honour someone for expanding the EU when he claims to be Eurosceptic??? Cameron needs to go ASAP.

          • lifelogic
            Posted January 4, 2012 at 6:27 pm | Permalink

            I cannot see any Eurosceptic appointing Lord Patten to the BBC trust either.

    • APL
      Posted January 3, 2012 at 1:04 pm | Permalink

      Mick Anderson: “still impossible for most of us to differentiate between the policies of Mr Cameron and Mr Brown.”

      That would be because there isn’t a difference.

      They both represent the political elite, not the man in the street. The combined membership of the three ‘main’ political parties doesn’t even reach 1% of the electorate.

      If you want to understand why the UK is in such dire straits you need to look no further that the explosion of the political class and their hangers on, since the beginning of the last century.

      It explains everything. It’s rather like a termite infestation, you don’t notice it until the structural integrity of the building has been compromised, by then it is largely too late.

      Happy new year.

      • lifelogic
        Posted January 3, 2012 at 8:04 pm | Permalink

        There is much truth in this. Science, engineering, manufacturing and technology have made huge strides in reducing the costs and increasing efficiencies. Silicon memory chips for example cost less than one billionth of what they used to just 20 years ago and reliable efficient cars can be bought for less than a months wages instead of 5 years. The human genome can be mapped for about £3000 instead of Millions. Yet all this productivity has been squandered by the state sector (and protected professions) which have made virtually no efficiencies whatsoever. Indeed they have just grown rather like a parasitic tumour eating up these efficiencies and yet delivering little of real value in return.

  2. Sue
    Posted January 3, 2012 at 7:06 am | Permalink

    It’s not going to happen is it? Even now, the Express has an article to say that the EU is planning to slap VAT on food, books and children’s clothes.


    When are our politicians going to realise that the EU plan is to make us as poor and beholding as possible? Nobody seems to care that Greeks are being forced to hand their children into care because they can’t afford to feed them. Is this what the UK politicians want for us?

    The eurocrats and indeed our politicians sit back on easy street, travelling first class (http://bit.ly/td0PIN) with not a financial care in the world.

    I watch my daughter and her husband struggling to bring up two tiny ones and it really makes me angry. They work so hard and are left with nothing at the end of the month but more stress and despair.

    This whole immoral EU project has devastated people’s lives. It’s time for British politicians to listen to the electorate. WE WANT OUT OF THIS CORRUPT PROJECT. We want control of our country and lives back.

    • Bazman
      Posted January 3, 2012 at 5:11 pm | Permalink

      That’s all the fault of the EU?

    • Nick
      Posted January 3, 2012 at 8:29 pm | Permalink

      Withe the greatest of respect Sue, if the Greek people cannot afford to feed their children on the understanding that government has no money – whatsoever – of it’s own, it is all stolen from the population – how will the government feed the kids?

  3. Mike Stallard
    Posted January 3, 2012 at 7:15 am | Permalink

    Let me put this a little more strongly.
    Every time someone like me uses their unnecessary bus pass, every time I go to the doctor or hospital for treatment, every time I call in the Police, I am using money which does not belong to me and which has been taken from someone else.
    Every time I go to the library, look at unnecessary flowers on the street, talk to my next door neighbour’s children, or putting my rubbish out I am spending someone else’s money.

    If I were now a school leaver, I would certainly be looking for a job in the public service – police, teacher, dustman, librarian – because it is (up to now) pretty safe, well paid and promises a pension and maternity leave and all the trimmings.

    In no way would I start a business. No way.

    • Rebecca Hanson
      Posted January 3, 2012 at 3:12 pm | Permalink

      “Every time I go to the library, look at unnecessary flowers on the street, talk to my next door neighbour’s children, or putting my rubbish out I am spending someone else’s money.”

      If you agree that it is a good idea to provide access to books and the internet to those who can’t afford it and that provision exists I’m not sure there is a marginal cost for you to use that service. If there is it would be very small.

      Can’t you explain the bit about talking to your neighbour’s children? When I do that I’m making conversation with them for fun and to spark their interest in the world around them. How is that spending someone else’s money?

      • Mike Stallard
        Posted January 3, 2012 at 5:31 pm | Permalink

        Don’t the children have to go to school? Don’t their parents get some sort of allowance? Children get massive support from the State.
        Everything I do seems to be provided in some way by the all present state.
        And all my brilliant ideas get somehow led into oblivion by the bureaucracy.

        • Rebecca Hanson
          Posted January 3, 2012 at 10:22 pm | Permalink

          Perhaps try getting involved with local stuff without trying to change the world for a while to get more of a feel for how it works in practice?

          Until you’ve done that you have ideas but no instinct for which make sense given the structures and processes which are already in place. Once you’re familiar with those structures and systems and the people who operate them as you come up with ideas your understanding of the people and systems helps you know what’s worth pursuing and what’s not straight away and you waste less energy.

          Usually the reasons for not pursuing things is that while your idea might be good, you can see that what’s already there makes sense too so there will be little energy for change, or you can see that they people who are running that area really know what they’re doing so there’s no need to worry. As you interact with the systems and practical realities of things you’ll find areas which clearly do need imagination and energy and intelligent solutions and that’s where you begin to feel like you can make a difference.

    • uanime5
      Posted January 3, 2012 at 10:32 pm | Permalink

      So you’re no longer going to use a bus pass, doctor or hospital, the police, library, look at flowers, talk to children, or put rubbish out to save the state money? What about not driving on state owned roads and walking on state owned pavements?

      Reply: Isn’t the state you and me – we have paid for those roads.

    • John Wrexham
      Posted January 4, 2012 at 12:07 am | Permalink

      You must want to live in a rather unpleasant world full of atomised individuals. Considering how much business and finance benefit from the existence of the state and society, it is only right that they contribute to the upkeep of both and their improvement. Business wants healthy employees so subsidising health care is hardly a tax – it actually saves them the cost of paying for personal health care – unless you wish to wind us back to the health care of the past when most people had to rely on the charity of the rich which was spread very thinly and very subjectively. As for the Police, the modern police was started by a Conservative…

      I suppose we could all get rid of our own rubbish – quite a few do already. It’s called dropping litter and fly tipping. As for the idea of unnecessary flowers, i think you’ll find there are far more unnecessary web debates than there will ever be unwanted flowers. Anyone who has met any businessmen and women quickly learns that none of them ever started a business for the trimmings – successful people just don’t find such perks motivating.

  4. Paul Danon
    Posted January 3, 2012 at 7:30 am | Permalink

    Let’s reduce our public sector so it’s proportionally the size of China’s.

    • Rebecca Hanson
      Posted January 3, 2012 at 3:13 pm | Permalink

      I don’t think we can. China’s public sector employs huge numbers of people but it’s costs are low because their wages are extremely low. They are facing challenges as wages begin to rise.

    • Bazman
      Posted January 3, 2012 at 5:09 pm | Permalink

      You can work for a Chinaman’s rate Paul, because no one else will and nobody wants to live in country with the standards of China except you.

    • John Wrexham
      Posted January 4, 2012 at 12:08 am | Permalink

      We had better not include the Communist Party or the People’s Army in the calculation!!

  5. ian wragg
    Posted January 3, 2012 at 7:46 am | Permalink

    Then automatic stabiliser argument always puzzles me.
    If your paying someone £30k p.a. in the public sector and you make them redundant, after the initial payment surely it is cheaper than to employ them.
    On;y when the productive sector sheds jobs does the stabiliser argument hold water as they become net recipients of taxpayers money.
    Until at least a million or more are sacked in the public sector there will be no reduction in government spending.

    • Rebecca Hanson
      Posted January 3, 2012 at 3:16 pm | Permalink

      “If your paying someone £30k p.a. in the public sector and you make them redundant, after the initial payment surely it is cheaper than to employ them.”

      “Until at least a million or more are sacked in the public sector there will be no reduction in government spending.”

      I follow the first statement but not the second, which seems to contradict it.
      Could you possibly explain this further Ian?

  6. BENGO
    Posted January 3, 2012 at 7:48 am | Permalink

    John we are now living in a virtual Soviet state allowed to happen through our Parliament.It does not help matters that our elected body looks to the E.U for the answers and while the B.B.C can broadcast its opinion of big state nannying instead of the News and facts.

    • John Wrexham
      Posted January 4, 2012 at 12:10 am | Permalink

      Please read a book on the history of the Soviet Union before using the word ‘soviet’ in arguments as if you had, you wouldn’t have written that post!!

  7. Nick
    Posted January 3, 2012 at 8:12 am | Permalink

    If the UK economy grows at 2.5%, its old pre crisis growth rate, the UK could reach Labour’s preferred level of public spending by 2016-17 by freezing current real levels of public spending and allowing the private sector to grow.


    Unlikely. Government debts will have risen dramatically.

    You’re not getting 2.5% growth, but your borrowing costs are higher, since most of the debts are linked to inflation.

    Inflation has been let rip, by agreement with the Bank of England. Proof is the level of inflation, the level of interest rates, and that the BoE has protected its pensions against inflation (bet against itself succeeding) by moving into ILG. The biggest insider trading scam going.

  8. alan jutson
    Posted January 3, 2012 at 8:34 am | Permalink


    The simple solution is to work the other way round.

    Instead of wanting growth to fund excessive expenditure, you need to curb expenditure to less than what was raised by last years taxes.

    The old system hopes for (unknown) growth, sometime in the future, and is a variable.

    Last years tax reciepts are a known fact.

    You cannot run your calculations on a variable figures over which you have little/no control. You can only run accurate accounts on known facts.

    Fix the spending at 80% of the known, last years tax take (although the rates are still too high) and you stand a chance of getting out of the brown stuff.
    Bugger about on guesses and variables, and we remain forever in the brown stuff, digging a deeper and deeper hole.

    It so Bloody simple, why is no one suggesting it, or better still, doing it !.

    • A.Sedgwick
      Posted January 3, 2012 at 12:23 pm | Permalink

      You took the words off my keyboard! A simple budget – no mortgaging future generations and impoverishing current taxpayers to satisfy the very misguided egos of Prime Ministers and Chancellors.

  9. John Moss
    Posted January 3, 2012 at 8:37 am | Permalink

    Two of Labour’s many failure were to allow th emergers of banks and energy companies which reduced choice and competition. This has allowed costs of energy to be subject to a cartel effect and of course led to the bail out of “too big to fail” banks.

    It is an urgent necessity to break up the big banks, especially Lloyds Group and RBS, to increase competition and drive down prices.

    It is also desirable to open up the energy market so wholesale price falls are more quickly passed on to customers. Lowering fuel duty would also help enormously.

    • A different Simon
      Posted January 3, 2012 at 12:25 pm | Permalink

      John Moss ,

      We were better off when energy wholesaling and retailing was nationalised .

      Surely it was never anything more than money for old rope ; in essence free money for friends of people in power who will in time be rewarded with non-exec roles on the boards .

      Whilst energy exploration and production is clearly best served by private concerns , boring trivialities like wholesaling and retailing are surely just as well served by public sector utilities .

      This must be in every sense a commodity business and if it ever delivers anything like double figure percentage gross profits then the consumer is getting hosed .

      • Kevin Dabson
        Posted January 3, 2012 at 9:45 pm | Permalink

        A different Simon

        “We were better off when energy wholesaling and retailing was nationalised .”

        A definate no no. The last thing you want is the power grid of the nation or parts of it nationalised, and partly controlled by trade unions via public sector strikes. We learned this in the 70’s and 80’s. Only the private sector can protect us from the enemy within!

        This is the single most important utility in the UK and minimising the affect of public sector strikes. I have been wondering about Ed Miliband’s recent interest in this sector at or prior to the Labour conference etc when the strike rhetoric was increased.

        I feel sorry for londoners with the constant repetitive tube strikes and think it’s unacceptable. Their paid good money too. The coalition should of brought in tougher employment legislation immediately with respect to the public sector.

        You constantly hear of problems of incompetent teachers, police and so on being shuffled around the system. They cannot be fired and replaced easily, yet other teachers are fully aware of their incompetence. Some of these people need to be let go, in the interests of running a good education system.

        A belated happy new year folks!


    • libertarian
      Posted January 3, 2012 at 1:03 pm | Permalink


      Whilst I agree greater competition and more choice is desirable energy costs are largely a function of tax, duties and green suicide not just the energy companies profiteering

    • StevenL
      Posted January 3, 2012 at 5:51 pm | Permalink

      I don’t buy this ‘cartel’ thing at all with energy. There is a low elasticity of demand (utility bills are next priority after mortgage/rent for most) and at the end of the day you are buying the same commodity, whichever company you choose.

      It’s like saying wheat farmers or petrol stations are a ‘cartel’. The prices are more or less the same because you are buying the same commodity, it’s quite simple really.

    • John Wrexham
      Posted January 4, 2012 at 12:13 am | Permalink

      Surely it’s not impossible to split up the banks into their constituent parts – ideally hive off the BoS, RBS, Nat West and Halifax and get them to compete against each other and foreign banks.

  10. PayDirt
    Posted January 3, 2012 at 8:51 am | Permalink

    Third January 2012 the day Boris bears down on van drivers, criminalising them off the streets of Greater London (inside M25) in favour of shoppers in cars. Must be one of his worst jokes yet, pretender to the Conservative Party, rubber stamper of barmy EU anti-business regulation. http://www.tfl.gov.uk/roadusers/lez/default.aspx

    • john w
      Posted January 3, 2012 at 10:47 am | Permalink

      That will make tradesmen give up and sign on.I cant think of one good idea that has come from the EU.They destroy everything they touch and the mayor seems happy to let them.Two weeks ago he reckoned he was a eurosceptic.Actions speak louder than words in my books.

      • Martyn
        Posted January 3, 2012 at 1:44 pm | Permalink

        Eurosceptic or not, Boris had no option other than to comply with the EU ‘low emissions zone’ directive. Neither, of course, did our elected Parliament. What is dishonest about this is that no one in office will openly admit that, but if they were truly honest, each time another EU directive is set in place and announced “we are powerless to challenge or change the directive”, then people on a wider scale might begin to see from where we are ruled and question the value of remaining in the EU.

        • Mark
          Posted January 3, 2012 at 3:18 pm | Permalink

          Although I agree with your general argument I think that Labour in particular were fond of suggesting legislation to Brussels that they felt would be controversial if they tried to push it through Parliament, but which could be passed on the nod as a directive.

          • Kevin Dabson
            Posted January 4, 2012 at 1:39 am | Permalink

            Yeah I suspect Labour has used EU directives to protect the public sector and quango’s from being axed.

        • Denis Cooper
          Posted January 3, 2012 at 4:52 pm | Permalink

          Through its European Communities Act 1972 Parliament agreed that all EU Directives would transposed into our national law; if asked to do so, Parliament could amend that 1972 Act, its own legislation, to the extent that certain Directives would not be so transposed; the only proviso is that it must be clear to the UK courts that this is a deliberate decision by Parliament, and not an inadvertent breach of EU law, which would be covered by the inclusion of words such as “notwithstanding the European Communities Act 1972”; if other EU countries persist in passing EU legislation designed to destroy the City, then the day may come when the government will have to resort to asking Parliament to expressly authorise it to ignore or disapply some of the most damaging EU legislation, using that formula.

          • uanime5
            Posted January 3, 2012 at 10:36 pm | Permalink

            This will only work in you can convince the ECJ not to fine the UK for a blatant breach of EU law.

    • alan jutson
      Posted January 3, 2012 at 2:42 pm | Permalink

      Pay dirt

      Yes this one has crept up without any publicity that I have seen or been aware of.

      Iam retired now, and my pick up trucks were petrol (imported from New Zealand) so it would not have affected me or my company, but for the vast majority of tradesmen, self employed delivery men, who run diesel vehicles older than 2002, this will put them out of business, unless they purchase a newer truck which will comply with the new regs..

      Our politicians should hold their heads in shame.

      Proof (if any was needed) that they live in a different world.

      No doubt Chris Huhne is clapping his hands with joy.

      • Mark
        Posted January 3, 2012 at 3:35 pm | Permalink

        One van factory is in Mr Huhne’s constituency at Swaythling although some production has now been moved to Turkey. Another is owned by an oligarch with known connections to former EU Trade Commissioner Mandelson. I think the French otherwise do better for their motor industry than the Germans, as they make more vans.

      • Robert Christopher
        Posted January 3, 2012 at 9:02 pm | Permalink

        “I am retired now, and my pick up trucks were petrol … so it would not have affected me or my company …”

        We were told diesel vehicles would be cheaper to run, even though the engines were more expensive to buy, but now that their fuel is more expensive than petrol and now this, it doesn’t make such pronouncements believable.

        Reply: Diesel engines tend to offer more miles per gallon, so there can be savings if you drive enough

        • alan jutson
          Posted January 4, 2012 at 9:51 am | Permalink


          I bought petrol instead of diesel for two reasons.

          The petrol vesion had auto gear boxes, not available on diesel at the time.

          The petrol versions had a better performance.

          In addition I was going to convert petrol to auto gas, very much cheaper than desiel, but the up front costs to do so were rather high (aware of this at the time) and I could not bring myself to believe the government would not raise the tax on autogas once it took hold (Brown was chancellor at the time !!!!!). The calculation of breakeven to change to autogas was 80,000 miles per vehicle.

          • alan jutson
            Posted January 4, 2012 at 9:53 am | Permalink

            In addition the up front savings of purchasing the vehicles from New Zealand, as opposed to the UK, were £4,000 each.

        • Robert Christopher
          Posted January 4, 2012 at 3:49 pm | Permalink

          JR: Diesel engines tend to offer more miles per gallon, so there can be savings if you drive enough

          Yes, I agree with “tend to”. It depends on many factors, including how short journeys are from a cold start.
          We have both types of engine (two cars, with an engine each!) and calculate that, while cars with diesel engines may have been good deal in the past, now that petrol is cheaper than diesel, the number of miles driven to ensure that running a diesel engine is cheaper has increased some what.
          We have lowered our fuel expenses because, for other reasons, we have greatly reduced our ‘business miles’, but for those doing the same number of miles as they used to, it is a lesson of not believing everything you hear.

    • Bazman
      Posted January 3, 2012 at 5:43 pm | Permalink

      Many cities ban certain dirty and polluting vehicles from entering, even Moscow has a ban on certain types of old cars. London is a very dirty city and not letting ten year old vehicles, which is very old for a van and so will more than likely have a worn engine too, is probably for the best. This fantasy of keeping old equipment going forever is not a good thing. Though retrospective legislation of equipment bought in good faith and legal at that time is a point vehicle manufactures and users have in general been forced to up their game by safety and pollution legislation not by voluntary means. Why should Londoners breath in the pollution of someone determined to keep their ancient vehicle on the road forever?

      • John Wrexham
        Posted January 4, 2012 at 12:15 am | Permalink

        Baz, you forgot that some in our society move out of London to escape the filth and smog, yet at the same time fight tooth and nail to defend their right to pollute. We need more polluter pays taxes and more tax cuts for those who don’t.

        • Bazman
          Posted January 4, 2012 at 8:52 pm | Permalink

          Interesting to see how this will be enforced on foreign lorries and vans. I suspect it will not be.

  11. stred
    Posted January 3, 2012 at 8:57 am | Permalink

    The costs on the private sector also come in the form of regulation fees. I have been running a small project at no charge for a friend over the last 18 months. The local authority has delayed the project by 9 months by changes of mind and raising objections, all of which have been overcome and been proved wrong.

    Costs to object are now over £7k. To comply could have cost £40k. Because they have exceeded their tome allowances they have threatened to charge and extra fee for Building Control above the £800 already due. All of this cost is caused by needless and wrong objections by inspectors who do not understand their job.

    Buiders have told me that ‘bunging’ is widespread and that the going rate is £500 per job.

    • Alan Wheatley
      Posted January 3, 2012 at 10:21 am | Permalink

      It came as a shock to me to discover the immunity enjoyed by building inspectors and by their council employer. They can hide behind case law which has determined that the inspector has a duty of care only to the owner doing the building. The consequence is that no subsequent owner who discovers a building defect passed by an inspector has any claim against the inspector. A £500 bung would seem to fit hand and glove.

      So buyers beware; you can not be sure that a building signed off by the inspector as complying with building regulations does in fact do so.

      • uanime5
        Posted January 3, 2012 at 10:40 pm | Permalink

        What’s wrong with this? The fault with the building may not have existed when the inspection was carried out.

        • alan jutson
          Posted January 4, 2012 at 10:02 am | Permalink


          The idea of a building control officer is exacly as in the title, building control.

          They inspect at key stages when major construction elements can be seen, that is why you have to comply with regulations, your proof of that is getting the building work signed off at each stage, and again after completion after all inspections have been satisfactorally completed.

          If a building inspector does not like what he sees, he asks you to prove the construction with calculations to his satisfaction, or asks you to modify it to his requests, it is then reinspected before you can go to the next stage.

          You can now circumvent the Council officer (who works in the interests of the client) with a private one who works for the builder (to a degree in their interest) although the result SHOULD BE the same.
          A building which conforms to current regulations.

        • stred
          Posted January 4, 2012 at 10:33 am | Permalink

          This type of fault would not be actionable anyway. We are talking about design or compliance faults. As when, in my case,the LA required that I replace a beam and supports that they had passed 39 years ago. Fortunately they gave way after a series of complaints and called this ‘goodwill advice’.

        • Alan Wheatley
          Posted January 4, 2012 at 10:41 am | Permalink

          The issue is the building not being made compliant with building regulations but the inspector signing it off to say that it was.

    • alan jutson
      Posted January 3, 2012 at 2:49 pm | Permalink


      Aware that Planners and Building inspectors can delay things with sometimes impunity, but certainly not heard that they take bungs.

      I certainly have never been asked, or indeed would pay for any application or approval, but at 63 I am begining to find out that I am some what unusual in many of my traits and business dealings, where honesty and your word seem to mean so little to so many nowadays.

      If bungs at this level are true this really would be the last straw.

      • stred
        Posted January 4, 2012 at 10:28 am | Permalink

        Alan. This information came to me from tradesmen who were amazed at some of the objections raised by the inspectors on my job. Some of them said that the inspectors were quite helpful on other jobs and that the practice had been started by the many European builders, who were undercutting the British. They assume that obstructive behavoiur by officials is a preliminary to a bribe in their own countries. Of course there is no way of checking whether this is going on.

      • Robert K
        Posted January 4, 2012 at 11:12 am | Permalink

        Take a look at some of the holiday caravan developments on the south west coast and ask yourself how they got permission without bungs.

        Reply: Planning officers and planning committees can have good reasons to allow such developments, and may wish to do so to swell visitor numbers and use of local facilities in the season. You would need to have some evidence to substantiate such a claim against a particlar Council or development.

  12. javelin
    Posted January 3, 2012 at 9:01 am | Permalink

    WSJ reports Ray Dalio – head of worlds largest Hedge Fund Bridge Water – that the world has $21 trillion in debt to pay off – and it will take 15-20 years. He says there are 3 options

    1) hyper inflation
    2) massive haircuts all round (triggering CDS)
    3) a tax of 30% on global wealth

    2 weeks ago the UKs own Mike Platt of Bluecrest was bearish as well saying that all their money was left in T-Bills and Bunds.

    Bloomberg reports total Government debt levels of $7.6 trillion maturing this year. With further details in costs (not sure why Italian and UK coupons are so similar) below.

    My question is that with the hedge funds being so bearish – (and presumably the pension funds, soverign funds and unit trusts etc) who IS GOING TO LEND THE MONEY TO THE GOVERNMENTS AT THE CURRENT RATES OF INTEREST.

    Country 2012 Bond, Bill Redemptions ($) Coupon Payments
    Japan 3,000 billion 117 billion
    U.S. 2,783 billion 212 billion
    Italy 428 billion 72 billion
    France 367 billion 54 billion
    Germany 285 billion 45 billion
    Canada 221 billion 14 billion
    Brazil 169 billion 31 billion
    U.K. 165 billion 67 billion
    China 121 billion 41 billion
    India 57 billion 39 billion
    Russia 13 billion 9 billion

    • a-tracy
      Posted January 3, 2012 at 5:24 pm | Permalink

      I wonder what the plans are for the NEST pension savings money? Will these funds be used by government today at current rates of interest, I haven’t heard of any guaranteed returns on these pensions unlike public sector guarantees for their 3% (after their NI rebate is taken into account).

      I also wonder why these schemes haven’t been presented to small business yet when it is due for implementation for many of them starting in October 2012. It may only be 2% to start with but it is intended to be 7% employee/employer contribution with automatic opt in (I believe employees can opt out but would lose the eventual 3% employer payment plus 1% from the government).

    • zorro
      Posted January 3, 2012 at 7:20 pm | Permalink

      Hyper inflation it is then……cue Spandau Ballet


  13. Bazman
    Posted January 3, 2012 at 9:01 am | Permalink

    Good to see the burden of the taxpayer is being lessened by allowing the railways to put up fares by up to 10%. The record number of passengers on the railways should allow for this and will counteract the cost to the treasury of the drop in petrol sales as motorists are priced off the roads. Presumably onto the heavily subsidised private railways who are obviously doing a sterling job with their record levels of investment and profits.
    This is exactly what this country needs. Putting the cost of services fairly and squarely upon the users. I live walking distance from my work and object greatly to my taxes being spent on subsidising the private or state sector transport for anyone going to work. More often than not the company pays for a commuters season ticket, so is in fact part of his wages and anyone who drives should either make a decision as to what is economically viable This being between them and their employer.

    • A different Simon
      Posted January 3, 2012 at 12:35 pm | Permalink

      I used to commute by train for about 10 years .

      Now I only travel by train about 30 times a year .

      Essentially the rest of us get all the benefits of the infrastructure paid for in the main by season ticket holders .

      On South East trains the service has improved noticably over the last 10 years , they employ good people and seem to do a good job . On two other operators I use it has worsened .

    • sm
      Posted January 3, 2012 at 5:01 pm | Permalink

      Footpaths or bridges etc are paid by users only?

  14. Faustiesblog
    Posted January 3, 2012 at 9:01 am | Permalink

    Your first paragraph is powerful and absolutely spot on. Add into the mix the uncertainty as to what government is going to do to them next**, and you can see why people are not spending. They simply cannot afford to. They are being prudent, or they’re afraid, or both.

    ** Recall that McDoom encouraged us all to put second homes into our SIPPs (after he trashed our pensions); the coalition then clobbered us with CGT. While I appreciate that no government should bind its successor, there has to be long-term protection for things like pensions and old-age provision generally, otherwise it is impossible to see how the average person can plan adequately for his future.

    The same argument can be made for savers. Saving is, by its nature, a medium- to long-term exercise and if the government seriously wishes to encourage saving, then locking savers’ income away from the opportunistic grasp of the taxman is essential.

    I’ve been toying with the idea of a sort of taxation contract – a kind of constitution which protects the taxpayer from manipulation and Treasury kleptomania. It would be yet another means of “nudging” the government of the day into balancing the books.

    How feasible is such a device, JR?

    Reply I doubt it would be popular with the current Parliament

    • Alan Wheatley
      Posted January 3, 2012 at 10:48 am | Permalink

      It seems that we humans are either short-termist or long-termist in our attitude. There was a very interesting programme on the BBC (big cheer) that showed experiments on delayed gratification with young children: some just could not resist a small reward as soon as possible while others were able to resist temptation and wait for a larger reward. Seems this trait continues into adulthood.

      This obviously has a fundamental impact upon the attitude to investment. You need to be strong on delayed gratification to forego the short term benefit in preference of a greater benefit in the longer term. While investing is to some extent an act of judgement, it is also an act of faith, particularly where you can not recover your investment until some time later – pensions being the primary example.

      Where as once upon a time investing in your own pension was a no-brainer, this is now much less so. If there is no chance of a “taxation contract” as suggested by Faustiesblog, then a modified approach would seem to be wise for those with a long term viewpoint.

      And if pension funds receive lower levels of investment this would seem to make the lending issue raised by Javelin an even bigger concern.

      • A different Simon
        Posted January 3, 2012 at 12:40 pm | Permalink

        Sounds like you are saying that the Govt’s and civil servant’s interest in private sector provision for old age goes no further than the amount of Govt bonds they can persuade pension funds to buy .

        Private sector pensions will never be any good all the while Govt and public sector workers have a scheme which is only open to them .

        • sm
          Posted January 3, 2012 at 5:18 pm | Permalink

          If the scheme was open to the private sector workers on the same terms. Now that would be interesting choice for most paid workers – defined benefit/low risk/low charges-simple/portable irrespective of employer.

          Private pension managers would indeed tremble.

          It would resolve the private sector paying for riskfree pensions they cannot achieve for themselves.

          Should council tax fund public sector pensions?

          • Robert Christopher
            Posted January 3, 2012 at 10:11 pm | Permalink

            While ‘profit’ is a dirty word, it can’t happen.
            If it sounds too good to be true, then it is very probably not true.
            For the public sector, there is always the taxpayer to help out, for the time being anyway.
            That is why there is such a difference between them.

          • A different Simon
            Posted January 4, 2012 at 9:57 am | Permalink

            SM ,

            Of course it couldn’t be offered on the same terms .

            It’s only possible to guarantee certain notional investment performance to one group if the outcome for another group can be arbitrarily reduced .

            It’s simply not possible to guarantee returns like SCAPE’s inflation + 3.5% at no risk (to the beneficiary) . This is around 3% higher than the risk free rate .
            To get inflation + 3.5% requires one to take significant risk on the stock market , before charges are considered .

            Private sector saving has to increase and because there isn’t an infinite pot of money to draw on demand has to be deferred to old age like it was 30 years ago . This will drive us further into recession – unless means are found to reduce the cost of living – specifically housing .

            The property bubble has to be popped and measures taken to prevent vested interests restricting supply in future to drive up costs . People need viable alternatives to BTL’ing for generating income in old age .

            Is it any surprise we’ve ended up in this state with an economy based on selling houses at exponentially increasing prices , coffee shops and nail salons .

      • A.Sedgwick
        Posted January 3, 2012 at 12:44 pm | Permalink

        As final salary schemes for those in the private sector are now rarely available for new entrants I believe those young(ish) people would be better off minimising any theoretical extra saving in the ubiquitous pot schemes. I was interested to read that 80% of gilts sold are mandatorily bought by the captive market e.g. retirees, most of whom in the future would prefer the lump sum in total. Pension arrangements are now so skewed towards the public sector and high taxpayers that tax relief should be removed, which should lower the standard rate and perhaps give the foot soldiers a better chance to buy real assets e.g. homes, land, gold sovereigns. Unfortunately this would stuff easy government funding and is probably a major reason why all Governments will resist any simplifiaction of the tax system and flat taxes.

    • John Wrexham
      Posted January 4, 2012 at 12:23 am | Permalink

      An eminently sensible idea… but the government, just like the last one, is desperate for us to get spending!!

  15. Brian Tomkinson
    Posted January 3, 2012 at 9:03 am | Permalink

    Don’t omit the main culprits, the coaliton government, from your criticism of those who talk of deep spending cuts. After all, they are not only responsible for failing to reduce expenditure and choosing to increase taxation instead, whilst at the same time spinning the myth that they had to take such “difficult decisions” over spending. Most MPs seem wedded to big government and the belief that they know how to spend our money better than we do. They believe that they can buy our votes with our own money. Disappointingly, even you, John, seem to have accepted that government spending at 41% of GDP is “the desirable norm, the levels the UK public wishes to vote for.” Government should be doing less, be far more efficient and allow taxpayers to keep more of their own money and decide how to spend it.

    Reply: No, I do not accept that, but am saying that the very modest objective of getting it to those levels will take a lot of changes. I think our economy and society worked better with the public sector at a lower share of the total in previous years.

    • Brian Tomkinson
      Posted January 3, 2012 at 12:19 pm | Permalink

      I am pleased to have you confirm that you would like to see government spending below 41%. Disppointingly, the changes required to get down to that still high level seem to have been discounted by this government which clearly prefers tax and spend to economic prudence.

      • zorro
        Posted January 3, 2012 at 7:25 pm | Permalink

        I think that John was talking about ‘desirable norm’ in terms of a Labour government. I somehow expect that John’s preferred level of public expenditure in a liberal, free market economy would be substantially lower that 41%…..but Rome wasn’t built in a day.


        reply: Of course.

  16. stred
    Posted January 3, 2012 at 9:22 am | Permalink

    The costs on the private sector also come in the form of regulation fees. I have been running a small project at no charge for a friend over the last 18 months. The local authority has delayed the project by 9 months by changes of mind and raising objections, all of which have been overcome and been proved wrong.

    Costs to object are now over £7k. To comply could have cost £40k. Because they have exceeded their time allowances they have threatened to charge an extra fee for Building Control above the £800 already due. All of this cost is caused by needless and wrong objections by inspectors who do not understand their job.

    Buiders have told me that ‘bunging’ is widespread and that the going rate is £500 per job in order to be clear of unresonable regulation.

  17. Tedgo
    Posted January 3, 2012 at 9:31 am | Permalink

    The public sector is simply making little effort to reduce its spending.

    Take the MOD and its desire to cut the number of civil servants. In the second round of voluntary redundancies, those employees who volunteer to be made redundant can select a leaving date between June 2012 and December 2014. This hardly seems like a vigorous plan to downsize the MOD.

    In the same situation private businesses would rapidly identify those areas which need cutting and then get on with those cuts.

    Even with the first round of redundancies the MOD has wrongly calculated some redundancy payments to the tune of £6200. People who accepted their offer and have left the MOD are now getting letters demanding they pay the money back. You can imagine what the reaction is, some are seeking advice from solicitors.

    Apparently up to 1000 people are involved.

    • zorro
      Posted January 3, 2012 at 7:27 pm | Permalink

      Typical of voluntary exit schemes in the Civil Service….notoriously diverse rates of calculations of exit settlements.


  18. Alan Hill
    Posted January 3, 2012 at 9:45 am | Permalink

    We are at a ‘Winter of discontent’ moment, but this time there is no Mrs Thatcher waiting in the wings to sort things out just Cameron, Clegg and Milliband. God help us.

  19. Caterpillar
    Posted January 3, 2012 at 9:47 am | Permalink

    “It is time to end the large squeeze on the private sector.”

    How? I mean politically.

  20. oldtimer
    Posted January 3, 2012 at 9:47 am | Permalink

    The propogation of the myth that public spending has been “cut” is a perfect contemporary example of the “big lie” so clearly stated by the arch propagandist, Dr Goebbels, many years ago…
    “If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

    There are other contemporary examples, such as the CAGW scam and the attempts to sustain the euro. Very few put their heads above the parapet to expose them. One who did, a blogger called tallbloke, was rewarded by a visit by some half a dozen policemen who confiscated his computers. This clearly was an attempt to intimidate him into silence. Fortunately the blogging world has rallied to support him, morally and financially, so that he can sue those who have impugned him.

    Then, in the last Parliament, there was the case of the arrest of Mr Damien Green MP. A clearer case of state intimidation it is difficult to imagine.

    On the specifics of your post, I believe that the objective should be to restrain public spending to, at the maximum, the long run taxable capacity of the country – estimated at 38% of GDP. It will not happen, of course, because the political class is besotted by debt.

    • uanime5
      Posted January 3, 2012 at 10:49 pm | Permalink

      I thought tallbloke was (investigated-ed) for (allegedly-ed) hacking into other people’s computers.

      Damien Green was arrested for for leaking classified information. Though I’m unsure if he was ever charged with this.

      Reply: Mr Green was not charged with any offence. He was doing his job, exposing details of the government’s immigration policy that the public wished to hear.

      • A different Simon
        Posted January 4, 2012 at 10:00 am | Permalink

        J.R. , it was pretty quickly brushed under the carpet by the BBC and the other usual suspects .

        There were more column inches devoted to the political persecution of Damien Green than the information he was trying to publish .

      • oldtimer
        Posted January 4, 2012 at 2:18 pm | Permalink

        You should get your facts right. Tallbloke was not arrested nor charged, as you put it ,”for (allegedly-ed) hacking into other people’s computers”. JR wisely edited your comment, otherwise you would be added to the list of those making unsubstantiated charges against him.

        His house was raided by the police who appear to have been on a fishing expedition, It was heavy handed, ineffective and probably counter-productive.

    • John Wrexham
      Posted January 4, 2012 at 12:27 am | Permalink

      Most of the business and financial sector is besotted by debt too, usually its own and that of its customers too . You can’t really be surprised that the political class follow their lead. After all we are always told the private sector knows best!!

  21. waramess
    Posted January 3, 2012 at 10:04 am | Permalink

    What politicians on both sides fail to grasp is that government spending fuels recession.

    Because the private sector benefits society by feeding both the supply side of the equasion and the demand side its purchases will stimulate its suppliers business and its own sales will stimulate the businesses of its buyers unless they themselves are supplying directly to consumers.

    Government spending on the other hand benefits only their suppliers and often only those of foreign suppliers, which have little benefit to the economy.

    By taking more resources from the private sector the government actually reduce economic activity and the country will display the extent of its poverty when the government reach the point where the deficit cannot be replaced by either borrowing os increased taxation.

    This is exactly what we can now see in most western governments where state spending is reaching a saturation point.

    What next? More borrowing, perhaps from the IMF, more taxation? Eventually the solution will be forced upon them but perhaps not until they have impoverished us all

    • uanime5
      Posted January 3, 2012 at 10:53 pm | Permalink

      Once the Government has bought something from a UK supplier the supplier will then purchase good and services from other suppliers, thus stimulating supply and demand.

      • waramess
        Posted January 4, 2012 at 11:04 am | Permalink

        Uanime5, think about it. It is both the nature of government spending and their role acting as a consumer that distorts what is happening. Building roads, hospitals and schools for example in an enviroment where there is no real competition and results in the role of “sale” to the ultimate consumer being absent.

        All well and good to eliminate unnecessary labour when a good job is being done without it, but not so smart otherwise.

        Eliminating competition by forcing people to pay for government services will reduce the opportunities for employment in any economy but it becomes more of a problem when government starts taking the lions share of the National wealth.

        Slowly the increasing influence of the government “doing things” at the expense of the private sector by forcing people to pay for the service will slowly erode job opportunities and will feed a recession.

      • waramess
        Posted January 4, 2012 at 12:06 pm | Permalink

        Uanime5 just in case I have not put the case simply enough, one of the most difficult parts of any private sector business is marketing and sales. Enormous effort and expense are put into these roles creating a vast amount of employment.

        Because the Government force you to pay for the services they provide they virtually elminate competition and so act as a consumer themselves (which they are not), in not having to bother with marketing or sales.

        All well and good if eliminating competition means that the service does not deteriorate but, if you look at education or health, or even building railways and roads, it clearly does.

        In the process of eliminating the “need” for a sales and marketing resource they remove from the economy the need for a large amount of employment and, as the state gets bigger the amount of employment they are responsible for eliminating gets proportionately bigger.

        Maybe the idea of government spending being a way of heading off a recession is doing exactly the opposite and the figures on unemployment and growth seem to bear this out

  22. Kenneth
    Posted January 3, 2012 at 10:05 am | Permalink

    Public sector growth is an ongoing threat to all of us.

    You said the other day, John, that the public sector has strong lobbying power.

    This is evident today as a letter in the Daily Telegraph written mainly by those who gain financially from professional care services has been broadcast across much of the media.

    I have nothing against making a profit in cares services but this attempt to universally turn the amateur care that families have administered since time began into a profit making enterprise is scandalous.

    The country could not possibly afford to professionalise family care services en masse, which appears to be what these quangos want.

    We would end up with the farce of professional carers looking after each other’s parents.

    I am happy to see doctors and nurses making a profit from the NHS (though I think Doctors make too much profit); however, attempting to turn a normal human endeavour into a profit-making exercise could be the last straw for our fragile economy.

    I do hope you lobby Conservative Ministers to teach their Lib Dem colleagues on the madness of being taken in by this campaign and the Lib Dems brief their media friends in turn.

    I would also like to see a letter sent to the Telegraph from MPs on behalf of battered taxpayers and pensioners (and others) with savings and assets that are being degraded, pointing out that many of us do not want human amateur caring universally turned into a money-making machine by these quangos, at the expense of our country.

    • John Wrexham
      Posted January 4, 2012 at 12:33 am | Permalink

      It’s probably the easiest way to ‘create’ jobs in the modern British economy!! It will end in tears as you will never be able to pay some people enough to do the jobs that only those motivated by love or true vocation are prepared to do. Instead such jobs will be left undone as is already the case in hospitals where the professionalization of care has led to its de-humanization and the degradation of the most vulnerable in our society.

  23. backofanenvelope
    Posted January 3, 2012 at 10:40 am | Permalink

    What I would like to see is a contract between the politicians and the voters. I have read somewhere that the optimum percentage of GDP spent by the government is about 35%. I realise that getting down to that would take some time. So, how about the politicians bidding for our votes by proposing their figure? In the next election we might see the Tories say 38%, Labour 41% and LibDems 45%.

  24. Rebecca Hanson
    Posted January 3, 2012 at 10:47 am | Permalink

    Clearly there are massive cuts in the public sector: 710,000 jobs according to this article: http://www.telegraph.co.uk/finance/budget/8923696/Public-sector-job-losses-to-hit-710000.html

    Meanwhile wages for the rest of the public sector are being rapidly devalued:
    No increase for 3 years and 1% for two years while inflation has so far consistently been 5%. That’s a substantial cut in wages in real terms.

    Where is the money from those people who have been made redundant going? Is it that the benefits have not come through in the figures yet as many of the redundancies happened in September or over this winter and there are costs associated with them?

    Clearly the biggest squeeze on the private sector is that people don’t have money to spend so further public sector jobs and wages will be counterproductive.

    We need to know more detail on the figures John.

    A rant about the top line figure may be justified but it’s not constructive. We want to say intelligent and helpful things but you haven’t give us the ammo today.

    Reply: I do regularly set out areas of public spending which I think could be reduced, and ways in which efficiency can be improved. We could start with cuts to Overseas Aid and the EU budgets, and move on to a repeal of over the top regulations, saving the money on administering them.

    • libertarian
      Posted January 3, 2012 at 1:01 pm | Permalink


      How many current job vacancies are there in the public sector? How many NEW people have been hired? How many people leave, retire or get fired each year from the public sector.

      By the way according to the ONS there are just over 6 million people employed at tax payer expense. Government is now the biggest single sector. ALL of this is funded by the private sector workers taxes and there are fewer and fewer private sector workers, so inevitably the public sector will have to cut back.

      If you want MORE public sector then you should be encouraging private sector growth to pay for it.

    • Rebecca Hanson
      Posted January 3, 2012 at 2:00 pm | Permalink

      By ammo I mean figures which give us clear information regarding where costs are going up.

      Reply: Most budgets are up – Health, Transport, Local government, overseas aid, social security, public sector pensions etc etc

      • Rebecca Hanson
        Posted January 3, 2012 at 6:08 pm | Permalink

        Is there anywhere we can see the figures?

        I find it quite shocking that there doesn’t seem to be any coherent sources of specific figures.

        Perhaps Mr Cameron should work on integrating them into his app: http://www.telegraph.co.uk/news/politics/david-cameron/8979989/David-Cameron-to-get-his-own-personalised-iPad-app.html and then making them available to the public too.

        As suggested above we could use revenue figures that are a year delayed. I think we need to bring society and the figures closer together. I know the figures won’t be totally accurate but surely it’s possible to do better than a top line figure?

    • alan jutson
      Posted January 3, 2012 at 3:10 pm | Permalink


      A local NHS trust had asked for people to put their names forward for voluntary redundancy to take place before April this year, it was over subscribed by applicants.

      Perhaps the reason was the one month per year of service redundancy pay being offered to those people who put their name down. it was limited to 24 months entitlement (2 Years pay) not sure where the money comes from, new/old /another budget.

      On the other subject of spending.

      This recession is the same as many others we have gone through.
      The majority of people are unaffected, but they curb expenditure due to the unknown nature of it may affect me.
      Thus people who still have money/savings and an income, reduce their expenditure, and make the overall situation worse, as demand drops.

      • Rebecca Hanson
        Posted January 3, 2012 at 6:25 pm | Permalink

        People round here have been getting a maximum of 12 weeks for public sector redundancy Alan. Sounds like someone at management level should be held to account for that one.

        • alan jutson
          Posted January 4, 2012 at 12:05 am | Permalink


          Can assure you its true, a family member put their name forward (offer made to all employees in writing) but was turned down (in writing) on account of their skills, which needed to be retained within the organisation.

          I think this programme would have been initiated at the very top level, and not simply left for a simple management decision, as the total cost could be very large indeed.

          • Rebecca Hanson
            Posted January 4, 2012 at 2:10 pm | Permalink

            It would be interesting to find the root source of those terms Alan.

            Meanwhile my experience has been of dinner ladies aged 63 with 20 years service thinking they’ve got their 12 weeks reduncancy pay when there school closes only to find on the last day that they haven’t got it and they’ve got to travel 3 hours each way by bus to a new job instead even though their pay won’t cover their transport.

            Meanwhile my friends in the private sector seem to have been able to organise themselves really well considered and generous ‘redundancies for the girls’ which have left them with £50k payouts, substantial retraining packages and the like.

      • Robert Christopher
        Posted January 3, 2012 at 10:38 pm | Permalink

        “redundancy pay … was limited to 24 months entitlement (2 Years pay) …”

        Sound very generous. Over many decades, the longest entitlement I have heard has been 12 months (1 year’s pay).

        • alan jutson
          Posted January 4, 2012 at 10:05 am | Permalink


          “Sounds very generous”

          Indeed that is why it was oversubscribed, those who were thinking of retiring anyway, and had 24 years service or more (not unusual in the NHS) got 2 years salary.

    • APL
      Posted January 3, 2012 at 3:11 pm | Permalink

      Rebecca Hanson: “Where is the money from those people who have been made redundant going?”

      For Mr. Redwoods benefit. These are all reputable UK published sources.

      • APL
        Posted January 3, 2012 at 3:13 pm | Permalink

        My experiment with embedded links didn’t seem to work very well.

        • Rebecca Hanson
          Posted January 3, 2012 at 6:23 pm | Permalink

          When I worked for a city bank which was having some problems APL, we organised an emergency conference for all their key staff from around the world.

          It involved two days of sports organised by Penny Hill Park which we booked out for accommodation and conference facilities as well as a massive banquet at Hampton Court. Of course we had to charter several jets to bring people in.

          I was curious about London corporate culture so in between two permanent jobs as a business analyst, I spent 6 months temping as high level PA in order to go whereever I wanted and get a warts and all insight at director level. It was very interesting indeed. Typically I’d turn up and find that a secretary had been sacked for being incompetent and there was a desk drawer full of receipts which needed to be turned into expense claims. It is amazing how costs for flying first class and staying at the Dorchester add up.

          I wasn’t just fascinated by the city either. I went to places like Brent Council because of their reputation for waste at that time to find out why the waste was actually happening.

          Can’t recommend it highly enough as a way to spend 6 moths is you’re an intelligent well presented young lass with a Northern Accent. Because of the exec/admin cultural divide you can see things you’d never see as an exec. Just don’t mention the BA Cantab.! 🙂

          • alan jutson
            Posted January 4, 2012 at 12:13 am | Permalink


            Ah yes Pennyhill Park, has a nice Spa as well.
            England Ruby Team often use it as a base when playing Home at Twickers.

            But I think the point being made by APL was that the Bank was probably at the time private, and not run on State/taxpayer funding, unlike the Local Authority who use council tax or central government/taxpayer funds.

            Aware that some Banks are now under taxpayer support and would object if some of my money was spent by such an organisation in such a fashion now.

          • Rebecca Hanson
            Posted January 4, 2012 at 2:06 pm | Permalink

            Have any of you guys actually done Go Ape? Can you not see that it might be a suitable team building/challenge exercise for some organisations in some circumstances? If you can’t you should go an try it – it’s a really tough challenge for a lot of people and getting dragged along to hoik your way around your nearest Go Ape is no luxury day out for many people. It’s not some indulgent choose whether you go riding or on a shopping trip or shooting like the kind of thing you get in the city.

          • APL
            Posted January 4, 2012 at 4:45 pm | Permalink

            There were several links in my last post but either Mr Redwood decided not to publish them or my attempt to embed them using the html code went terribly wrong.

            Rebecca, you asked ‘Where is the money from those people who have been made redundant going?

            How about this?


            There are plenty of other similar examples.

  25. David Blackie
    Posted January 3, 2012 at 11:05 am | Permalink

    My own international education publishing business was hit ten years ago by direct and deliberate competition from the British Council, an organisation which is in receipt of millions from the taxpayer – not just the £200 million from the FCO, but closed contracts with at least three other government departments, plus tax concessions at home and abroad, and civil service pensions, and even a for profit company “BC Trading International Ltd” which pays no tax (because it donates all profits to “charity” i.e. to the British Council). The fact that I have survived is simply down to their incompetence. But it is an affront to me as a taxpayer that I am obliged to pay for such an organisation, and to all other taxpayers who are obliged to subsidise sloppiness and inefficiency at the expense of taxpaying enterprise.

    • Caterpillar
      Posted January 3, 2012 at 9:34 pm | Permalink

      Interesting comment.

      Charities in the high street with an artificial competitive advantage, charities globally with an artificial advantage.

      So the ‘Big Society’ is/will be made up by large Public Sector +large charity sector with tax advantages over the private sector that is ‘responsible’ for funding the public sector.

      [The damaging coherence of Govt strategies becomes clearer all the time]

    • Rebecca Hanson
      Posted January 4, 2012 at 2:52 pm | Permalink


      Also 10 years ago I was working on a British Council project in the Middle East.

      A heck of a lot of discussion was going on about the future role of the British Council and one vision I was pushing particularly hard for was that it would move into supporting links between British and international schools so that our children study other countries in a current and relevant way and are taught by teachers who’ve actually travelled to the those countries and built real positive links between our children and those abroad.

      This is the infrastructure which is underpinning the current TV adverts for schools to link up with international schools in the run up to the olympics.

      I sincerely hope this kind of project will not present the anti-competitive issues you have experienced – it is particularly conceived not to.

      I am sorry you had the experiences you had and am delighted to hear that you managed to survive them. I hope you will work with me to ensure that future British Council activity will be positive for Britain and will not generate the kind of issues you experienced.

    • APL
      Posted January 4, 2012 at 4:51 pm | Permalink

      David Blackie: “But it is an affront to me as a taxpayer that I am obliged to pay for such an organisation, ”

      Thus does the public sector attempt to strangle the private sector.

  26. Iain Gill
    Posted January 3, 2012 at 11:16 am | Permalink

    So we need to prioritise spending cuts?
    Let’s start with:
    International “aid”.
    Free schooling to children of work visa holders from countries which do not provide free schooling to children of Brits working in their country.
    Free healthcare to supposedly temporary residents and their dependants from countries which do not provide free healthcare to Brits in equivalent positions in their country.
    Cut subsidy to public housing estates in areas where there are no jobs! Give the people in need subsidy and encourage them to move to areas where there are jobs.
    Let’s rebalance the tax take?
    Let’s start with :
    Increasing tax and national insurance paid by work visa holders to at least as much as a Brit would be paying.
    Increasing work visa prices to reflect the social impact and to incentivise firms to hire and train Brits.
    Let’s change the incentives!
    Encourage people to save.
    Encourage people to “do the right thing” in all sorts of ways.

    • uanime5
      Posted January 3, 2012 at 10:59 pm | Permalink

      There are 455,000 jobs and 2.64 million people unemployed. Where exactly are people meant to move in order to get a job?

      People won’t start saving unless the interest they get on their savings is higher than inflation.

      • Iain Gill
        Posted January 4, 2012 at 12:29 pm | Permalink

        Re “Where exactly are people meant to move in order to get a job?” I have in mind large public housing estates in the North East which once housed the workers for shipyards and mines. In some obvious cases those employers have gone and been replaced by nothing. Everyone who could got out. Those housing estates would be shut if left to free market economics, and the people would have moved elsewhere. It is only the state subsidising those houses that keeps those estates going. It would be better to subsidise the people allowing them to move to other areas with a better chance of a job (yes I know its tough everywhere but at least other place have some jobs).

        Re “People won’t start saving unless the interest they get on their savings is higher than inflation.” the social engineering which encourages no savings because you will get no benefits, and encourages no savings because it will limit your access to a subsidised house, and encourages over stretched mortgages because of perks and interest manipulation and so on do none of us any good. Bettter would be the state keeping out of it and letting people make choices based on a neutral environment.

  27. David Price
    Posted January 3, 2012 at 12:01 pm | Permalink

    Chart 1.7 on page 25 of the autumn statement provides a stark illustration of just how profligate and wasteful the last government was and how untenable the current expenditure on the public sector is. It shows how expenditure has been held above income since 2001 and emphasises the madness of Brown’s spending increases at a time of declining revenue with a gap of 11% GDP in 2009.

    I would take issue with your suggestion that 41% be the norm though. Why shouldn’t it be set at the 37.5% of GDP as in 1998 when it matched income for example? Even more to the point it should be held and track significantly lower than income until the deficit is removed and continued on that basis to reduce the debt.

    Why shouldn’t we be aiming for a positive balance in sovereign funds and finance? What would the associated target expenditure level be – 20% of GDP?

    Reply: 41%is not my preference, but it would be good to get back to that high level from where we now are.

    • David Price
      Posted January 3, 2012 at 8:53 pm | Permalink

      Thank you for your reply, I note what you have said in this and other replies that 41% is probably a realistic target.

      By why is it the urgency of reducing the over-expenditure cannot at least match the rate at which it was increased in the first place? That you think reducing from 46% to only 41% will be fraught with difficulties suggests to me that the public sector has effectively become unmanageable.

      Why must the public sector be treated with so much more consideration and lenience than is shown to people in the private sector who actually pay the bills?

      Reply: That is because the public sector is so good at using the media and politicians to defend itself from doing more with less.

      • David Price
        Posted January 4, 2012 at 10:40 am | Permalink

        Highlighting why blogs such as yours, Daniel Hannan’s, Lord Tebbits and others are so important…

        Better get the public sector costs and headcount resized downwards quickly though as when the EU collapses they will find all sorts of ways to continue spending the £14b direct and £40b+ regulatory compliance costs pa or maybe even justify staving off public sector redundancies entirely.

        I suspect we may come regret the dismantling of the EU more because it becomes a feeding frenzy for the UK bureaucrats than any minor loss of trade income.

  28. lifelogic
    Posted January 3, 2012 at 12:14 pm | Permalink

    Given that the next election has to be before May 2015 is it not rather too late for Cameron to start “ending the squeeze on the private sector.” He will probably just be making it easier for Labour in 2015 by cutting the state sector now, nearly two years too late.

    • Kenneth
      Posted January 3, 2012 at 3:40 pm | Permalink

      Quite. The Swedish conservatives cut as soon as they came in – in the middle of the budget they were landed into. They are doing relatively well now

  29. Barbara Stevens
    Posted January 3, 2012 at 2:03 pm | Permalink

    Finance is a difficult area to fully understand for someone like me, however, I would expect any government to concentrate on certain things, education, defence, NHS, these are important and should be upheld at all costs. Without any of those mentioned this country will sink further down into the mire. Education is needed for the future of this country, defence is needed for the danger we face, and at the moment we are at risk. We ask those that do serve an awful lot, but they do it with pride. The NHS, is the jewel in our crown, most cannot afford to pay for private care, this NHS keeps the nation healthy and without it we would be a lot more unhealthy. Just look at the USA, 40% without health care, what does that tell you? We certainly do not want that here. Health neglect can also be a risk to the rest of the nation. We should know that from history. My husband remembers the ‘fever hospitals’ in tents, yes that’s correct, in the 30’s. Not that long ago, and before we had the NHS. Is this what we want to return to, I think not. The stablisation of any society is fairness, and without that anachy will ensue. Its Ok for some to cry, no benefits, give them nothing, but what will you have in it’s place? No, a good country provides basic care, good education, and good defence, without these in place we have nothing. At the moment most are there, but are blunted by economic plight, we would do well to remember what life would be like if they are slowly reroded to nothing. Makes you think does it not?

    • Iain Gill
      Posted January 3, 2012 at 4:04 pm | Permalink

      you are looking at the NHS through rose tinted specs

      compared to our peers in the rest of Europe it is very definitely the worst

      if you can get to see an NHS doc you will find even the most basic care is rationed

      far from keeping the nation healthy the NHS lets lots of people die far too early from things which could be easily and cheaply solved

      large parts of society already cannot access healthcare, those that work away from home, move house frequently, etc, and if and when you can get access to anything on the NHS you will land in a long wait

      the NHS is a national disgrace as a visit to most waiting rooms would tell you

      it was a good idea but its is failing, we shouldnt keep it going, we should learn from the best of the rest of the world (and no I dont mean the USA)

    • lojolondon
      Posted January 3, 2012 at 5:42 pm | Permalink

      You are wrong. The NHS is not fit for purpose. The NHS budget has doubled and more people than ever are dying from preventable diseases, and it is the most expensive and least effective health service in Europe, probably the world. The NHS urgently needs a makeover.

      I would cut the NHS budget by 50% and promise an improvement in services, it CAN be done, other countries are doing more with less.

      All my comments are targeted at the managers of this situation, NOT the hard working doctors and nurses.

      • Iain Gill
        Posted January 3, 2012 at 7:50 pm | Permalink


        and re “cannot afford to pay for private care” I cannot afford to pay for private care but have been FORCED to several times and would probably be dead if I hadnt. given that reality they should give me back the fortune I had to pay into the NHS over the years back!

        scaring the population about what would happen if the NHS was replaced with another model from elsewhere in the developed world is a con trick, a trick which is wearing thin as more people travel and see the great care everywhere else but this country

        everyone please stop defending the modern NHS it is a shambles

    • Robert Christopher
      Posted January 3, 2012 at 11:27 pm | Permalink

      Barbara Stevens, January 3, 2012 at 2:03 pm
      “Just look at the USA, 40% without health care, what does that tell you?”

      It tells me your figures are incorrect!

      Taking figures from here:

      Out of 46 million uninsured:
      10m are not citizens
      17m make over $50k pa and choose not to have insurance, the voluntarily uninsured
      between 5m to 15m are eligible for government programs for which they haven’t joined

      The number of people without care because they cannot afford it is around 6m, which is under 2%. Granted, the figures may be slightly higher, but they would be a good starting point.

      So where does “40% without health care” come from exactly?

      The initial total of 46 million is still only 15%.
      The ‘fever hospitals’ were a 1930’s ‘solution’. I bet the private hospitals of the 1930’s didn’t do open heart surgery either!
      “The NHS, is the jewel in our crown”
      What! You obviously haven’t lived near Stafford Hospital’s Accident & Emergency Department in the last decade!

      I have heard about and seen excellent care being given by dedicated NHS staff, but they often do it in spite of the NHS machinery that is supposed to support them.

      I read a post (which certainly rings true) that someone, in IT, was working on the famous BIG NHS IT project, on £2000 per day. (Yes, per day! That’s £400k pa, with 12 weeks holiday.) After six weeks he resigned because he knew it would never succeed (and, I guess, he wanted to remain sane).

      Yet it went on for several more years and has cost £12,000,000,000 and resulted in very little to show for it.

  30. Derek Emery
    Posted January 3, 2012 at 4:40 pm | Permalink

    I doubts there are many politicians on the left who understand finance at all. Few realise that the public sector can only survive on the money made by the private sector. As far as many are concerned all parts of the economy make a profit. Only the private sector has exports that create the surplus needed to buy essential imports such as energy and food. Perhaps a few have now realised that you cannot live off debt forever to cover the balance of payments deficit and to cover the costs of the public sector when they exceed the tax on the private sector. I think understanding finance should be made compulsory for politicians and if they fail they should stop being an MP.

    • Robert Christopher
      Posted January 3, 2012 at 11:29 pm | Permalink

      “I doubt there are many politicians on the left who understand finance at all.”

      That is fortunate, otherwise the damage would be even worse!

    • John Wrexham
      Posted January 4, 2012 at 12:40 am | Permalink

      If only it were that simple. The private sector needs the public sector too – health, transport, education were all rather shambolic till the Government started interfering. The problem is that the Government didn’t know when to stop. The challenge is getting the public sector to deliver what is required and to increase its efficiency. However, logically, the public sector should be cheaper than the private sector as there are no shareholders to satisfy, just customers.

      • Robert Christopher
        Posted January 4, 2012 at 4:10 pm | Permalink

        If businesses put up prices or give poor service, customers can go elsewhere and other suppliers can enter the market, unless there is a monopoly involved.
        This does explain why the public sector is finding so hard to adapt to the current economic situation. If they don’t adapt, stuff the taxpayer!
        Unfortunately, this does tar everyone involved with the same brush, which is unfair, but while nothing changes, it is a small price to pay for generous pensions.

  31. Denis Cooper
    Posted January 3, 2012 at 5:35 pm | Permalink

    But for decades voters have been trained to expect high and constantly rising government spending, and misled into believing that it’s fine for the government to partly fund that increased expenditure through borrowing money, and now that it’s OK for the government to get the Bank of England to print vast sums of new money for it to spend.

    Worse than that, I suspect that many people have never given much thought to government finances and lack even the most basic understanding.

    I recall the edition of Question Time back in April 2010 when Victoria Coren, intelligent and well-educated, admitted that she didn’t even know what was meant by “budget deficit”.

    I don’t remember her exact words, but they were something like “What is this budget deficit? Is it a bank account, or …?”.

    I hesitate to suggest anything which would involve more government spending, but money spent on a well-designed public education campaign could be money well spent.

    • Nick
      Posted January 3, 2012 at 8:48 pm | Permalink

      People like not to know. Hell, msot don’t think beyon their own trousers and the X Factor. Marx called religion the opium of the people. These days it’s TV. Politicians know this, they play on it and love it.

      Just look at the language. Verb free, content devoid. It’s all about customers, services and deliverables. This is the language of PR and sales. However, sales implies choice – choice is good, yes? Well, I’d like to stop being a customer of HMRC please.

      Suddenly the choice evaporates and reality steps in, but as long as no one challenges the language they get away with it – spinning, without commitment, without action, just fluffy words that mean nothing, say less.

      Our national debt, for example, is 2/3rds that of America. Our GDP, however, is 1/4 the size. We owe close to £9tn. Without radical cuts,, no, slashes, decapitations and lopping off of limbs we will head into a debt holewecan’t get out of.

      Why is obvious: to buy votes politicians promise lies. No one bothers to ask where the money to build a road, or pay a sweeper (not that there are any) comes from. Those lies then require money – lots of money because the public sector likes spending other people’s money as this is how it judges it’s value. That money is then borrowed from big banks who love government borrowers as they’ve a force backed payer (us). So the cycle accelerates until a party gets into government that is so offensive, so dangerous and so intent on permanent damage to the economy and nation that such debt is considered small change: Labour.

    • John Wrexham
      Posted January 4, 2012 at 12:43 am | Permalink

      The vast majority of people get far more out of the public pot than they put in. Just look at the cost of private health, private education, private security, etc etc. That is probably why most people aren’t so uptight about the government deficit because the money was and is being spent on them!!

    • Kevin Dabson
      Posted January 4, 2012 at 12:53 am | Permalink

      Agree entirely Denis.

      More Labour spin delibrately designed to confuse/mislead people. I too had problems knowing what the deficit was until someone explained it to me. It used to be called the PSBR – I knew what that was. It was changed apparently because people were getting it confused with national debt? I wonder why?

      Probably only 10%-20% of the population in the UK know what the deficit means….

      As a supporter of Blair in the early years, and after living in the US and setting up a company etc, I absolutely detest that party and moved to being much more right wing in the UK (less so in the US but it’s different culturally). My problem is the tory party is not right wing enough.

      Having said that, I beleive a tory govt from ’97 onwards, and in spite of eurosceptics like John, would almost certainly have joined the euro. Too many are Pro EU.
      You pick your own poisons.

      Reply: We had won the argument against the Euro by 1997 within the Conservative party. Although Mr Hague would not rule out joining the Euro when running for Leader in 1997, he did so shortly afterwards, as he came to see we had the majority in the party on the issue.

    • Kenneth
      Posted January 4, 2012 at 1:05 am | Permalink

      Denis, it won’t matter anymore when fiat money collapses and we go back to local currencies and scores of gangsta kingdoms across the UK….well that’s the way we are headed unless we get a grip.

      • Bazman
        Posted January 4, 2012 at 8:47 pm | Permalink

        Never mind Ken. Your security gates and personal wealth will protect you, but who will protect everyone else from the Banksters?

  32. Martin
    Posted January 3, 2012 at 8:38 pm | Permalink

    I suspect part of the private sector’s problem is that too much of its activity is supplying things to government. We somehow need do a lot more of to making things for sale overseas and even replacing imports at home.

  33. Nick
    Posted January 3, 2012 at 8:39 pm | Permalink

    The solution is very simple. As we saw with Jaguar Landrover getting a ‘subsidy’ to employ people that government can help businesses.

    What no one mentions, however, is that JLR had already had that money taken from them by the government in the first place. Thus they were getting a tax rebate. It’s like getting mugged and the robber giving you £5 of the £10 he stole and telling you how generous he is.

    Lower taxes, radically smaller state. There are ranks of wasteful non jobs in local and national government. Scrap the department for education, health, trade and industry – what is it for? It’s not helping the ruddy economy. Stop paying for town mayors. We don’t need them. Local councillors – a waste of money. Future change managers, focus advisors, the utter lie of ‘climate change’ yes, Cameorn has pushed a document into the stream about how we must move to a ‘low carbon economy’ despite him not having the first clue that it is drivel such as his madcap ideas that are destroying the economy and making us all poor.

    We need someone to actually start cutting – starting with the striking job centre workers demanding better pensions when there is record unemployment. An obvious example of a group failing to do it’s job. Cameron, however, wants a big state because it inflates his ego and provides him with power, pomp and the charade of importance. If he carries on at this disasterous spending level he’ll plunge us into depression and keep Britain there. Then it really will be ‘lights out’.

  34. JimF
    Posted January 3, 2012 at 9:36 pm | Permalink

    There is a problem here, because if the automatic stabilizers allow more spending when in a recession, and we “share the proceeds of growth” by increasing spending when the economy is growing, then you are on a one way street to national bankruptcy. Surely we either have to align spending absolutely with GDP or put money aside in a growth era?

    You are slipping into Cameron/Blair/Cleggspeak.

  35. uanime5
    Posted January 3, 2012 at 10:25 pm | Permalink

    John if helping the private sector grow will reduce the public sector from 46% to 41% do you suppose that the public sector increased to 46% because the private sector shrank due to the global financial crisis? If so then isn’t it the fault of the private sector that the public sector is now much larger, rather than increased spending by politicians?

    One of the problems with tax cuts is that the public sector will need to borrow more money to make up the loss in tax revenue, further increasing the deficit. How much growth would be required per 1% tax cut to make up for the lost revenue and how likely is this to occur?

    Reply: Not so – I am proposing cuts in rates where that would increase the revenues. The policy decisions to make the public sector bigger are part of the background to the crash.Nationalising the banks was an expensive mistake, as I have explained at length with a sensible alternative.

    • Bazman
      Posted January 4, 2012 at 8:50 pm | Permalink

      If the last government had built or the latest government proposes to build some new council houses, the state will not have to pay out 20 billion in housing benefit every year to private landlords in sky high rent.

  36. Max Dunbar
    Posted January 3, 2012 at 10:57 pm | Permalink

    Mr. Redwood,
    If national output exceeds 50% would you re-define the type of country that we live in?

    Reply: You mean if the public sector accounts for more than 50%? It clearly means we live in a less free society where politicians and officials have too much power over us.

    • Max Dunbar
      Posted January 3, 2012 at 11:03 pm | Permalink

      Do you also have the figures for public sector output in Scotland, Wales and Northern Ireland?

    • Max Dunbar
      Posted January 4, 2012 at 8:44 pm | Permalink

      Thanks for that. I didn’t make the question clear enough and should have said “public sector national output”.
      I would be interested to know what the figures are for Scotland and if one can find out the number of private sector operations that depend for more than half their business on the public sector. If one then adds these dependent businesses to the figures for the public sector and subtracts them from the private sector share of Scotland’s national output I suspect that the figures for England, and the UK as a whole, may look quite different.

  37. Joe Broughton
    Posted January 3, 2012 at 10:58 pm | Permalink

    I entirely agree with the analysis John has made here.

    Sorry to go off topic,
    but I’m extremely concerned about HMRC going after small businesses, unreasonably.
    I’d be interested in JWs views on this, because it looks extremely serious.

    We must speed up the reduction of red tape and tax.

    Reply: Yes, the government needs to avoid hounding small businesses for no good reason

  38. Joe Broughton
    Posted January 3, 2012 at 10:59 pm | Permalink

    Sorry JR s

  39. Quietzaple
    Posted January 3, 2012 at 11:20 pm | Permalink

    Tory hysteria has really set on when John Redwoad openly fears recession.

    He’ll be calling for a VAT cut next!

  40. Neil Craig
    Posted January 4, 2012 at 5:33 pm | Permalink

    The deficit is more the cause of low growth than of government w2aste, gross though the latter is. There is no question whatsoever that we could easily reach world average growth rates (4.8%) and if the will was there, more than match China’s 10%.

    Every single senior politician of all 3 parties knows this perfectly well – they just don’t want to.

  41. Jon
    Posted January 4, 2012 at 7:13 pm | Permalink

    I like the way the article presents cuts in the private sector and so stifeling growth, could do with that angle being used more often.

    With our ageing population the cost of servicing that will add to our 47% current cost alone.

    What was criminally negligent of Brown and Balls was to argue that you could use our slightly lower tax base to fund/service even more debt. If we did that and thereby increasing our tax base to that of Germany, France etc who are already aged populations what happens from 2020 when we need to pay the further costs of our aged population.

    If they were running a company they would be banned as directors, locked up and fined by the FSA many times over.

  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

  • John’s Books

  • Email Alerts

    You can sign up to receive John's blog posts by e-mail by entering your e-mail address in the box below.

    Enter your email address:

    Delivered by FeedBurner

    The e-mail service is powered by Google's FeedBurner service. Your information is not shared.

  • Map of Visitors

    Locations of visitors to this page