Budget 2013
In June 2010 the Office of Budget Responsibility forecast 2.9% growth in 2012-13, 2.8% in 2013-14 and 2.7% in 2014-15. In the 2013 budget they forecast 0.2%, 0.8% and 2% for those years. The total growth of 8.6% has fallen to just 3%.
The original strategy rested on increases in total public spending in cash and real terms for the first two years, followed by a small real decline in the second half of the Parliament. They have kept more or less to budget, with a modest underspend recorded for 2012-13. The structural deficit was to be eliminated by 2015 by a large increase in tax revenue.
This budget confirms that tax revenue has fallen well short. In areas like higher end Income Tax and CGT the higher rates of tax have done damage. The government estimates that the 50p tax rate has lost the Exchequer £7bn a year as a result of very high earners leaving the country. Tax revenues generally are below forecast owing to slower economic growth.
By 2014-15 tax receipts are estimated to be £62 billion lower in 2014-15 than the June 2010 forecast. Borrowing will be considerably higher as a result.
The budget seeks to speed growth to achieve the delayed increases in growth rate the government is seeking. They propose to do this by a combination of targeted tax cuts, monetary expansion, improved flows of finance for the mortgage market and a general income tax cut to boost family incomes. Petrol and beer duty area protected from further rises, and 1p is taken off beer duty per pint. The tax cuts are financed by additional public spending reductions, to avoid making the deficits worse.
The budget in itself is modestly positive for the economy. The numbers involved in the tax reductions are small, reflecting the Chancellor’s limited scope to offer changes given the poor overall fiscal arithmetic.
Two items that did not get fully dealt with in the Budget matter more. One is the future ability of the banks to finance recovery, and the other is the question of energy prices and supply. The Chancellor says he will improve and extend the Funding for Lending Scheme, as well as introducing his plans to help people buy new homes on mortgage. There are welcome signs the housing and mortgage markets are beginning to improve, and this could help further.
The second is the high cost of energy to industry, offices and homes. The Chancellor has promised to remove the carbon levy from the big energy using businesses, for fear of losing them from the UK if he perseveres with it. He sounds as if he wants to do more, but EU rules and Parliamentary opinion in the Lib Dems and Labour constrain his room for action. The UK needs immediately to extend the useful lives of its coal burning power stations, but the Chancellor was silent on this matter in the Budget.
This post is tomorrow’s post, put up early. I will post my Budget debate speech in the Commons tomorrow when the Hansard is available. It includes the figures showing real public spending has risen so far under this government.
March 20, 2013
And the government continues its invidious efforts to underpin houseprices by putting stupendous amounts of taxpayers’ money on the line. And this helps things how, exactly?
And seemingly hinting at turning an even blinder eye at the BoE ignoring inflation. The same old story – steal money from savers rather than reducing spending.
And we’re continuing to borrow to shovel huge amounts of money at foreign nuclear powers and into the pockets of despots. Mad, mad, mad.
March 20, 2013
So house buyers get 5 years interest free loans but only for new property – well I suppose it just about gives buyers their stamp duty back, in a silly contrived and high in parasitic and pointless costs method. Why not get rid of stamp duty and fire all the parasitic staff – far more efficient that way.
March 21, 2013
Indeed, a convoluted way to lend to potential risks and underwrite the risk with other people’s cash. Houses are overvalued and should be allowed to reach their market value.
zorro
March 21, 2013
lifelogic: “So house buyers get 5 years interest free loans but only for new property ”
More tax money grubbing by the
ToryCorporatist party.Lifelogic: “Why not get rid of stamp duty and fire all the parasitic staff – far more efficient that way.”
Yep, and roll NI into income tax – then eradicate the Department for National Insurance. The whole operation is an outright fraud anyway.
March 21, 2013
Yes and the money is going into “new builds” only. On my walk into work this morning, I will be passing by a very large project where presumably a lot of the units will be bought with the assistance of our tax money. The first phase was completed a few years ago and already the paint is visibly peeling from the window panes and the walls are discoloured with slime. If this “quality” is being maintained on what is being built now. The taxpayer is going to be left with a pile of rubbish (as usual when HMG interferes in the market place) when these punters default on their loans, because they cannot keep up with the repayments when either or both the RPI link on their loan or interest rates in general go up
March 21, 2013
This housing policy is a fatal mistake. This is exasperating. They really don’t have a clue. Housing ties up otherwise productive capital, and earns zero foreign exchange to fund imports. It props up zombie banks, and the property ladder is the definition of a pyramid scheme. Hopeless.
March 21, 2013
They just don’t listen. Anything to kick the can down the road……I cannot believe that they think that it is a good idea to make houses more expensive by subsidising to this extent. They just want to create debt slaves. Unfortunately for them, these slaves will not be wealthy consumers.
zorro
March 21, 2013
Mortgages underpinned by government, did he not learn from the 2008 crash? What happens when or if the interest rate increases how many will default? Alternatively, is he indicating interest rates will remain as they are for decades to come?
1% pay increase for public sector workers, 1% for welfare lifers, how does this fit to his mantra that his budget is for people with aspirations, workers trying to get on etc. £19,000 for teachers, nurses, police officers while welfare lifers get capped at £26,000 in July (about £32,000 if they had to pay NI and tax). A lot still live in houses most workers could only dream about. And Alexander says there is no need to make any more cuts to welfare. I hope all public sector workers remember this at election time.
Osborne should have made severe cuts in the first two years of government, he failed. He also appeared to be too interested in other things ie flying in the plane of the US president.
The same economics of continuity Brown at the Ministry of Truth. Vote for a change and release the shackles of the EU that are bringing the country down.
JR, he also forgot (or deliberately omitted) to mention the new build of wind farms in Cumbria making it the largest in the world- no use in reducing the price of energy, making industry competitive or reducing the bills for ordinary households but he can boast to the SW1 elite they are record breakers. While serviceable coal fired power stations are made uncompetitive by EU regulations and fictitious targets.
He also did not mention why forests are being cut down in the US, mulched to chip and transported across the Atlantic to fuel the Drax power station. Economics, good for the environment- what a joker.
March 21, 2013
“1% pay increase for public sector workers, 1% for welfare lifers”
How can a small business give pay rises with declining sales, rising business rates, increased transportation and energy costs?
March 21, 2013
Paul–Totally agree that the Government, just for a change, has got it wrong big time, this time on houses. Aggressive (and 20% is aggressive) State lending to individuals so that they can buy a house has hold of the wrong end of the stick. When interest rates go back up again as they assuredly will having been held down artificially and for so long, house prices are going to go down and possibly by a lot. Pandering to eager young bright-eyed inexperienced prospective buyers won’t look so good when prices fall in response to the higher rates ( I concede that there is immigration working in the opposite direction–gr8!). What this means is that this belief, taken as a given by the Government, that it is essential for youngsters “to get on the housing ladder” may well come back to bite them. Unfortunately, nobody wants to take seriously what the banks think any more but one of the reasons they they require larger deposits these days–and, Why not, for look where excessive debt has got us?–is that they feel in their waters that house prices are going to fall. Beats me how anybody – let alone a big clever Government – should not see all this as obvious. It’s simply no good getting sentimental about first time buyers to pander for their votes in this way when there is every possibility that house prices will not rise again for decades and may well fall. Instead of helping them, they could be wiped out, and the Conservatives with them.
March 21, 2013
The other day I received an invitation to invest in a VCT (with tax reliefs) that would in turn invest in green energy (that offered guaranteed returns courtesy the taxpayer). This remarkable offer was, apparently, confirmed by the PM. In answer to a question at the recent DECC Energy Efficiency Mission (!) Cameron said “if, for instance, you invest in offshore wind if you build your turbine before the end of 2017 I can`t just tell you what you`ll earn for one or two years, I can tell you what you`l earn for 20 years. What other industry or business anywhere in the world has got that sort of certainty?” If his listeners believed that they`ll believe anything, given the record of the UK government when it comes to taxes and subsidies. But in the meantime it us, the long suffering taxpayers, who must pay for Cameron`s delusions.
March 21, 2013
I suspect the real idea is to provide a temporary underpinning that might allow the sale of the mortgage banks, only for the whole thing to blow up for the next government.
March 21, 2013
Paul H wrote: And the government continues its invidious efforts to underpin houseprices by putting stupendous amounts of taxpayers’ money on the line. And this helps things how, exactly?
It may help to get the Conservative Party re-elected.
March 24, 2013
sjb–Not if houses fall it won’t. If houses go up, the Government will not get the credit because the public will think it is their God-given right that houses should only go up, and furthermore the banks (who will inescapably believe that prices, that is the value of their collateral, are about to go down) will lend less. And as I say if they go down Heaven alone help the Conservatives–not that I care any more. Viva UKIP. Political nous was there none.
March 21, 2013
And maybe only underpinning the prices of new houses, I think, because any owner occupier moving from their present house to a newly built house may feel under rather less pressure to extract the highest possible price from potential purchasers and that will feed back down the ladder for all pre-existing houses.
Maybe somebody will tell me that I’m wrong about this, but it does seem to me that the Chancellor is making newly built houses more valuable by attaching the right to get easier loans, but by doing that he is also making pre-existing houses correspondingly less valuable.
March 22, 2013
Newbuilds are more expensive than second hand homes because they have to support the Section 106 levy and the unnecessary, ueconomic greenergy building standards (that come in part at the expense of other features that buyers might prefer). They lose that premium when they are resold in competition with other second hand houses. The Chancellor is underwriting that loss.
Currently, purchases of newbuild properties are dominated by buy-to-let landlords, as they can make financial sense of the purchases on the assumption that the state will subsidise tenants’ rents while continuing to subsidise their mortgage. Such purchases have no chain behind them.
By pumping funds into the market, the Chancellor is simply pumping up the price bubble again. He really ought to know better.
March 22, 2013
Be that as it may, it seems to me that anything which makes new houses more attractive must by definition make used houses less attractive. Therefore it will have a depressing effect on the market values of all existing houses, and while I don’t imagine that it will precipitate a house price crash it must have ramifications that Osborne may or may not welcome.
March 23, 2013
Denis–I don’t quite follow, for it is hard to see that increasing the attraction of part would decrease the attraction of the whole, indeed I venture the opposite. As an analogy for what worth, assume you are a young man looking for a lady friend. If on that basis you were to learn that a bevy of new and attractive women had arrived in a nearby village I doubt that you would think that the attractiveness of the girls in that village as a whole had thereby gone down such that for example you would be inclined to give the next dance there a miss.
March 24, 2013
Leslie, I think your analogy suggests the opposite of what you intend, because the arrival of the bevy of beauties, = “new houses”, would tend to make the local girls, “= used houses”, relatively less attractive, and possibly they’d have a few harsh things to say about that. To extend the analogy, some of the local girls might attempt to copy the beauty techniques of the new arrivals to restore their competitive position, but there is no way that the owner of a used house can turn it back into a new house.
March 21, 2013
Paul H – Boosting the house market at taxpayers’ expense. A clever move when you think about it.
Either it will work or…
Ed Balls gets landed with the mother of all problems when Labour win in 2015.
Giving them some of their own medicine.
March 20, 2013
“the 50p tax rate has lost the Exchequer £7bn a year as a result of very high earners leaving the country.”
uanime5 assured us that this wouldn’t happen!
If only George hadn’t listened to her.
He should have scrapped the supertax and maintained 40% as the top rate and the HR threshold should have increased with inflation, instead of being lowered to drag more workers into it.
Finally, does the Chancellor’s “shared equity” scheme not risk becoming another “sub prime” mortgage fiasco as the economy continues to swirl down the glugger?
March 20, 2013
45% still far to high. The employee NI cut is next year and so irrelevant it might never even happen.
March 24, 2013
lifelogic–The NI cut is a start at least and we must be thankful it is next year and not after the election as in the case of so much else.
March 20, 2013
Does the Chancellor’s “shared equity” scheme not risk becoming another “sub prime” mortgage fiasco?
Yes but it only gives them their stamp duty back just get rid of stamp duty?
March 21, 2013
I doubt there will be any benefit for buyers: it will result in higher prices, which benefit sellers. The buyers (and taxpayers who are on the hook for guarantees) will face larger losses in due course in consequence.
March 21, 2013
Scrap stamp duty? Are you seriously suggesting that those administering this non job should be diverted to something like picking litter up if they wish to remain in the employ of the state? This won’t happen, someone needs to bully those that want to get on.
March 21, 2013
uanime5 assured us that he can predict volcanoes too. I await his list with dates.
March 22, 2013
The Kileaua Volcano will erupt this year, just like it has every year since 1983. I’d recommend you look up the type of volcanic eruption known as “Hawaiian eruptions” to understand just how I can predict that several volcanoes will erupt this year with a high level of accuracy.
March 21, 2013
I only assured you that the jobs wouldn’t leave. Who works in them is somewhat irrelevant.
In any case the fall in upper tax revenue can be caused by the following:
1) Fewer people working in high paying jobs, even though these jobs are available.
2) Fewer people working in high paying jobs because there are fewer of these jobs available.
3) Fewer people working in high paying jobs because their industry isn’t earning enough money to pay these high salaries or there’s public pressure against high bonuses.
4) Higher levels of tax avoidance/evasion.
Odd how John considers 1 more likely than 3 or 4, especially since the economy has been doing badly and the HMRC staff have been reduced nearly every year after the Coalition started running the country.
March 22, 2013
@uanime5
” the HMRC staff have been reduced nearly every year after the Coalition started running the country.”
A quick search reveals:
From BBC
“More than 2,000 tax inspectors will be recruited to crack down on tax evasion among the wealthiest people in the UK, a Liberal Democrat minister has said……Efforts to raise an extra £7bn by 2015 from evaders were “on track”, he said.”
http://www.bbc.co.uk/news/uk-politics-14960364
From the Telegraph
UK facing middle-class brain drain as professionals seek better lives abroad.
Almost half of all Britons who emigrate each year are professionals and company managers, potentially threatening the country’s supply of highly skilled workers, research for the Home Office found.
The attractions of a better lifestyle and climate, as well as career opportunities, meant a “large and increasing” number of executives, scientists, academics and doctors have chosen to leave Britain in the last 20 years, the report said.
Business leaders blamed high rates of income tax for the “disturbing” rises in the number of professionals leaving Britain for countries such as Australia, American and Canada. Around 149,000 British citizens emigrated last year, and 4.7 million now live overseas.
There were fears that high tax rates, cost of living and the slow economic recovery could prompt more people to emigrate.
http://www.telegraph.co.uk/news/politics/9659949/UK-facing-middle-class-brain-drain-as-professionals-seek-better-lives-abroad.html
March 22, 2013
Why don’t you compare the number of HMRC staff from 2010 to the number of staff in 2013? Could it be because that would actually reveal that the number have been reduced.
Members are protesting about plans to cut 10,000 HMRC posts by 2014/2015.
http://www.bbc.co.uk/news/uk-18575439
Not sure what you’re referring to in the Telegraph article. All it says is that 1 in 7 people are leaving because of the cost of living but it doesn’t say why the other 6 in 7 people left.
The comments about high taxes aren’t supported by any claims made by the people who left the UK. So there’s no evidence that people moved because of the tax rates.
I suspect that most professional are leaving the UK because they’re so badly paid here, compared to other countries. After all why would educated people stay in a country with high inequality and low social mobility.
March 27, 2013
HMRC staff reduced when companies had to submit end of year returns electronically, removing the necessity for HMRC staff to key in all of the details sent in at the end of the year. Technological advancement has removed a lot of data input.
March 22, 2013
@uanime5
Have you seen this?
http://www.dailymail.co.uk/news/article-2294560/The-great-green-1-The-hard-proof-finally-shows-global-warming-forecasts-costing-billions-WRONG-along.html
March 22, 2013
An article written by a journalist with no scientific credentials, using a graph but without providing any data or explaining where this data is from, providing quotes but not stating the source material so it’s impossible to check them, repeating the lie that average temperature hasn’t increased for 15 years even though his own graph shows it has, who claims that their views aren’t widespread because they’re the victim of a conspiracy.
Yep sounds like more rubbish from the Daily Mail pretending to be science. The fact that average global temperature isn’t rising as fast as some scientists predicted doesn’t change the fact that it is still rising. Nor does it make it more likely that the temperature will suddenly start declining.
March 22, 2013
Oh dear, wrong again… you didn’t read to the bottom where the article tells you precisely, as of 17:13 20th March, where the data comes from.
Unsurprisingly, it’s from a climate scientist.
March 23, 2013
@uanime5
Why do you think global average temperatures should remain perfectly static? Do you really think this has ever been the case?
If there had been a slight reduction, would you be predicting a new ice age?
March 20, 2013
We know that there was no freeze on pay increases for the public sector but they get bashed for using that phrase because the public and press believe there was a freeze.
They are underpinning the cost of the curtailment of the state second pension within the state sector pensions costing more billions. Private sector schemes will down scale their benefits. For all this extra spending on public sector workers who are already paid more than the private they go on strike.
More could have been done here.
March 21, 2013
I’ve just read that our local council is giving all on £21k or less a £250 ex-gratia payment in lieu of pay freeze. Is this legal as its my money.
March 21, 2013
” Is this legal as its my money.”
“was your money”
It’s their money now.
March 21, 2013
They are living in a different era where they still expect inflation proofed salaries and pensions. That changed in the private sector back end of last century and its the private sector that pays for this. JR did warn of the need to define what a pay freeze or 1% meant, that wasn’t actioned and its just full of loopholes.
March 21, 2013
It’ not £21k though is it .
It’s £21k plus a pension plus other benefits , ie above the national average wage .
I was earning 8% more 6 years ago than now in monetary terms and more in inflation adjusted terms 23 years ago when I was 23 .
It’s reasonable to give those workers who work in a state monopoly sector a payment in lieu of a rise but not those who work in roles with an equivalent in the private sector .
March 20, 2013
Not enough, nowhere near.
The major cuts to public expenditure, needed to bring that deficit down, just aren’t there.
What a wasted opportunity.
March 20, 2013
I really cannot believe that in a country where one of the fundamental problems is an over egged housing market with totally unsustainable prices, kept artificially high by ever more state manipulation of the market, what is the genius solution? Even more state manipulation of the market to keep the housing market over heated.
We are inventing our own sub prime crisis by giving money to folk who would otherwise be unable to fund a house to buy into the dream, a dream which will inevitably crash as house prices fail to keep up with inflation or more likely crash completely. House prices are already basically a tax on entrance to the decent schools, if that little state manipulation was eased wow watch the freefall…
We would be better to stop manipulating the market and let market forces drop prices to realistic levels and then indeed more folk would be able to buy…
I note Indian nationals working in this country still pay zero national insurance in their first 12 months here, and massive tax dispensations and so on, so hardly a budget for locals who strive when the government manipulates the employment market to make it cheaper to hire foreign nationals here.
March 20, 2013
Indeed – and of course there is likely to be a short-term boost to house-prices which means that (a) the very people whom Osborne is supposed to be helping will have to borrow more, and (b) increase the potential down-side to the taxpayer (and we are talking big numbers).
At this rate I don’t think that my children will ever be able to afford to buy a family house. My elder son wants to be a teacher and is already talking about emigrating when he finishes university. I would not be surprised if he did so and never came back and never repaid the student loan. Ordinarily I would discourage defaulting on a debt as irresponsible and unreasonable behaviour. However, as he is probably going to have to compete with half the world (speaking of which, just what is it about India and Mr. Cameron?) for a job and a home here, I am not sure I will blame him. In any case, the government’s inflation and interest rate policies are hardly setting a high moral tone when it comes to respecting one’s obligations.
If Osborne really has so much collateral to splash around for loans he should put it behind business loans, especially to small businesses. The banks are disgracefully not interested in lending to small businesses and have diverted much of the funding-for-lending to mortgages.
I utterly, utterly despair of Osborne and Cameron, and wonder how Mr. Redwood manages to hold his nose and stay in the same party.
As for your last paragraph …
March 22, 2013
Paul H: “and wonder how Mr. Redwood manages to hold his nose and stay in the same party.”
That has puzzled me too, I must admit.
March 20, 2013
It is pure madness as we feared. Their only solution is to stoke up an unsustainable housing market with taxpayer guarantees instead of allowing the market to set reasonable prices…..
zorro
March 21, 2013
Exactly, allowing more people access to a housing market that will now overheat is no solution in the long term. Hopefully it may, allied to housing benefit caps. take some steam from rental costs but this is surely “paying off debt by borrowing more”.
Mr R wrote recently that historical growth levels were 2% but that more realistic long term expectations were 1% (OBR guessing @ 2% in 15/16). At 2% it would take 8 years to cut the current deficit (assuming tax take @ 40% of GDP) racking up over £800 biliion more debt in the process. Coversely cutting spending by 4% each year would wipe out the deficit in 5 year racking up considerably less debt while keeping inflation at bay. Flatlining is OK so long as inflation is tamed and business, shark like, always needs to find a way to make money so it will learn to cope.
I know which of the above strategies I favour. To assist in delivering 4% cuts annually we need to become more protectionist as a nation including refusing impoted labour and we will need to learn to live simpler, less extravagant lives in the interim. Had we taken this direction in 2008/9 instead of continuing to spend other people’s money, we would be nearly there now and the housing stock would be affordable.
Risk should not be socialised!
March 21, 2013
Furthermore we are constantly told that business is sitting on piles of cash which they are not prepared to spend. How is reducing the tax they pay (which ils not levied on funds they actually spend) get them spending. Increasing tax on profits would encourage them to spend and spend on infrastructure upon which they pay no tax.
Once again business is treated preferentially for little gain
March 21, 2013
They do pay tax on infrastructure. It’s capital not cost. Although they have reintroduced the £100k capital allowance that us tax free. Removing that was a huge error in the 2010 budget and possibly the cause of some damage to confidence in small and medium business
March 21, 2013
Lets see how many foreigners sign up to the system so they can send more of their own mnoney back home.
It will finish up like the student loan and the international health service.
March 20, 2013
It was good of them to take my advice and give at least some relief to, especially, small employers against the insane Employer’s NI but that has to be set against the financial and other discouragement heaped upon mothers who wish to be women and hands-on mothers by staying at home instead of paying strangers to look after their children. The fanciful idea that it is salary-earning women that need more money is well up there with the other weird, wonderful and unnatural ideas that Cameron these days attaches himself to, at the request of Clegg of course. Clegg will not be satisfied till (in his dreams) he has made men and women not just equal but identical. On Employment grounds alone, one might have thought that the incentive would have been installed the other way round to encourage women to stay at home to free up jobs that people who need them could take. In any event by my reading it is clear that if the Good Lord and Mother Nature had intended us to be identical He and she would have made us so. I thought I read somewhere that the Australian gentleman they have brought on board had set himself the laudable task of knocking crazy ideas on the head ab initio but unfortunately he does not seem to be terribly effective in that regard. Let’s hear it for traditional families.
March 20, 2013
“It includes the figures showing real public spending has risen so far under this government.”
Fascinating. Cyclically adjusted figures, I presume?
March 21, 2013
What cycle? A Penny-farthing perhaps?
March 24, 2013
James thinks that there is a fiscal cycle. He doesn’t know its periodicity or its magnitude. He doesn’t know the variables involved and the cause and effect mechanisms. He just ‘knows’ that there is one.
Geoffrey Howe was interviewed recently. In his time as Chancellor he was scathingly criticised by 364 ‘sophisticated economists’ a bit lit James Reade. They said that Howe had got it all wrong. In a single budget (1980), Howe cut public expenditure by £4 billion, got £4 billion more out of VAT by raising the rate and reduced his income tax take by £4 billion. You have to scale up those numbers a lot because od 30+ years of inflation.
It turned out that Howe was right and all the ‘sophisticated economists’ were wrong because the economy started growing rapidly 18 months later.
March 20, 2013
A feeble budget but predictable when the real coalition is between Labour and Libdems. The Conservative Party painfully drags itself to the next election like a dying animal.
March 21, 2013
The Tory party has been dragging itself round like a dying animal since the idiot removal of Thatcher in 1990. The fall of socialism in the USSR hasn’t done the west any favours. It was the best advert of the true nature of socialism. No progress. Look around the world. Socialist countries stand still as they viciously stamp out enterprise and freedom. Unless you set up as a manufacturer of barbed wire and military police uniforms that is.
March 20, 2013
When you think of all the businesses who use energy (who doesn’t?) the numbers are going to be humungous for us all. If this government does not ditch its idiotic policy on green energy subsidies and extra taxes to make it so attractive for the green manufacturers and activists this country will lose so many companies – losing jobs and putting up energy costs to such an extent none of us will be able to heat our homes or cook our food. The world is not warming and every scientist worth his salt is saying as much. When will you MPs look out of the window and see the global warming white stuff falling from the sky !
March 21, 2013
Every scientists worth their salt is saying that the world is warming. Just because you don’t like the science doesn’t make it wrong.
March 22, 2013
For the purpose of argument lets just ignore the last 16 years of no change and pretend that global warming is happening.
If this is the case then what difference is the UK going to make if China, USA and India for example don’t radically alter. Until they do then we may as well compete on level terms in energy prices. We are not exactly world players that have the reponsibility of influencing the rest of the world.
March 22, 2013
No matter how many times you claim that there hasn’t been any global warming it will never become true. All the scientific evidence shows that the average global temperature is continuing to rise and has risen over the last 16 years.
Your fallacy that because the UK isn’t a major CO2 producer it shouldn’t do anything is equally poor. Per capita the UK does produce a large amount of CO2 and if the UK and other developed countries aren’t going to reduce their emission then it’s unlikely that developing countries will take any actions to reduce theirs.
Claims that the UK can compete on “level terms in energy prices” with China and India are little more than a fantasy given the lower wages in China and India which prevent the UK from ever having such cheap energy barring a massive devaluation of the pound.
March 24, 2013
unanime–When you trot out your usual (and usually wrong) stuff about “every scientist” and “all the scientific evidence” you devastate your own argument. Neither of these phrases is appropriate or meaningful on any basis.
March 22, 2013
You are wrong. Many scientists worth their salt say the warming is much slighter than the IPCC and the alarmist establishment have made out, and that mankind therefore has many decades, perhaps centuries, to seek alternatives to fossil fuels. Examples include Professors Richard Lindzen & Freeman Dyson.
March 22, 2013
Care to explain why all these scientists have failed to publish any studies to back up their claims? Could it be because they don’t have any evidence to back up their claims. That would explain why Professors Richard Lindzen & Freeman Dyson have failed to convince other scientist that their claims have any merit and why real scientists keep pointing out the flaws in their research.
Your claims that mankind has centuries to look for alternatives to fossil fuels is incorrect given the high rate that humanity is consuming these fossil fuels.
Finally claiming that the average global temperature is increasing far more slowly than predicted is still evidence that it is increasing.
March 22, 2013
What are you talking about?! Dyson and Lindzen are both world renouned scientists who have published numerous respected papers and other works. The point is there is disagreement and debate in this field. Real scientists do not argue as you do, recognizing the many uncertainties. Only polemicists with an axe to grind talk in your terms.
If it is true that the actual temperature rise is c. 1\3 of the forecasts on which damaging environmental legislation is based then the legislation should be changed.
March 23, 2013
@uanime5
The climate has been changing since the Earth was first formed. That’s a scientific fact. On what basis do you think that global average temperatures should remain unchanged from one decade to the next?
March 24, 2013
unanime–What Richard1 says below is unarguably true and he is not writing because he is interested in your views but because, with John’s open forum, which personally I think you abuse, every now and again he and others and I feel the need to rebalance your blather. If a fort in the Wild West decided to take steps because “the Indians are coming” it would matter a lot if information arrived saying the number of Indians was two thirds fewer than thought–fewer reinforcements perhaps. And that’s giving you the benefit of the doubt as to whether there has been any rise at all. Lighten up.
March 22, 2013
Dubious credentials and links in particular Lindzen. You will have to do better than this guy.
March 23, 2013
unanime–So you don’t believe the last 16 years measurements is that it?
March 20, 2013
The entire economic program of this government is starting to look like the majestic transformation of Father Ted’s car.
Just at the very juncture where the public have become all too grievously aware of our enormous, and growing national debt. Just as we are all witnessing the devastating impact of a European state which dare not allow its banks to open their doors, and seeks any help it can get to keep the bailiffs from the national door. These are the very circumstances in which a messenger of hard lesson, is liable to find he is pushing at an open door. “Look what’s happening to Cyprus, to Greece, we have to lose our debt addiction before it poisons us”.
It seems that George does not have the flair for the Chancelling business. And I doubt whether he has the latin for the Judging business, perhaps we should arrange something more suitable for his talents. As he seems perfectly brilliant at digging holes for himself, perhaps we should send him down the pit?
March 20, 2013
You might wish to address the reasoning behind blowing further government-sponsored bubbles in the property market. We really need to add to the housing stock by removing restrictions on planning; everything from bat and newt survey requirements to additional costs imposed on developers to creating a strong and competitive lending market by breaking up the big banks. This is a feeble attempt to rig the market using taxpayers’ money.
March 21, 2013
By facilitating movement in the housing market, sales of many domestic goods will also be stimulated, helping local manufacturing and service businesses.
March 21, 2013
Mr Maynard – We must be careful to distinguish between a busy economy and a growing economy.
One founded on taxpayer backed debt where most of the goods bought are imported is the last thing we need.
Export is what we must concentrate on.
March 21, 2013
I didn’t know that China was now considered local.
March 21, 2013
The cliff edge stamp duty rate has a dampening effect on property transactions. I guess that the Tories would address that problem if they were not shackled to the Lib Dems.
I don’t understand why you cannot explain to the Lib Dimwits that the object is to raise more money in order to pay the national debt, as opposed to punishing success.
Can you imagine what would happen to our Olympic medal tally if we handicapped our best athletes?
Please tell them John, before it’s too late.
March 20, 2013
Too little too late, so let us try and stimulate the housing market by asking people to borrow more and let the taxpayer act as guarrantor.
Is this really the best our Chancellor can do.
If we did not have such massive rates of stamp duty on houses already, then people may not need a false bribe to move, Up or Down.
If we did not have such penal rates of taxation on (road) fuel then perhaps goods may cost just that little bit less, and people may get to work for less expense.
If we did not have such high energy prices people may have some more money to spend on other things.
Raising taxes in the past has given the government diminishing returns, keeping them where they are just locks in personal stagnation on disposable income.
The only good news, Personal tax allowance raised, but it still does not pay to work.
Yet another opportunity lost !
Now its 3 wasted years.
March 21, 2013
No, it is just 2 wasted years. Just 2 more to go until Labour are back in to finish the economy off once and for all.
I’m at the point where I think even Ed Balls could not do any worse.
March 21, 2013
Mike
I listened to Balls this morning on the radio, still as daft as ever and perhaps even more dangerouse than Brown, because he does not even understand what damage his polices may do.
Brown at least knew he was a red necked solcialist and exactly what he was doing with hisa locked in spending spree, hence the poison he deliberately left behind for others to unwind at a huge cost.
March 21, 2013
But what would he have done differently? It’s as though he was Chancellor already!
March 20, 2013
JR said, ” The second is the high cost of energy to industry, offices and homes.”
If you had removed that ridiculous and damaging Climate Change Act, and subsidizing windmills, which generate little or no energy, we would not be losing businesses and jobs.
Further, why do ‘we’ the tax payer have to subsidize, or guarantee the private profits of a French ‘State owned’ company, when we could not do that for our own. ?
If EDF and others cannot build power stations and make them profitable, then we should get someone who can, or use an alternative means of energy generation.
The EU and its policies are slowly killing the nations of Europe and yet nobody in the rarefied air of power can see this.
March 21, 2013
If we still had miners our energy sector would be as well defended against Europe’s idiotic ideas as our City workers are in our banking sector.
March 21, 2013
While I welcome the Employers’ NI moves I do feel the beer duty moves are nothing more than window dressing. It would have been more productive to use the money to raise the lower limit of employees NI contributions even if only by a small amount
March 21, 2013
The reduction in employers NI will enable small businesses to increase wages a little. If it were removed entirely wages could be increased quite a bit more.
I will pass it on to my staff by adding it to their bonuses, because I cannot be sure that a future budget will not take it back.
March 21, 2013
Mr Redwood,
Does this budget simplify the tax system or make it more complicated?
March 21, 2013
Needed are –
Competitive taxes
Lower energy costs for industry (Alcan closed in Northumberland citing high energy costs as the reason 515 people unemployed)
Competitive banking.
More spending cuts
I hope that the budget helps to promote recovery, but it seemed a bit lame for a country in an “economic war”
Need a recovery before the election, the government is rapidly running out of runway.
March 21, 2013
The Alcan closure will result in a sharp increase in global GHG emissions. In China, they don’t worry about PFC emissions that are thousands of times more potent than CO2: the smelters are inefficient, consuming high amount of power per kilo of Al produced, burning more carbon anodes that produce CO2 – and rely on coal powered electricity.
March 22, 2013
But the hydro is needed to back up all those lovely green scottish windmills.
There were some Labour MPs who spoke in the budget debate and seemed to be aware of the damage caused by the energy bill. Do you think there is a possibility of getting enough MPs to force a vote and delay the carbon tax on all industry and home, rather than just favouring certain industries? Obviously, it is no use talking to Libdums or Mr and Mrs Cameron.
Reply It is safe to conclude I remain in a minority on this issue, but do have some new friends.
March 22, 2013
Stred
As I am still registered as a small business user of electricity, I have today recieved a letter from my supplier in forming me that since government feed in tariffs have been introduced, and since they are so inaccurate on estimates of production of electricity generated, the agreed tarrif on my contract will now need to be surcharged (in the terms and conditions) in order to make allowance for their extra costs.
Classic case of a government subsidy which increases prices.
I thus pay twice, once as a taxpayer and secondly, as a consumer.
How bloody daft is that.
March 21, 2013
The public sector annual deficit is not coming down fast enough. We need asset sales (e.g. Lloyds, RBS) and to construct toll roads over the next 2 years. One project stands out: widen the M6 from the western end of the current M6 toll, all the way through Staffordshire, Cheshire and Lancashire, financing it by tolls.
March 21, 2013
M6 Toll (has-ed) financial problems: look at the accounts for Macquarie Roads. I don’t think trying to extend it is a solution.
reply The company says it is a long term venture so you need to look at cashflows across the long life of the franchsie
March 22, 2013
John, it is a reality. Not publishing the comment doesn’t hide it.
http://www.birminghampost.net/birmingham-business/birmingham-business-news/businesslatest/2013/01/25/m6-toll-records-lowest-ever-daily-average-65233-32676909/
Reply: I am not trying to hide anything. I have been very busy with the Budget and Cyprus. I have not had time to check out the story on the tollroad, which is an interesting topic. You have made various financial allegations about an commercial company, and I will need to devote some time to checking those and seeing if there is another side to the issue. This is not soemthing I have researched or written about myself, which is why it may take me time to get round to it, given all the more topical matters before us.
March 21, 2013
“construct toll roads”
Road users pay enough tax already thank you.
If you want to improve UK transport infrastructure then cut back on government waste, foreign aid, subsidised food and drink at Westminster, EU contributions, six bedroomed houses for people on welfare who spend £1000 on a parrot.
March 22, 2013
Bob
“Parrots”
How about horses, as recently reported.
Not a bad deal given the people do not work or even contribute to National Insurance, as even their contributions get credited.
How did it ever get this far ?
Madness.
March 21, 2013
I hope that was not a serious proposal. The M6 Toll Is making an operating profit but the usage is steadily dropping off . Its problem though is the (word left out ed) debt repayment charges that have pushed it to (substantial-ed) losses each year. (words left out- unproven assertion-ed) This is hardly encouraging for future such projects.
March 21, 2013
I’ve thought the M6 toll was a good idea. To add tolls to existing roads use the average speed camera devices to toll the fast two lanes and leave the slow lane free. No more CLODS!!!
March 22, 2013
Rich boys love tolls. They are the ones who flash their blue diode headlights, expecting you to move over, when you are waiting to overtake in the fast lane. I am the one who waits to overtake in my 15 years old diesel turbo and then accelerates to 85 producing a black cloud of carbon as I disappear.
March 22, 2013
No blue diodes on my motor. Nearly 15 years though. 5 litre V8. I just love the fact it winds up all the people I’m fed up with. It’s a second motor though, The fuel bill is outrageous but I’m doing my bit to balance all the lentil munching motors.
March 22, 2013
Mark W
I hadn’t thought of of that. Increasing the already high cost of motoring will keep poorer people off of the roads thus reducing congestion.
Great idea (as long as the government don’t bring in means testing and issue free toll road passes for those on welfare).
March 21, 2013
Dear Mr Redwood,
Some things never change. In the old days Treasury forecasts laughably always came out great at the end of the forecast period. Under the OBR, nothing has changed. Regardless of what happens today, growth, the fiscal balance (and now peak debt) come out rosy in the last year of the forecast.
I used to think it was wishful thinking but now realise that it is built into their equilibrium computer models. They always return to the assumed “trend”.
Now I see that this approach is going to be formalised for the Bank of England too. It does not matter what inflation is today so long as it is going to be 2 per cent in “the medium term” and it will always be 2 per cent in the medium term because that is what the model will come up with, not least because real oil and commodity prices are assumed to be stable.
In other words, there are two worlds. The one we live in and the one that equilibrium economic models project. The trouble is that the models give false policy signals.
In model world, the past five years have just been a disturbance following the crash and we just need to get back to where we were: massive personal borrowing, house price boom, the lot. In real world, we know that is untenable, as senseless as assuming that the British Empire will return to where it was 60 years ago.
PS: Enjoyed your reasoned supportive speech and also John Healey’s opposing one but Ed Milliband’s pre-written rant was the worst Budget reply I have ever heard, even though the usual standard is pretty low.
March 21, 2013
Your PS – agree with you.
Interesting isn’t it ? Imagine if Miliband had replied in a sombre but respectful tone (like John), making his criticism, but showing that he was concerned about the economy and the British people – his poll ratings would have zoomed up.
But they are stuck in this Ballsite yah-boo! mentality !!
The sight of the entire Labour benches shouting “down” with such evident glee, as Miliband screamed his economic list, was a frightful and deeply shameful thing.
These people want the country to founder, if it means they can get their soiled hands back on the levers of power.
March 21, 2013
They don’t deserve to ever govern again, but the sad fact is they will be back shortly. But looking at the state this lot are getting into, it’s as though they never left.
Cometh the hour cometh the man? Doesn’t look like it.
March 21, 2013
It does seem unwise to be deliberately stoking the property market again, and bailing out losers with zombie mortgages, when it was a hugely overvalued property market here and overseas combined with far too low interest rates that caused the current problems. Mr Osborne’s solution here is akin to giving an alcoholic some hair of the dog. In the short term it may make him feel better, but it is no fix in the long term. This seems to me to be a desperate strategy to try and inflate another property bubble by 2015 as an electoral ploy to make people think the the coalition have solved Britain’s problems, when all they will do at best is to delay the inevitable painful medicine that will have to be taken in the end.
The other major concern I have is the apparent carte blanche that is being handed over the Mr Carney and the BoE. When even Mervyn King is warning that the pound has dropped far enough it really is time to start worrying about what is going to happen to both Sterling and inflation. I’m still betting that Mr Carney is going to have to deal with a major Sterling crisis at an early stage in his term.
March 21, 2013
King says Sterling has “fallen far enough” after spending the previous six months talking the currency and economy down.
The first duty of a BoE governor is sound money.
Draw your own conclusions.
The mortgage guarantee scheme is time limited and relatively small beer.
It is in no way comparable to the sub-prime disaster.
We have a housing shortage.
If you believe in the market, housing is not “overvalued”.
We are not Spain/Ireland/USA with hundreds of thousands of empty, unsold and unwanted properties.
March 21, 2013
Mr Maynard – There are plenty of spare bedrooms in the UK.
It is the fragmentation of families and the trend towards single-living which is causing the ‘shortages’. There are also plenty of large houses with single old aged pensioners staying in them.
Not to mention entirely unecessary mass immigration.
March 22, 2013
I agree with you 100%, but these are reasons. Unfortunately there is still more demand than supply – a shortage.
March 21, 2013
You say the UK needs immediately to extend the useful lives of its coal burning power stations, but the Chancellor was silent on this matter in the Budget. Indeed the UK does. I think Osborne muttered something about a low carbon economy and some carbon capture projects, nuclear and shale gas. Carbon capture, just means much of he energy generated is wasted dealing with the carbon so very wasteful of energy and very expensive. There is simply no need for this, it is harmless tree and plant food stop believing the quack science and pushing it at our children and through the BBC.
The good thinks are the Enterprise Investment Scheme and Seed version. Good tax reliefs but rather complex and silly contrived rules to dance round.
The employer NI reductions but why on earth only from April 2014 it should have been from 2012.
The scheme to give people (what amounts merely to their stamp duty) back as a five year interest free loan sound but only for new houses – sounds contrived and complex. Why not get rid of stamp duty and ease planning and building regs, that would do far more good.
What is needed as we all know is:
Firing half the state sector, so many of them do little of any good anyway and many do positive harm.
Cheap non religious energy.
Sound competitive banking.
Lower tax rates and a simpler tax system and restore the IHT promise not rat on it.
Fewer payments to augment the feckless.
Start charging for the NHS and sort out the dis-functional mess that it is.
Get out of the undemocratic EU before they start robbing 10% off our bank deposits.
Easy hire and fire and fewer nonsense regulations all round.
Relax planning and speed it all up.
Cut public expenditure and waste in half.
Set a positive low tax vision not one of Miliband the Unison man in 2015.
The cut in Corporation tax to 20% is good but for 2015 after the Tories have gone! Why not now it should have been done in 2012.
To little and far, far too late. Even the NI reduction is still over a year off.
March 21, 2013
Well said. A good post melt-down plan once the smoke has cleared and the rubble has been swept up.
March 21, 2013
Carbon dioxide isn’t harmless and if more than 5% of the atmosphere (50,000 ppm) was CO2 it would result in the deaths every human. No I’m not thinking of Carbon Monoxide (CO), that’s fatal at 3,200 ppm (0.32% of the atmosphere).
March 22, 2013
uanime5: “Carbon dioxide isn’t harmless and if more than 5% of the atmosphere (50,000 ppm) was CO2 it would result in the deaths every human.”
What utter extruded stinking digested material you spout.
CO2 has been stable in a range for millions of years.
But …
The concentration of CO2 could reach 5% and as long as the O2, was 20% no one at all would die.
At 5% CO2 and 20% O2 we’d probably have bumper harvests and massive plant growth – all other things being equal.
March 22, 2013
APL even if the atmosphere was 95% Oxygen and 5% CO2 of everyone would still die because an atmosphere containing 5% CO2 is toxic to humans. High levels of Oxygen doesn’t protect people from high levels of toxic substances. If it did then you could prevent poison gas attacks by spraying Oxygen everywhere.
March 22, 2013
uanime5: “even if the atmosphere was 95% Oxygen”
unlikely to be a stable atmosphere given how reactive oxygen is.
uanime5: “an atmosphere containing 5% CO2 is toxic to humans.”
Since we have a difference of opinion, we need an experiment. I’ll volunteer as the control, you test out the atmosphere with 5% CO2
March 22, 2013
One of your more silly posts Uni, because every chemical element would become harmful if its percentage in the atmosphere grew to fantasy levels.
March 22, 2013
My post was to point out that lifelogic was wrong when he claims that CO2 was harmless.
Also since when has a 5% level been considered considered a fantasy level?
March 23, 2013
unanime–Even in the unlikely event you are right, and I’m afraid you do not have much credibility, 5% is an enormously high and far-off concentration on any basis–Wiki for instance gives its concentration as less than 400 rather than your 50,000 ppm so once again what on earth are you talking about? You should try and bring some perspective to what you say. I was once taught, and it is obviously true, that water is poisonous at high enough concentration but so what?
March 21, 2013
I agree about the Employer’s NI I thought it was a 2013/14 rebate!
Why can’t GO just say the mortgage finance help is only available to first time buyers and families moving up? Not for second/holiday homes? I too would have preferred a stamp duty holiday for first time buyers for the first band. These ill thought through schemes just take too much good news about raised personal allowances, corporation tax reductions, and fuel duty freezes off the news, completely removing the optimistic feel good factor we need.
March 21, 2013
Who are the feckless specifically. Name one group of individuals. You cannot answer can you? Putting half the state sector on the dole claiming benefits to be re hired through agencies and speaking of easy hire and fire yet again please tell us what you mean by this when there are many ways of easy hire and fire? Fired for pregnancy etc I think is what you mean. basically a dismantling of the state and anyone who is left behind to bad. However I don’t think they would see it that way. Is there no limit to your blind fantasy? Just thick is more like it.
March 21, 2013
Start a party, you got my vote
March 22, 2013
Seconded. A good post lifelogic.
March 23, 2013
Funny how these right wing fantasists always have names like ‘Excalibur’. Imagine talking to this gut down the pub about politics in between fanatical support of Top Gear, real ale and telling you about the bar maid.
Kill me now.
March 21, 2013
In the current system of government where everything hangs on the man at the top, Mr Cameron is obviously getting tired. He seems to be carrying on like Mr Blair, surrounded by people who make him go rushing round being the object of photo snaps, kicking footballs and so on. When he doesn’t turn up to the all night meeting over the press where Mr Letwin represented him, or when he doesn’t go to Rome for the Pope’s inauguration, people criticise him.
And he is missing opportunities now.
What we need is something really radical: a reform of the vast, incomprehensible tax system for a start. That might bring in a bit more. Then we need some radical reforms of the governmental system: simply abolishing a few Ministries would help: Media, Culture and Sport, for instance. Ministry of Justice, for instance. Radical Cut backs on the Welfare and the NHS are probably impossible, but perhaps necessary. EU projects like HS2, Gay Marriage and all the Directives do not help by making things simpler.
There must be a coming crisis, surely. Cyprus is bust for a start and this is menacing the EU. That could get really serious. So could bankrupt Britain.
I am worried. And the coming Labour government is certainly not going to help either.
March 21, 2013
But the next election will be won by whoever bribes the public with their own money the most. Sad but true. Any serious minded politician must merely fiddle while Rome burns.
March 21, 2013
A penny off of a pint of beer! Wow – who dreamt that one up? As for petrol well if the price goes up in Sterling terms the chancellor gets more VAT anyway.
The medicine isn’t working but there is no alternative was the message I got.
Attempts at stimulating house building will struggle due to the activities of Nimbys blocking developments down the the council.
I still advocate scrapping the Nimby planning laws – a real free market start that doesn’t cost the government money. Indeed the government would get extra tax revenues sooner.
March 21, 2013
Have I got this right? Down my way, a pint of beer costs £3.20, so a 1p reduction will make no noticeable difference to the punters – more likely it will be absorbed by the publican or the brewery. In the trade, they are celebrating, not the level of the reduction but the fact that the tax was not increased (by 3p or thereabouts).
If this is supposed to be a bribe for beer-drinkers’ votes, it should be a real winner – not! But it may keep a few pubs from closing.
March 21, 2013
In my local last night, I asked the landlord when the 1p was coming off my £3.75 pint. He said ‘I can’t be bothered with all the pennies in the change – every pint I sell I’m going to give that penny to charity’.
Has Osborne got an IQ above 100. Does he seriously think anyone in the country could care less about a penny off a pint. Is he serious? All for what, a little cheer from the Tory faithful in parliament. What have we come to?
March 24, 2013
If beer gets anymore expensive the pubs are going to have to drink it themselves and in London as far as I am concerned they do. 1p off a pint? what use is that to anyone? The tax lost would pay for a lot of things. If he is serious about the pub trade then he needs to cut the taxes on pub beer massively and crack down on cheap drink sold in pubs. Not much chance of that though due to political donations and lobbing from the drinks industry Who laughably blame the customers for pub closures. You cannot stop pub closures by hindering supermarkets in the same way you cannot stop piracy by copyright laws. You can’t force a person to buy your media or beer no more than you can prevent a person from downloading it or buying it from the supermarket. Faceless corporations don’t seem to know how to deal with customers on a personal level. Their robotic responses and automatic, conveyor-belt processing of clients is way too impersonal and interactions with these companies tend to be sterile affairs People have to want to buy media or beer and people have to want to support them.
March 21, 2013
What a deliciously ironic name for a government body. “The Office of Budget Responsibility”. A name that is so at odds with reality that I laugh every time I see it. Responsibility is something that is utterly unknown in British governments for more than 20 years. What is known is total irresponsibility. Our “leaders” have splashed money around like a drunken sailor in a house of ill repute for decades. They continue to do so. It’s not their money. They steal it from us in the form of taxes, artificially low interest rates, inflation, devaluation and debt. They impoverish us whilst warning that if they stop wasting immense fortunes everyday the economy will collapse and because most people do not know the first thing about money they are believed. Our “responsible” leaders make us poorer every single day and yet seem to believe their own propaganda that they are doing the right thing. If they are not outrageous liars and do believe it then they are fools and have no place leading a conga line let alone a country.
March 21, 2013
It is unfortunate that, perhaps to appease the LibDems, the Chancellor was drawn to putting more taxpayer’s money into carbon capture and storage. A process with little chance of meaningful success. However, it is encouraging that shale products are to be encouraged.
March 21, 2013
They should call it Oxygen Capture and Storage .
The Carbon would get sequestered under ground anyway in the fullness of time if left to vegetation .
When man gets involved the oxygen gets sequestered underground too . How second rate .
(fossil fuels are carbon neutral in the long term so long as the carbon is sequestered by vegetation)
March 21, 2013
Early commentators here have identified the potential folly and dangers of making the taxpayer take the risk for mortgage deposits. The policy hasn’t even been thought through(no change there) as Osborne showed on the ‘Today’ programme this morning. Osborne has no idea what to do and never did have from day one as you pointed out to us in 2010. He is relying on the Bank of England to sort out the problems. God knows what that will do to inflation. Last night’s Paxman interview with Danny Alexander would have been hilarious if it weren’t so important and tragic. Alexander admitted that they were formalising the unauthorised policy of the MPC to ignore the inflation target whilst keeping the same target. I saw nothing in the budget or even any recognition of the plight of savers had been considered. Clearly, just like the EU but in a different way, you regard their money as yours and they are considered less important than those who spend everything and more besides – just like the government itself. Further proof that your party isn’t worth voting for along with Labour and the Lib Dems.
March 21, 2013
Spot on. UKIP it is then.
March 21, 2013
“Alexander admitted that they were formalising the unauthorised policy of the MPC to ignore the inflation target whilst keeping the same target.”
That policy of ignoring the inflation target has been implicity authorised by two successive Chancellors through their replies to the Open Letters sent by the Governor, which can be read here:
http://www.bankofengland.co.uk/monetarypolicy/Pages/inflation.aspx
Never a hint of rebuke; never an insistence that the Chancellor has given the Bank a target and he expects it to be met; just “I note”, and “I agree with you”, and basically “OK, carry on”.
The problem is that Parliament has NOT authorised that policy, which is plainly contrary to Section 11 of its Bank of England Act 1998:
http://www.legislation.gov.uk/ukpga/1998/11/section/11
“11 Objectives.
In relation to monetary policy, the objectives of the Bank of England shall be –
(a) to maintain price stability, and
(b) subject to that, to support the economic policy of Her Majesty’s Government, including its objectives for growth and employment.”
And nor has Parliament ever given the Chancellor the power to authorise that policy, even though he could ask for that power through Section 19 of the Act on “reserve powers” which says:
“(7) While an order under this section has effect, section 11 shall not have effect.”
March 21, 2013
“The budget in itself is modestly positive for the economy. The numbers involved in the tax reductions are small, reflecting the Chancellor’s limited scope to offer changes given the poor overall fiscal arithmetic.”
The scope may be limited, but only by the Chancellor’s limited vision. Great to be cutting corporation tax and giving NI holidays to small businesses, but if this vision of less government is good, why not extend it? Why risk hyperinflation by encouraging the BoE to print more money? Or stoking up house prices when apparently there aren’t enough homes to go round?
Truly, an opportunity missed.
March 21, 2013
Green subsidies and energy policy are a chance for a clear blue line at the next election. Increasing numbers of people reject global warming theory in the light of the actual evidence, including many scientists hitherto in the alarmist camp. Conservatives should campaign on a repeal of the climate change act, and end to renewable subsidies and an end to measures such as the climate change levy and higher fuel duties. Instead there should be a real focus on freeing up restructions on the development of shale gas. Should be a winner.
March 21, 2013
If there was actual evidence that climate change was wrong then the denier would be using it to make their case, rather than their usual rubbish which is instantly debunked by scientists.
Also just because people don’t like climate change, evolution, or a heliocentricism doesn’t make any of them wrong.
March 22, 2013
Uni
Go and have a look at the temperature graphs on the websites of the hadley centre and met office for years since 2000
No rises
And you warmaholics were predicting runaway rises
Oh dear
March 22, 2013
Go have a look at the data on websites that are written by scientists, rather than cranks. You’ll find that on average it has been rising since 2000.
March 23, 2013
Wow Uni,
The renowned and highly respected Met Office and Hadley Centre both denounced as cranks
You read it on here first!
March 22, 2013
What on earth has your fantasy religion of climate change got to do with evolution and plantery orbits. (Knock it off with the school words, it’s not that clever in the google age).
March 22, 2013
If you had bothered to read my post, rather than just pick random words out of it, you’d understand that my point was that just because someone people don’t like the results of scientific studies doesn’t make these studies wrong.
So just because you don’t like that climate change has been repeatedly proven to exist doesn’t make it wrong.
March 23, 2013
@uanime5
Who has denied that climate change exists?
The climate has been changing dramatically since the Earth was first formed, well before the existence of mankind.
Excuses to tax people is however a more recent phenomena.
March 23, 2013
@uanime5
Have you seen this?
http://www.independent.co.uk/environment/snowfalls-are-now-just-a-thing-of-the-past-724017.html
March 23, 2013
Uni
“Climate change has repeatedly been proved to exist” is an even more nonsensical statement than your usual “climate change is real”
Yes we all know the climate changes.
We live on the same planet as you.
March 22, 2013
Your vituperative response contains no arguments or evidence. It is a fact that there has been no warming for 17 years. It appears that the IPCC’s 1990 projection of c. 0.3C warming per decade is a gross exaggeration, with 0.1C being nearer the mark. This is why many scientists, and much of the general public, believe that – contrary to the hysterical pronouncements of alarmists – mankind has many decades more, perhaps centuries, to seek alternative fuel sources. Accordingly it is rational to re-vsit the growth and prosperity destroying green legislation. Long may the Left stick with your hysteria, it is a vote loser as it is not supported by the evidence.
March 22, 2013
It is not a fact that there has been no warming for 17 years, you’re just repeating that denier lie because you haven’t bothered to get any information from reputable sources.
Just because the planet is warming slower than some people predicted doesn’t change the fact that it is warming.
Humanity doesn’t have centuries to look for alternative fuel supplies due to the high rate it these fuels are being consumed at. The sooner humanity develops alternative fuel supplies the better.
In conclusion the only thing not supported by evidence are your claims that global warming isn’t happening.
March 23, 2013
It is widely acknowledged by numerous sources that warming has not progressed as forecast by the climate models for 16/17 years. You are in denial of this, showing that you derive your comments on this issue not from scientific literature but from political polemicists. The facts are that the climate models upon which green legislation is based forecast much faster warming and catastrophic events which have not in fact been experienced. Your frequent assertions that there are no scientists and no research which recognize this are untrue.
March 23, 2013
Uni,If you go onto the Met Office website and then use their link to the Hadley Centre and look at the graphs for global average temperatures from 1850 to 2013 they show no warming since 2000.
March 21, 2013
The new housing subsidy policy is absurd, its astonishing to hear a Conservative chancellor who has grown up under Margaret Thatcher announce such a piece of nonsense. Its a sort of Fannie Mae / Freddie Mac for the UK – one of the main causes of the sub-prime crisis. Danny Alexander, interviewed after the budget, was completely unable to say what happens if there a house price collapse. Answer: big losses for the taxpayer of course. Mr Osborne was surely wrong therefore to say in the budget that this was balance sheet neutral – proper accounting would recognise the assumption of a huge open-ended liability.
March 21, 2013
Yes, they are a shower. A blatant political move to try and falsely give an impression of activity in the next two years. All they can do is debt, what is it with these people? They are not Conservatives at all.
zorro
March 21, 2013
So, the government will invest in housing. At a time when house prices are massively subsidised by extremely low interest rates, the market will be further manipualated. House prices should be at least 20% lower than the currently are. The markets will not be kind when the real correction takes place. The government WILL lose the money. There’s a mighty judgement coming…..
March 21, 2013
Small correction – TAXPAYERS will lost the money.
March 21, 2013
Why doesn’t the government accept that it has no more control over the economy than it does over the climate? All it is doing is waving its arms around to give the impression of activity, whilst just making the lives of its citizens worse.
Why continue with the OBR, when this quango is no better than the others and cannot get even its basic sums right? I accept that forecasting is very difficult but the OBR is making the government look even worse than it is.
I still believe that the Conservative Party is by far the best of the parties in Parliament but Cameron has made so many enemies, who now include the right of centre Press, and is so weak when confronting them, that we have to accept that we are very likely to have a left-wing government in 2015. That this will be a disaster is an easy forecast to make.
It is time to batten down the hatches and put your money in a box under the bed.
March 21, 2013
I’m forced to the conclusion that the Conservatives do not want to win the next general election. They are doing nothing to fix the economy, just continually pushing problems into the future. The “Help To Buy” scheme is a transparent attempt to bring back subprime and blow more hot air into the debt bubble. If Osborne had burst the bubble immediately on taking office in 2010 it would be done, dusted and forgotten now and we would be growing the economy from a lower but solid base.
The plan seems to be: do the bare minimum to keep the show on the road until 2015 then hand over to Labour and let them take the blame when the wheels fall off! (Actually this isn’t such a bad plan, politically speaking.)
March 21, 2013
Perhaps you could be kind enough to lend Osborne your (or Farage’s) magic wand ?
March 23, 2013
@John Maynard
It has nothing to do with magic, just common sense.
Pumping taxpayers money into an already overpriced market will just make the problem worse.
Do you know what the stamp duty amount is for a £600,000 house?
The government need to take less and do less.
March 21, 2013
Not impressed. With this following press regulation (sadly many of your peers backed it) I don’t think I can vote conservative in 2015.
One or two measures were welcome but it was mainly Brown like tinkering and numbers fiddling. What are we doing ignoring inflation and giving Carney even more freedom than Mervyn enjoyed. People need sound money that is not continually inflating away their living standards. Surely someone in the treasury realises the severity of the inflation of recent years and its impact on the economy.
As for state backed mortgages – is this for real?! The issue is prices being way too high, due to various things including a lack of supply and low interest rates for years (glad to see Carney followed in this fine tradition of housing booms in Canada). So instead of addressing the fundamental issue of houses being absurdly higher than wages we try and push prices ever higher. Nice
I appreciate that you advocate rather different policy in this blog regularly, but Osborne and Alexander don’t have a clue what they are doing.
March 21, 2013
To borrow two over used expressions, the budget looks like Mr Micawber rearranging the deck chairs on the Titanic.
There was little of substance, except for laying the foundations for a UK variant of the sub-prime crisis. And why should we believe the latest OBR forecasts? Is the Chancellor expecting to lose the next general election and in this budget digging as deep a hole as possible for his successor? More and more it looks like an election to lose.
March 21, 2013
Funding for lending should bypass the banks and go to peer to peer lending. Stuff like Zopa and Fnding Circle. The banks are a failed old model.
March 21, 2013
The sun is setting on an once great kingdom and as the plane lands from Canada, figures are seen kneeling on the runway.
Mark Carney: I am NOT the Messiah!
George Osborne: I say you are Lord, and I should know. I’ve followed a few.
Mark: I’m not the Messiah! Will you please listen? I am not the Messiah, do you understand? Honestly!
Danny: Only the true Messiah denies His divinity.
Mark: What? Well, what sort of chance does that give me? All right! I am the Messiah!
Con-Dems: He is! He is the Messiah!
Mark: Now, (push-ed) off!
[silence]
George: How shall we (push-ed) off, O Lord?
March 21, 2013
We should be grateful that Osbo’ did not attempt to remove more spending power from the economy. Keeping the deficit constant by various accounting tricks, will hopefully stop the economy sliding into a triple dip recession, but the odds will be better any race day at Sandown Park.
I think the Treasury has finally understood the sectoral balance equation, that is; (S – I) = (G – T) + (X – M). The three balances have to sum to zero as a matter of national accounting. The sectoral balances derived are: The private domestic balance (S – I) – positive if in surplus (overall private spending is less than income), negative if in deficit (overall private spending more than income). The Budget Deficit (G – T) – negative if in surplus, positive if in deficit. The Current Account balance (X – M), positive if in surplus, negative if in deficit.
Our export surge has yet to happen, even with a sinking currency, so X minus M is still 2 % negative. Household and SMEs are in debt and are saving circa 7% of income; they are spending less than they earn so, S – I is positive. Basically, this means the government Treasury has to run a budget deficit of around £120 billion to fund both of these; which it currently is.
Hopefully by now, you will have learnt that the government hands out tokens, which it prints itself, and it calls Pounds Sterling. Until the government hands these out in exchange for goods and services, you will not be able to pay your taxes or buy any of its IOUs that pay you a subsidy, called interest, for holding them. They won’t let you pay with any other currency, so you have to get some Pounds. Otherwise, we could all use US dollars and tell the government to stick its Pounds.
So, if nobody in the private sector is spending money, the government has to run a budget deficit just to pay for the imports to start with. All them foreigners end up with big BoE bank accounts full of Pounds which they convert to mansions in Chelsea or interest bearing IOUs.
Osbo is going to part nationalise the housing sector, just like the US did with Fannie Mae and similar government agencies. This means a bank can start a mortgage with someone who can’t afford the payments; securitise it, and flog it to some dummy as a collateralised debt obligation (CDO) or similar security. Sub-Prime all over again, whoopee!
Osbo is ideologically constrained to the private sector and free market competition. Nothing wrong with that but; you have to be able to recognise how much competition is too much competition. Likewise, he fails to recognise that to kickstart the housing industry he should have said we will build 100,000 council houses for rent; get your bids in lads; payment is guaranteed from the Treasury. Stick the bill for it on the budget deficit. We will worry about the national debt in the next decade not this one. We are a sovereign nation with our own currency. Mervin King can crucify any Bond market vigilante, out of the park, any time he wants.
March 21, 2013
What did Margret Thatcher say, I learnt this at A-Level ‘You can not buck the market’.
Pity Osborne didn’t. He is trying to get growth by re-inflating a real estate bubble. Won’t work.
It will all end in tears.
March 21, 2013
Isn’t the Chancellor doing exactly what Bill Clinton did a number of years ago? Clinton, for socio-political reasons, made it possible for many Americans to obtain mortgages despite the fact that, in reality, they were unable to service them. When, as was to be expected, they defaulted on repayments, the whole financial problem was triggered. What happens here when interest rates finally start to rise and mortgagees are unable to fund their repayments?
March 21, 2013
Peter Oborne, writing in the Telegraph, seems to have (unfortunately) summed things up quite nicely:
March 21, 2013
If we cast our minds back to 2010, most pundits considered that we were on a growth recovery path and the deficit/debt was the main issue. The “growth” in 2010 proved to be a deceptive “dead cat bounce”.
This was before the Euro crisis wrecked global confidence (and British chances for short-term gains from trade).
The OBR forecasts were over optimistic and a poor assessment of the economic situation.
It is taking a long time to build growth momentum in the economy (with regular blows to business and consumer confidence from the Eurozone and our obsessively negative media).
However, things are slowly improving.
To be fair to the OBR, their latest forecasts look a tad pessimistic/conservative, and they are clear that all of these estimates are very uncertain – then again, you need some sort of forecasts for planning purposes.
The media ALWAYS treat forecasts as facts.
It is a race against time to try to prevent a befuddled and confused electorate returning a potentially disastrous (in the true sense of that word) Balls/Miliband regime.
God help us.
March 21, 2013
Economic Freedom + Cheap Enmergy = Fast growth
We have limited freedom and a policical class (all 3 of what the state propganmda broadcaster calls “the main parties”) intent on deliberately making electricity fra more expensive and intermittent.
The only surprising thing is that we are not in deeper recession.
Even the sclerotic USSR could manage 10% annual growth in the 1930s when it had 23% annual growth in electricity supply.
We could be out of recession and into growth rates far surpassing that any time those in charge stopped preventinmg it.
March 21, 2013
The USSR achieved high growth in the late 1920’s and early 1930’s by forcing workers to work for 16-18 hours a day and threatening them with execution for being late to work. It has nothing to do with cheap energy or very little to do with producing more energy.
March 22, 2013
Uni,
Thought this was the workers paradise you socialists believed in.
Still as Big Brother said “work makes you free”.
Of course the USSR wasn’t proper socialism, it was communism.
Subtle difference.
March 22, 2013
I’ve just picked myself up off the floor. You’ve just criticised a socialist state. You’ll figure what is wrong with a 45p tax rate soon.
March 22, 2013
Your inability to distinguish between communism, socialism, and the USSR shows you have no idea what you’re talking about.
Also I know what’s wrong with the 45p tax rate; it’s too low.
March 24, 2013
uanime5: “Your inability to distinguish between communism, socialism, and the USSR .. ”
Socialism is but the first step to communism, both are ideologies.
The USSR was a geographical area of the globe, the totalitarian regime there used communism to murder and maim it’s inhabitants.
March 22, 2013
Uan assumes that slave labour is an efficient economic system. Typical of socialists.
Any knowledge of either history or economics would have shown him otherwise.
The USSR growth in that period was not because of prefering slavery to free markets but despite it.
March 22, 2013
History and economics have shown that slave labour has always been part of an efficient economic system, especially for slave owners who reap all the benefits of the slave’s labour at almost no cost to themselves.
That’s why the DWP’s recent Workfare scheme was popular with employers because it gave them free employees that they could use instead of employees they’d have to pay minimum wage. If slavery was economically bad then employers would have opposed Workfare and demanded that the “participants” should be paid minimum wage.
March 23, 2013
@uanime5
Able bodied people should not be paid for doing nothing. Getting some work experience in a commercial organisation is no bad thing, as it could lead on to permanent employment for those with the right attitude. But for those who conscientiously object to working in the private sector there should be an option to undertake public sector jobs such as street and sewer cleaning.
March 23, 2013
Scratch a socialist and one finds a supporter of slavery.
Ignoring the evil of that it is simply a fact of history that free societies outcompete slave ones. The Northern and Southern USA as much as Uan’s beloved North Korea proves that.
His second para is, of course, the normal socialist/totalitarian/fascist doublespeak, trying to graft the word slavery onto something which no person with the remotest trace of honesty could ever equate to it.
If I am wrong in that Uan you could provide evidence of some person with a trace of honesty who has ever said “workfare” and “slavery” are synonyms.
March 23, 2013
You need to buy another history book Uni, the one you’ve got is written by a crank.
March 22, 2013
Nearly right: it achieved the growth by first trashing the economy entirely, so its output was halved. That also resulted in extensive famine and death.
March 21, 2013
“The Chancellor has promised to remove the carbon levy from the big energy using businesses, for fear of losing them from the UK if he perseveres with it.”
So that’s one step in admitting they have a problem with energy –
– Why not just accept that the whole idea is flawed, windmills are not going to solve our energy issues because we cant store the energy.
– Cutting down trees in the USA and sending them on a boat to the UK to be burnt in Drax isn’t going to stop carbon emissions .
And simply ignore the discredited EU and keep ALL our power stations running until they have built enough Nuclear capacity to keep the lights on and bring energy prices down.
March 22, 2013
Re. keeping coal power stations open.
How the EU Works.
It is interesting to note that the figures from the DECC book, Sustainable Energy.. show that, even before they decided to close nuclear, their greenhouse gas conversion factor was higher than ours. This figure is given in grams of co2 per kilowatt hour of electricity and is the one used to work out how much co2 electric cars produce when supplied by the grid. In the UK efficient electric cars(not big ones) produce about the same as an efficient diesel car. The figures show-
France 83
Sweden 87
Austria 250
EU av 353
Spain 408
UK 580
Germany 601
USA 613
Netherlands 652
Italy 667
Ireland 784
Greece 864
Denmark ! 881
Germany, with all their Green Party enthusiasm for PV and wind, actually had higher carbon electricity than the UK, and Denmark the great windmill economy was 2.5x average EU. Yet a few years later, we are forced to close our coal stations or burn american trees, while Germany can build new coal stations. The only countries where electric cars work are France and Sweden.
March 21, 2013
So the government stayed with their planned spending plans whilst the income shrunk. If I was a borrower from a bank and, I ran my finances in this way, I would expect them to call the loan, and pretty quickly.
Until this government cease silly headline grabbing efforts to “stimulate” the economy and start looking more deeply at what causes economic growth (not consumption) then the slide will continue until the bank manager says no more.
March 21, 2013
So, if I manage to drink 100 pints of beer per week, I shall be £1 better off.
Thanks chancellor !
March 23, 2013
@HJBbradders
” I shall be £1 better off”
If a pint of beer costs £3, you would be £300 worse off.
March 21, 2013
So, Mr. Redwood, you are happy with the government using taxpayers’ money to underwrite people borrowing money. When, precisely, did it become the government’s job to underwrite mortgages.
I am keeping a restrained tone here but I am, in fact, furious.
New Labour, like the Tory government before them, allowed a massive increase in consumer debt to feed into the housing market. The Tory government of the 1980s had its own house price boom and bust – leading to recession and a stagnant economy for much of the first half of the 1990s.
But, New Labour took this a step further, and allowed house prices to increase by a factor of 3 to 6, depending on region.
Following the credit crunch, 300 year low interest rates have been used to rob savers and attempt to prop up a MASSIVELY overvalued housing market. My young adult sons are completely and utterly priced out of the housing market and, unless they end up earning 3 or 4 times average wages, have no chance of buying their own home at some point.
Now, your lot have decided that you must do even more to try to ‘stimulate’ and already massively over-valued housing market. I do hope that, at some point, young people wake up to the extent to which they are being shafted and revolt.
March 21, 2013
“When, precisely, did it become the government’s job to underwrite mortgages.”
Good question .
I’d also ask when it became the government’s job to fight a naturally declining population by importing people en mass .
If the scheme is only for new builds then perhaps Mr Osbrown’s plan will increase the housing stock .
I’d like to have seen some stick to go with the carrot . Say a land value tax to discourage hoarding of land and laws to reserve the right to ownership of houses in the bottom 9 deciles for British Citizens .
March 21, 2013
In order to avoid repetition my views are repeatedly reflected in the rubbishing comments already made. So our wonder Chancellor is encouraging young home buyers to take out 95% mortgages, well at least it is’nt 120%. Has nothing been learned in the last decade about over leveraged credit?
March 21, 2013
The government estimates that the 50p tax rate has lost the Exchequer £7bn a year as a result of very high earners leaving the country.
Where exactly did these people go and how did they take their jobs with them? Remember if person left but the job remained in the UK then someone else would have worked in it and paid the same amount of tax.
Petrol and beer duty area protected from further rises, and 1p is taken off beer duty per pint.
I doubt that the 1p reduction in the price of beer and keeping duty on petrol the same will have a major effect on the economy as high inflation and low wage increases will wipe out any savings.
The Chancellor says he will improve and extend the Funding for Lending Scheme, as well as introducing his plans to help people buy new homes on mortgage.
Oddly the lack of clarity regarding this scheme means that millionaires could use it as a subsidy for buying second homes. The rules need to be tightened to prevent such abuses.
http://www.telegraph.co.uk/finance/budget/9945426/Budget-2013-second-home-buyers-could-get-state-aid-for-mortgages.html
The UK needs immediately to extend the useful lives of its coal burning power stations, but the Chancellor was silent on this matter in the Budget.
Unless the Government is prepared to pay to have these power stations upgraded so they meet EU standards it won’t be possible to keep using them.
In other news several free-apps aimed at children allow them to buy additional game items using real money. The result being that some children have been spending thousands of pounds on these items without realising what they’ve done. Perhaps this is an area that the Government could introduce some more regulation so that the next wave of children’s games aren’t designed to charge people as much as possible.
http://www.independent.co.uk/life-style/gadgets-and-tech/features/freemium-apps-how-to-avoid-being-stuffed-by-digital-gems-8542968.html
Reply High earners took their jobs and skills to places like Hong Kong, Shanghai, and Zurich.
March 22, 2013
How exactly did they move these jobs? Wouldn’t it be hard to be a manager or an executive if all your staff are in another country or another time zone?
March 23, 2013
@uanime5
“How exactly did they move these jobs? Wouldn’t it be hard to be a manager or an executive if all your staff are in another country or another time zone?”
Spoken like a true public sector worker!
March 21, 2013
The mathematical proof of everyone’s gut instinct that the petrol/diesel tax hits the poorest the hardest and is thereby bad for the economy.
Given 80p out of every £1.40 / litre of petrol is tax this means the tax on 60p is now 133%. Put another way, 80p out of £1-40 is a tax rate of 57%.
Someone on average earnings of £26K p.a. (“Mr £26K p.a.”) will be paying tax and NI of £5,788, making an effective combined average tax rate of 22% on his £26K.
Meanwhile, someone on ten times the average, £260K (“Mr £260K p.a.”) will have paid an effective tax rate of 43% – and that’s after having had his 5% reduction on 110K and being 5.5K better off.
This means that for Mr £26K p.a. any spending on petrol is being taxed at an eye watering 79% – and there was me thinking that it was only the rich who socialists thought should be taxed until the pips squeak!
Any purchase made by Mr £260K p.a. costs him only a tenth of Mr £26K p.a. in terms of what it represents as a percentage of gross earnings, and thus the fuel duty is likewise also only a tenth. Therefore the effective tax rate on the same £’s and pence spent on fuel for Mr £260 p.a. is 43% + 5.7% = 49%.
So the current exorbitant fuel duty means that the rich man is paying 30% less tax than the poor man.
Were petrol duty to be reduced by 17% (i.e. 24p off £1-40) to 20% VAT + a further 20% into general taxation i.e. 40%, Mr £26K p.a. would still be paying 62% tax rate on his petrol money which is very often required just to get to work, while Mr £260K p.a. would be paying 47%. But, at least the gap between the effective higher tax rate for Mr £26K p.a. compared with Mr £260K p.a. would be halved to 15%.
I have shown mathematically what we have all sensed: i.e. that high fuel duty has a far more devastating effect on the welfare and spending power of the poor than on the rich.
George Osborne ought to ask himself why it is fair to give the richest a tax cut from 50% to 45% while expecting the poor man to pay 30% higher rate of income tax as a proportion of his total earnings because the continued inflated petrol and diesel fuel duty. He now needs to carefully consider my calculations above and move towards not only holding fuel duty but making a substantial reduction.
Finally, in answer to “Well OK, what spending would you cut?”, let me make an analogy. If in the days before satnav you went on a long unfamiliar journey and got lost, you had two choices: either make a new route from where you are, or retrace your steps to where you went wrong and continue on the original route. By the same token, any additional spending and measures introduced since 1997 should be obliterated to get us back to a balanced budget, be that in the NHS or anywhere.
Reply: Of course a duty like fuel duty hits those on lower incoems more proportionately, just as the majority of Income Tax is paid by those on high incomes. (Top 1% of incomes attract 26% of the tax)
March 21, 2013
It is senseless to encourage more debt when you are up to your neck in it ; the budget got it all wrong . Aspiring to achieve something implies you know what you want and you know where you are coming from ; I cannot see the logic of offering to expose taxpayers when individuals do not have enough to secure a deposit . Property prices will rise again as the result of this stupid decision making it even more difficult for house seekers to get started .
March 21, 2013
I was watching the budget debate on the box and a figure of predicted growth of 1.8% was flashed on the screen . Where did this come from ?
Being medically orientated , I analogise usually in physiological terms, hence.. If a man is slowly bleeding internally , and i try and patch him up with drugs then I borrow some blood from someone else , which immediately corrects the situation and he is able to carry sufficient oxygen for a short while, BUT he continues bleeding and the same thing happens again and again until there is no further resource and the source of the problem is not addressed , then he will die: he will become bankrupt of all capacity to carry lifes oxygen . Does it ring a fiscal bell?
March 21, 2013
Is there any chance of you showing us your own Budget proposals. A DIY JR Budget for instance? Or is that to be disloyal?
The Funding for Lending proposals reek of recycling the Sub-Prime Mortgage facility in the USA. And we all know how well that went. Is it not a very dangerous way to “invest” in the future? Piling more debt upon old debt, won’t buy us out of recession.
As Jim Callaghan famously stated, ‘you cannot spend your way out of a recession’.
It is a pity that our youthful Tory leaders cannot take the advice of an Elder, more experienced, Socialist for once.
March 21, 2013
Shocked
Mr Osbourne intends to loan deposits to enable people who can’t save to borrow the balance from a bank to buy a house.
Has he heard about sub-prime?
Mortgages and houses tie up disposable income reducing consumer spending.
Interest at current rates this might just be feasible but what happen when they rise and we all know they will.
Government sponsored disaster.
If you can’t save a 5% deposit and pay a mortgage at a least 6-8% don’t buy a house.
March 21, 2013
House prices will rocket.
Interests rates will eventually rise.
House prices will plummet.
Sub-prime.
Evictions
March 21, 2013
Good Budget – all things considered.
Best moment of the Budget ? – Hoyle ‘ticking off’ Balls !
Question. Even in times of ‘choppy waters’, while keeping our ‘head above water’ – you can still ‘rearrange the deck chairs’ – could GGOO not be more radical ?
Abolish a few more taxes – perhaps raise a few to compensate – just simplify, please !
March 21, 2013
John,
What is your opinion on the wisdom of the budget policy on housing?
zorro
March 21, 2013
So we’re going to get tax-payers money used to help first-time buyers (if they can get a new house). This could drive property prices up, in which case first time buyers will not be helped at all, or if house prices drop the tax payer will pay for those who default. Nice for the banks who caused this mess in the first place.
Tax payers money will also be used to help with childcare so that childcare companys can put up prices and pocket our taxes. Those on a single income over 50k have lost child benefit, while others on higher joint incomes keep theirs. Now those earning 150k will get childcare subsidies!
Tax-payers money will line the pockets of childcare company executives, energy company executives, private landlords, directors of healthcare companys and train company executives. Not only do we pay our taxes to benefit these people but the cost of these services goes up faster than our pay.
People on here winge about waste in the public sector (fair comment in some instances) but I’d rather that than see hard-earned money used as benefits for the very rich who continue to profiteer.
Meanwhile wages and salaries are falling and all sections of society apart from the richest are getting poorer. Houses are becoming less and less affordable to buy or rent for ordinary working people. Some people will become so poor there could be shocking consequences, the sorts of things we shouldn’t see in a so-called civilised society. The rich are getting a 5% tax cut though. Eventually, most will not be able to afford anything but essentials and it will be a waste of time running a business except in the black market.
March 21, 2013
Back on houses, I have just watched Channel 4 News and could cry. Some admittedly pleasant looking young fellow but not yet finished his degree (!) is over the moon that he will now be able to get on the ladder (Why that should be an objective for the Government I have no idea). He obviously hadn’t given a moment’s consideration to the possibility that house prices might go down instead of up (so he had better stay away from swaps). Moving away from this particular young man, the programme correctly pointed out that even if this scheme works, it will only do so at the price of houses going up (because supply of houses is constant in the short term) which is the last thing the market needs especially as the root of all evil at present is that houses are still way too high (so expected to fall which is why banks aren’t keen to lend) from the last boom. Was it too much to ask that Cameron and Osborne might see the glaring similarities with Clinton and sub-prime lending in the States (If anybody doesn’t know, Clinton forced the banks to lend to borrowers not up to standard–hence “sub-prime”)? And that’s without touching on the Government’s clearly, just for a change (again), not having thought this through. They have once more been caught flatfooted, presenting a gift to Balls and making even him look good, on some really basic questions which they do not seem to have anticipated at all, obvious though they have been, so simply did not, indeed still do not, know how to field. Talk about nil desperandum. What a shower. They don’t even have a wing and a prayer. Meanwhile, best I gather, they have simply given up on spending less, the only thing that matters, and till that happens all this froth is a waste of time.
March 21, 2013
Having looked at the budget Red Book I see there are some very optimistic projections for tax revenues. CGT to double by the end of the forecast period, SDLT almost double (is that a forecast of the house price boom?), 40-50% increases in revenues from SA income tax, IHT, Air Passenger Duty (with no extra airport capacity) and wine duty. The only one that seems plausible is the wine duty as the champagne socialists celebrate an ever wider deficit.
March 21, 2013
On the raising to 10k of the tax threshold. I would like the government target be to tie it to the minimum wage for a 37 1/2 hour week. The link would discourage vote buying by a future administration since raising employers costs will impact on tax revenues, and in any event it is an unreasonable position to argue that someone earning a wage the state considers a minimum should have some of it seized by the treasury.
March 22, 2013
Sorry to bang on about this, but Gas supplies again:
“http://uk.reuters.com/article/2013/03/21/uk-britain-gas-supply-crisis-idUKBRE92K0T120130321”
Crisis word again. Fear of blackouts re-stoked. This cold spell is liable to last through April. We are about 4 to 5 degrees Celsius below average. According to that Reuters report, Centrica are beginning to impose “withdrawal” limitations. That sounds like rationing to me.
March 22, 2013
The table of carbon intensity of electrity production sent earlier is on p335- Quick Reference- of Sustainable Energy… available on the DECC website.
This shows Germany higher than the UK and Denmark the highest rate. This despite their high use of PV and wind. But Germany is allowed to build new coal.
March 23, 2013
The Coalition’s first two years in office established a crude fiscal elasticity of sorts: if you cut the deficit by £20 billion per annum, you reduce real GDP growth by 2% per annum, from the previous long term growth rate of 2%, established over a 30 year period, to zero. The government could have carried on doing that for another 3 years, reducing the annual deficit to about £60 billion per annum (bordering on the respectable) but it has chosen not to. The opportunity has been wasted. Instead, in years 3 and 4 of this government, fiscal consolidation is going to be limited to the effect of inflation – £120 billion two years hence will be about 6% less than £120 billion now.
The Government and the Bank of England are in the meantime continuing with their policy of ultra-cheap money plus QE, leading to above target inflation. Where is the evidence – whether theoretical or practical – that this produces REAL GDP growth? This is certainly a question for the likes of uanime5 and Bazman. But it is also a question for John Redwood, because his Government continues to believe this nonsense and expects Mr Redood to vote for it.
March 24, 2013
On the contrary, the government does not expect Mr Redwood to vote for it because MPs are not being allowed to vote on any of it – the inflation target, what action to take in the event of a failure to meet the inflation target, the creation of vast sums of new money, how that money is to be used – and MPs including Mr Redwood have not yet got to the point of insisting that they must make these decisions rather than just being informed by the Chancellor of decisions he has already taken and transmitted to the Governor by letters.
March 24, 2013
What makes you think I support QE? You would have to produce a lot of money to do any good and their would be some sort of bounce back. High interest rate will be next thing and anyone close to the edge will be well and truly pushed off then.