Inflation at 1% – what does that do to the “cost of living crisis”

When Labour launched their cost of living campaign fuel and energy prices were higher than today. A price freeze on energy was one of their main demands. They also wanted to see an end to prices rising faster than wages, something which happened on a grand scale in their last two years in office.

This week’s figures show inflation down to 1% and likely to fall further. Private sector pay has been going up by 2%. Fuel prices are down by 5.9% so far, with clear signs that the lower oil price will now lead to lower prices at the pumps for petrol and diesel. Retail sales were up 6.4% in volume terms in November for the last year, an impressive rate of growth.

The employment figures were also good. Unemployment is now down by 552,000 since May 2010. The economy has created 1.75m new jobs over that time period. Labour predicted rising unemployment and widespread job losses, something they had created in 2007-9.

Of course what we need are yet more jobs to cut unemployment further. We need more better paid jobs, for people to gain promotion and have a sense of progression in their work lives. We need many more months of pay outstripping prices. It is however welcome news that the UK has a relatively high rate of growth, that this is creating many more employment opportunities, and that the real value of average pay is on the rise.

Just as Labour’s forecast of another recession was wide of the mark, just as their forecasts of rising unemployment were wrong, it looks as if their cost of living crisis to be remedied by an energy price freeze is also being overtaken by the real world. It is much better that oil, gas and motor fuel are falling in price so consumers have more money left over for other items.

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  1. Leslie Singleton
    Posted December 18, 2014 at 5:56 am | Permalink

    Haven’t heard much from Salmond on the joys of lower oil prices and therefore production. “It’s our oil” only seems to apply when things are going swimmingly. The panic and the vows were unnecessary and yet another irreversible misjudgement.

    • Richard1
      Posted December 18, 2014 at 11:01 am | Permalink

      its amazing Salmond and Sturgeon & Co arn’t challenged on this. The whole Scottish nationalist pitch the last 30 years has rested on the (nonsense) view that ‘its Scotlands oil’. At < $60 pb all their numbers are shot to pieces. the silly 'vow' was completely unnecessary. Conservatives need to make it v clear that if there is a Conservative govt it will be English votes for English issues full stop. Mr Hague's various permutations sound like a fudge. the more fudged it is the more likely it is Justice for England will be denied.

      • Max Dunbar
        Posted December 18, 2014 at 12:11 pm | Permalink

        If, as you say, Salmond and Sturgeon have not been challenged on their assertions concerning the oil ownership and its economic consequences then why are they also not being challenged by the ‘unionist’ politicians with regard to the demand for more powers post the referendum?
        When Scotland voted to maintain the Union on the 18th of September, that drew a line in the sand. We did not vote to hand the SNP more power. Any further devolution of power to the ‘Scottish government’ is contrary to the will of the Scottish electorate and in clear defiance to the spirit of the understanding that NO means NO, no more powers given away. The Smith Commission appear to be weakening, not strengthening our Union.

        If further powers are handed to the insurgent SNP post referendum, I would contend that these powers and the laws enacted from them be challenged and viewed as invalid and unconstitutional.

        • Richard1
          Posted December 19, 2014 at 6:27 pm | Permalink

          I agree. The people of Scotland spoke clearly. Apart from one rogue poll – the background to this should be checked – it never looked remotely likely Scotland would vote for independence. The current kowtowing to the separatists is profoundly undemocratic. It is absurd that the constitution is being turned upside down in a useless attempt to appease the separatists and at the behest of a failed and discredited politician like Gordon Brown.

      • Leslie Singleton
        Posted December 19, 2014 at 3:10 am | Permalink

        Richard–If there is any discussion on this you can bet your life that there is going to be a lot of good stuff about how it was all a matter of principle and nothing to do with the oil; and in the case of some people that might even be true

    • Max Dunbar
      Posted December 18, 2014 at 11:19 am | Permalink

      The ‘vows’ business shows how arrogant and out of touch the politicians are. We, the voters of Scotland, chose by a substantial majority to conserve the Union and our wishes have been ignored.

      • DaveM
        Posted December 18, 2014 at 1:25 pm | Permalink


        You should try being English mate.

      • William Gruff
        Posted December 18, 2014 at 10:38 pm | Permalink

        Few in England care what you ‘the voters of Scotland’ chose (Why do you keep on telling us?), other than that you chose not to take the drip of English subsidies out of your collective arm (Why do you keep on telling us?). You all seem to think that we live in fear of losing you, however, the truth is that we want you out of our affairs and the only way to achieve that is to get rid of you, and that is why the Scotch dominated British establishment will not allow us to determine our own affairs in even the smallest way, let alone to the extent that you can, at our expense.

        Other than Scots in England, few in England care about Scotland or the Scotch and, increasingly, we just want to be rid of you and one day we will be. You’ll find that it is we, and not you, who will determine the future of our disgracefully inequitable ‘union’, and there is nothing you Scots can do about that, strut and bluster as you will.

        Reply Many people in England wish to keep the union and have very different feelings to those described in this contribution.

        • Hope
          Posted December 19, 2014 at 9:05 am | Permalink

          JR, you might be correct. Why were the English not given a vote if the consequences effect us and we are expected to pay for any outcome? Secondly, how did you measure that many people have different views when we were not asked? Could you show me what the English wanted eithe separation or continue as we are. I can assure you on a straw poll, no one I speak to wants the outcome Cameron has given the Scots it is totally unfair and continues the lopsided political nonsense, not what is best for the UK or its taxpaying citizens.
          I thought you made good points on the Daily Politics programme. Unfortunately the fudging of Hague’s options shows your leadership does not agree with you- you side stepped that question quite well. But the point still remains.

          • Max Dunbar
            Posted December 19, 2014 at 11:24 am | Permalink

            The vote had little to do with nationality or identity as up to the beginning of September virtually anyone who arrived in Britain by that time and who was able to secure an address in Scotland could register on the electoral role and be entitled to vote. This has really been about creating a separate and permanently socialist state but with voting powers in Westminster. Labour are responsible as always.

        • Max Dunbar
          Posted December 19, 2014 at 11:28 am | Permalink

          If you wish to expedite the break-up of our nation you could join the SNP. Membership fees are very reasonable I believe.

          • William Gruff
            Posted December 20, 2014 at 7:44 pm | Permalink

            Max Dunbar:

            The phrase ‘our nation’ now means nothing in the context of the ‘United’ Kingdom. My nation is England and I’m English not British.

            That notwithstanding, I used to wipe smug grins from the faces of Scotch colleagues, when I worked in Scotland, when, in response to their feebly attempted taunts that they were going to vote for the SNP, I informed them that I would too, if I lived in Scotland, since I want nothing more than to be rid of that millstone around English necks. Their apparent belief that we in England live in fear of their going always amused me.

        • Denis Cooper
          Posted December 19, 2014 at 2:11 pm | Permalink

          I’m English, and you can count me out as far as wanting to get rid of Scotland and the Scots is concerned. Next you’ll want to get rid of other parts of the UK where people will no longer vote Tory in sufficient numbers, including most of northern England.

          • William Gruff
            Posted December 20, 2014 at 7:34 pm | Permalink

            Denis Cooper:

            1) I’ve made it very clear in all of my comments here on posts relevant to the subject that I want to see the dissolution of the ‘U’K, so it should come as no surprise to you that I wish to ‘get rid’ of all parts of it.

            2) Although brought up in a very conservative Conservative household, I am a former member and branch official of the Labour Party, and would not vote for our host’s party under any circumstances, even if the Grooovey One gave another of his ‘cast iron’ promises to establish an English Parliament immediately following the next general election.

            3) Although from the South East, I was a student at two Yorkshire universities, in the south and north of which I lived for five years, live now in the North West (which I do not want to see ‘regionalised’), and have done for very nearly eight years, after living in England’s most northerly town, in the North East, for more than eight years, and am married to a Scouser. I do not want to see northern England hived off because some parts of it, though not all (my MP is a Conservative as are many northern MPs), do not vote Conservative.

            You should try to avoid making baseless assumptions from unthinking prejudice, monumental conceit and your all too obviously limited ability to understand and interpret what others actually write.

            Rest assured that I would automatically ‘count [you] out’ of anything requiring an intelligent response.

            My apologies to our host for presuming upon his hospitality, his tolerance and his time.

        • The PrangWizard
          Posted December 19, 2014 at 2:12 pm | Permalink

          I am surprised, Mr Redwood, that you intervened on this comment by ‘William Gruff’? It is an expression of opinion and of course not shared by everyone, but legitimate surely and not by any means extreme, although I accept your right to censure.

          There is a letter in the Telegraph today (19th December) saying that a large number of Scots hate the English and so far that feeling has not been reciprocated, but the mood is shifting. I fear therefore that comment would have been far too much for expression here.

          We also see that Alex Salmond is hinting he will sabotage ‘English Votes…’ as I have said I thought he would, by reneging on previous understandings. Yet more proof of the kind of behaviour you get when bullies are appeased, and when the intolerant are tolerated.

          I very much regret it suggests to me that using ‘English Votes…’ as a defence and promotion of England is much limited; in that the Union is far more important than true justice for the English; as I have said many times the device is weak. We have seen how it has been treated by your leadership, as something which they can safely ignore, in spite of your impassioned beliefs and interventions in the House and elsewhere. And I don’t believe their expressions of determination to see it through, and am convinced that Cameron is intending to subordinate and sacrifice England to Scottish control and influence as much as he possibly can, to preserve the Union, and by any means, including the invisible and the denied. His scheme may not succeed.

          Please, Mr Redwood, come over to the ‘revolutionary’ side, and campaign only for a true English parliament.

          • William Gruff
            Posted December 20, 2014 at 8:18 am | Permalink

            I am surprised, Mr Redwood, that you intervened on this comment by ‘William Gruff’?,/i>’

            I’m surprised that Dr Redwood published the comment at all; I didn’t think he would and it is to his credit that he did.

            I wholeheartedly agree with you that EVoEL is completely unworkable and only an English Parliament, with powers at least equal to that of Scotland’s, can properly represent the interests of the people of England, even the Scotch ones.

        • William Gruff
          Posted December 20, 2014 at 9:15 pm | Permalink

          Reply to reply:

          I would make the following observations:

          1) Most people in England have very little experience of the anti-English feeling that is very common in Scotland, Wales and Northern Ireland, nor the savagery with which it is sometimes expressed, by people from those countries in England as much as to Englishmen and women in those countries.

          2) Few people in England bother themselves with an exegetical dissection of the possibilities of boring old politics and won’t until reality smacks them in the face in the shape of MSPs setting ruinous tax rates in England, which they will through their Westminster based compatriots exerting leverage through a coalition that is determined to slaughter the English on the British altar (Remember that about a hundred of your honourable ‘English’ colleagues are Scotch.) You’ll recall, as a historian that the issue of taxation without representation – meaning accountability of the tax setters – has caused controversy before.

          3) Not everyone eligible to vote in England is English, and many of those who are celebrate a non English pedigree (I have Irish ancestors ‘on the distaff side’ and Welsh on my paternal grandmother’s side; I think of myself as wholly English, as did my half Irish mother, however, I have met people with more distant ancestors and ancestresses than mine who said they hated me because I, eight times more Irish than they, was English and ‘the English’ stole their lands ). There are many in England, as of right, who would never countenance the dissolution of the ‘union’ since that destroys the British identity that allows them to live and prosper in England without being English, or even having to pretend they like us.

          4) One of my most liked lines from a film comes from Monty Python and the Holy Grail: King Arthur and his knights come across a group of serfs grubbing in the dirt and he asks them some question. Michael Palin asks ‘Who are you?’ The king replies ‘I am Arthur, king of the Britons’. Someone asks ‘who are the Britons?’ Arthur replies ‘you are, and I’m your king.’

          Our king, whoever he may be, is going to learn that we aren’t Britons and he isn’t our sovereign. Without the consent of the English he is nothing, even if Scotch blood runs through his veins.

    • Tad Davison
      Posted December 18, 2014 at 2:06 pm | Permalink

      Good point Leslie.

      The BBC are reporting this lunchtime that the UK oil industry is cutting back drastically and it is near to collapse because of low oil prices. Interesting times. We did warn about this some time ago, but the low oil price cannot go on indefinitely because we risk serious damage. Whether it will go up to that magic figure of $118 a barrel in the short-term is unlikely, but that is the one Mr Salmond used to cost his Utopian spending plans.

      At the time of the referendum, it was mooted that oil prices have only been above $118 a barrel four times in the past fifty years. The lesson here is never trust a socialist with a county’s economy, however plausible they may seem, and however competent they look before the camera. The British people made that mistake with Blair and Brown, going for style over substance.

      One good thing though, Miliband and Balls haven’t even got style to make up for the short-fall in their credibility.


  2. mickc
    Posted December 18, 2014 at 5:56 am | Permalink

    Inflation is at 2% on the RPI index, though, isn’t it?

    And the unemployment figures are made to look better because many people are “self employed” on zero hour arrangements with their “employers”.

    The economy is still just off the bottom, and likely to remain so for a long time.

    • Lifelogic
      Posted December 18, 2014 at 9:41 am | Permalink

      Indeed and the economy will remain near rock bottom until the state sector is cut hugely and made far more efficient, until the state stops its endless inconveniencing and mugging of productive industry, until we abandon the climate change act and get cheaper energy, until we leave more money with the productive and stop augmenting the feckless, until we lower taxes and get some real competitive advantages in the World.

      Indeed just the election of Miliband with his bonkers ideas and in only a few months is surely enough to destroy what little confidence there is.

      • Hope
        Posted December 18, 2014 at 12:56 pm | Permalink

        Disagree LL, Cameron has followed Miliband’s ideas on Climate Change Act, kept immigration higher than when Labour left office, economy worse than when Osborne took office in terms of debt, deficit no where near Labour’s target let alone Osborne’s, closer union to the EU kept on track while lying to the public, more money handed over to the EU despite false claims to the public ie bail outs, the recent £1.7 billion hand out on top of the previous extra increase paid to the EU earlier this year, EAW etc etc. Miliband offers no difference from Cameron. Read Oborne in the DT today or claims that France will veto any proposed treaty change made by the UK and you will be clear there is no difference. Different cheeks of the same ar5e.

        • Lifelogic
          Posted December 19, 2014 at 5:47 pm | Permalink

          Almost I agree, but with Miliband you get a damaging new rent act, price controls and he is the voice of the state sector unions. Cameron is dire but he does have a few sound MPs to limit his lefty & pro EU lunacy a little.

      • Lifelogic
        Posted December 18, 2014 at 3:14 pm | Permalink

        Is it true that Cameron is siding with those who are still delaying Chilcot? As is claimed by Peter Oborne in the Telegraph today – I rather assume it is?

    • libertarian
      Posted December 18, 2014 at 10:34 am | Permalink


      I’m tired of telling people this, stop with the zero hour contract schtick its drivel. Less than 11% of employers offer zero hour contracts, less than 5% of the workforce are on zero hour or part time work. The average wage is £26k pa the average wage of self employed is £31k . Of thew 560,000 jobs created in last 9 moths 480,000 were full time, permanent jobs paying in excess of the LIVING wage.

      We have a jobs boom on our hands, a skills crisis and ANOTHER 1million jobs due to be created in the next 12-18 months.

      • Tad Davison
        Posted December 18, 2014 at 2:33 pm | Permalink


        It worries me when I see kids leaving school not even fully literate or numerate. One I spoke to recently has O-level English, yet couldn’t even tell me what a paragraph is! How the hell does that work?

        By constantly churning out sterile drones, the UK’s education system is just adding to the huge reservoir of unskilled labour, yet we’re still cramming the UK with unskilled workers from the EU whose main advantage is a better work ethic. Our education policy, as well as our immigration policy, is insane.

        We fail to train our own kids properly at our peril. Had we an emergent workforce with the skills that industry really needs, EU migrants wouldn’t get a look-in anyway, so Mr Cameron wouldn’t be embarrassed by the level of it all.

        It’s called investment in the future. It’s what businesses pay taxes for, to ensure they get the people they need in future years. And if they can’t get them at home, who can blame them for getting the right people from abroad?

        Does anyone else get so exasperated by it all, they hold their head in their hands in despair?


        • libertarian
          Posted December 20, 2014 at 11:02 am | Permalink


          Totally agree our education system is completely unfit for purpose.

          We are producing far too many with poor literacy skills and who are unmotivated and unwilling to engage. This is entirely the fault of a 1950’s based obsession with exams and targets over real engagement and learning. Most employers are now completely uninterested in GCSE ‘s and the unintelligible grading system. We STILL don’t teach real technology skills in schools. We have a shortage of engineers but there’s nowhere that really specialises in this. Less than 30% of young people are academically suited yet our entire education system is still geared to this. Leaving 70% disenfranchised. Its a throwback to the old centralised, one size fits all early 20th century mode of organising. Its the 21st century for crying out loud.

      • Anonymous
        Posted December 18, 2014 at 6:50 pm | Permalink

        Libertarian – There are clearly many more “Beeeg Eeeshew !” (Big Issue) sellers plying their trade up and down the country – earning their National Insurance numbers and now able to bring whole families over with them.

        • libertarian
          Posted December 19, 2014 at 11:16 am | Permalink


          The point of your post is what exactly ?

          • Anonymous
            Posted December 19, 2014 at 1:07 pm | Permalink

            What happens to all these extra people in the next downturn ?

            Presuming that there will be one and that the Tories don’t claim to have cured boom and bust as Gordon Brown did.

            My point is that the long-term, underlying problems with Britain are not being solved. Your jobs boom is temporary.

          • libertarian
            Posted December 19, 2014 at 8:27 pm | Permalink


            No its not temporary. You just don’t understand the modern world . The jobs and SME upturn has NOTHING to do with the Tories, government or public sector. Markets go in cycles always have an always will boom and bust is the natural flow of markets. The way some people whine about the state of things makes me laugh. It just shows your age. Those of us that have been around a lot longer remember far worse things in the 1970’s for instance.

            Your fear of foreigners is misplaced. Just as an example where I live in Kent more than 160 French entrepreneurs have relocated businesses here and hired almost exclusively local staff. The owners of those businesses commute on a daily basis from France.

      • a-tracy
        Posted December 18, 2014 at 7:42 pm | Permalink

        Libertarian, I agree wages have been rising, fulfilling part-time job requests was a Labour Party demand and legislated issue, if you agree to one persons part-time request that creates a part-time vacancy, people who are working on over retirement age often ask for less hours or to work just the days and hours that suit them, these were the demands placed on businesses by all three political parties , you would think Labour supporters would be congratulating business for following their policy demands on flexible working requests.

        • libertarian
          Posted December 19, 2014 at 11:22 am | Permalink


          Absolutely correct. The EU mandated Flexible Working Directive was supported by Labour, giving workers the right to ask for flexible working patterns.

          What people forget is that a lot of people working Part Time actually don’t want full time jobs. As with Zero hour contracts which we’ve had for years we just didn’t call then that. If we scrapped zero hour contracts no student, work experience or single parent with school age children would be able to do ad hoc work to fit around their lifestyle.

          One of the reasons I keep posting the facts about employment is the utter stupidity posted by people when they talk about this. No one is forced to get a part time or zero hour job, they CHOOSE it. There are plenty of full time well paid jobs on offer

  3. Gary
    Posted December 18, 2014 at 6:40 am | Permalink

    slow, steady deflation is a good thing. In fact, slow, steady deflation is the normal economic effect of technical innovation and efficiency.

    But, when everyone is debt sodden from a prior humongeous credit and money printing binge, deflation is a killer. The debt burden becomes more and more onerous while the income streams wither. The lowered cost of servicing debt in a deflation is a false relief. And to add more debt onto the debt sodden, using daft housing loan bribes is a disaster.

    History will not be kind to this generation of lawmakers.

  4. Matt
    Posted December 18, 2014 at 6:44 am | Permalink

    Sounds great.
    Many of us who post on here would never vote Labour, and focus on how the Conservatives could do better. This often makes us over-critical.

    There should still be time for the electorate to notice the improvement in their living standards, and reward the government accordingly. Whether or not this takes place comes down to the campaign:
    Yes government debt is at insane levels and still going up, but it’s on a path toward sanity at least. The state can still borrow on the open market and has not needed an international bail-out. This tells me that true experts who deal in investment for living believe that if they lend money to the UK state, they’ll get it back.
    Public spending is very high in historical terms, but that seems to be what the electorate wants. If you have to have high public spending, you can at least manage it well. There’s still plenty of room for improvement, but things are heading painful slowly in the right direction.

    What you really have to fight against is the shameless Labour bulls%#t:
    We’ll just make laws to make everything better. We’ll collect a vast bag of money from those nasty rich folk and give it to you.
    So it’s not true. That doesn’t seem to matter. People desperately want it to be true and choose to believe it anyway.

    The way to deal with Labour is to repeat calmly but emphatically, at every opportunity, that they can’t and won’t do what they are promising. It’s not possible. They’ll either not do it and make up the reasons why; or worse, they’ll try to do it and make an almightily mess again. They’re either the greatest liars in the world or the biggest idiots. The trick is to get that message across without looking like the bad guys.

    • Lifelogic
      Posted December 18, 2014 at 9:56 am | Permalink

      Indeed: “What you really have to fight against is the shameless Labour bulls%#t:
      We’ll just make laws to make everything better. We’ll collect a vast bag of money from those nasty rich folk and give it to you.”

      Indeed but buying votes in this dishonest, fraudulent way is clearly a problem inherent in any democracy that gives votes to all regardless of any contribution. Then again what Cameron is doing is not challenging this fraud but merely aping it.

      He is virtually the same. He now has 12%! stamp duty, 20% VAT (which he recently refused to rule out raising still further), 45% income tax only just down from 50%, 40% IHT having ratted on the £1M threshold, circa 23% NI (both), fuel duties, alcohol duties, rates, council taxes, planning taxes, building control taxes, insurance taxes, air tax, land fill tax, a BBC tax ……. and what does the government provide of any value to most tax payers? Nothing much of any real quality. A second rate NHS free at the point of waiting and rationing, poor schools and Universities, the BBC propaganda unit, a slow expensive, multilevel and almost random legal system, pointless wars, crowded and intentionally constricted roads, over priced energy, the EU job destroying mechanism ….

      • Lifelogic
        Posted December 18, 2014 at 12:01 pm | Permalink

        I see the EU now want people who eat too much and get to say 25 stone are to be classified as “disabled” and thus protected from loosing their jobs even when they clearly can no longer do their jobs efficiently. Even protected from being called names it seems (perhaps by the other staff who have to do their work for them). Thus employers will have to make “reasonable” adjustments doubtless at vast expense and inconvenience to the businesses. Probably putting other out of jobs, prices up and even perhaps bankrupting the business or pushing it abroad. Much to be said for not investing in the EU with its insane employment laws, expensive energy and absurd regulations JR I agree.

        We have a legal system (both EU and UK) that is totally out of control and mainly benefits lawyers, vexatious litigants and layabouts at the expense of the productive. Far too many lawyers, mainly engaged in doing huge damage to the economy.

        This should do wonders for UK company’s ability to compete against the rest of the World. The only good business to open in the UK seems to be a litigation or Tax advice, or HR consultancy. Whatever you do do not open anything actually productive.

        • stred
          Posted December 19, 2014 at 9:48 am | Permalink

          Now that the legal system is becoming insane and run in a very strict way and, unlike the Americans, prosecuting people for crimes that may not have been considered as such when committed 40 years ago we should all be worried.

          Mrs May, having handed us over to EU state justice and given social services the right to extradite parents who have fled with their children, has just announced that coercive behavior may result in a 5 years in clink. The lawyers have explained this may include such crimes as denying access to a bank account.

          Unfortunately for me, when 45 years ago, I found that my ex wife had joined a department store credit club and was buying expensive items from a joint account, which was needed to survive a year on very little, I closed it and opened a personal one with only my name on it. Even worse I have done so ever since.

          I wonder what the Arabs make of all these changes.

    • Tad Davison
      Posted December 18, 2014 at 2:48 pm | Permalink

      ‘Public spending is very high in historical terms, but that seems to be what the electorate wants.’

      That’s always bothered me Matt, and is crucial to it all. All too often, the public will vote for people who promise the most, regardless of the deliverability of it. That’s how we got into the EU mess. Incredibly, there are politicians who still say that the EU is the cure for all our problems just as long as we agree to give up everything we have strived for centuries to secure.



      • Lifelogic
        Posted December 19, 2014 at 2:37 pm | Permalink

        The problem is you are asking most voters would you like more services paid for by mugging others. They tend to say yet please.

  5. Dame Rita Webb
    Posted December 18, 2014 at 6:55 am | Permalink

    ‘Just as Labour’s forecast of another recession was wide of the mark …’ JR another hostage to fortune. If the UK economy was so rosy your notional FT portfolio would have a greater exposure to it. You know big global companies are struggling e.g. IBM and FedEx (see their results yesterday). FFS McDonald’s are struggling to sell $1 “value meals”. Apart from the Saudi’s trying to knock out the frackers, the price of oil is dropping because the demand is not there. One plus point for Dave is he is bright enough to admit the red bulbs are flashing.

    Reply My FT portfolio has low UK owing to the political risk inherent in current opinion polls for the May election which adversely affect current market sentiment. Markets do not seem to like high levels of UKIP and SNP support. The economy is growing well with low inflation and generating many jobs.

    • Lifelogic
      Posted December 18, 2014 at 10:20 am | Permalink

      To. Reply very sensible my investments too. But why is Miliband likely to win an election in May? It is because Cameron is essentially just the same sort of green crap, high tax borrow and waste, EU loving, big state socialist as Miliband.

      So little better we might just as well have Miliband and let the Tories get their act together. Better than watching Cameron defraud the electorate again.

      • BobE
        Posted December 18, 2014 at 6:24 pm | Permalink

        We will get Boris next time!!

        • Lifelogic
          Posted December 19, 2014 at 6:45 pm | Permalink

          I doubt it, but it would only be slightly better than Cameron.

    • Duyfken
      Posted December 18, 2014 at 10:52 am | Permalink

      Markets do not like uncertainty, and the coming GE result is rather less than certain! JR seems to imply that no Party other than Lib/Lab/Con deserves a place in Westminster. Well, if the Tories had done a better job as Conservatives, they would neither have lost core voters nor have found themselves assailed by the upstarts.

      • Lifelogic
        Posted December 18, 2014 at 12:09 pm | Permalink

        Labour (or a messy coalition of fools) seems virtually certain. Even if Cameron does get an overall majority (8% chance it seems – though I tend to think it is rather higher) it will still be a complete and utter disaster.

        Just not quite as bad as Miliband as the Tories do have a sensible wing perhaps of say 100 MPs at best. But then nearly all of them voted for the Climate change lunacy! Many even voted for Cameron as leader.

      • Dame Rita Webb
        Posted December 18, 2014 at 12:25 pm | Permalink

        Eh and how is the threat of “Red Ed” becoming PM having such a malign effect of the American stock markets? If there was a recovery I would expect the small cap indices to start surging ahead not take a battering as they have all this year. You are seriously telling me the S&P500 is in decline because there is the “uncertainty” over an election in the UK?

        • Duyfken
          Posted December 19, 2014 at 8:56 am | Permalink


    • Max Dunbar
      Posted December 18, 2014 at 5:33 pm | Permalink

      Reply to reply: There is a tremendous amount of office space available in Glasgow at present and some very good deals are to be had. There are many more sellers than buyers, and for good reason; uncertainty and worry about political instability.

  6. Mondeo Man
    Posted December 18, 2014 at 7:05 am | Permalink

    Your party’s Achilles’ heel is still mass immigration. This is causing intense worry and pressure on jobs and resources – as well as the loss of national culture.

    The figure to watch to see if things are really working on an economic level is the national debt.

    • Mondeo Man
      Posted December 18, 2014 at 6:36 pm | Permalink

      Thousands of new homes being built in our area whilst council services are being cut. Quite clearly a dispersal from the SE is going on.

      Is quality of life being evaluated along with these figures ?

      • alan jutson
        Posted December 19, 2014 at 8:34 am | Permalink

        Mondeo Man

        Plenty of houses going up around Wokingham too.

        Population increase of 20,000- 40,000 promised for our so called Market Town, which is now often gridlocked, schools full to capacity, hospitals that cannot cope, although much development still to go.

        Thus I guess with a general population increase, we must accept more housing etc is required.
        Problem is the improved infrastructure (if it ever happens) follows years later instead of leading.

        The south East ripple is spreading out !

        All the result of an open door policy !

  7. Lifelogic
    Posted December 18, 2014 at 7:09 am | Permalink

    So finally, after declining living standards of living in the private sector for seven years, we get a 1% increase but this is only before the 299+ tax increases by Osborne. As pay rises many will find they now get no longer get child benefit or even personal allowances. Furthermore is it still being achieved by the government borrowing of the backs of future generations. Osborne’s deficit is still huge and largely being wasted on a huge bloated and generally incompetent and/or misdirected state sector.

    The private sector workers in the UK also still have virtually no pensions perhaps only 1/5 of the state sector pensions on average. This after Brown’s mugging and Osborne’s further mugging through with lower caps and contribution limits.

    Furthermore the Davey/Huhne types are still desperately pushing up electricity prices up artificially with their barmy, anti-science and totally misguided religion. “Renewables” are even more nonsensical now given the falling oil, coal and gas prices.

    The price of energy in the UK (relative to the US and many other places) is still far too high to be competitive for many industries. Unfortunately Miliband look like he is on the way to make matter worse thanks to Cameron poor sense of direction.

    • stred
      Posted December 18, 2014 at 10:54 am | Permalink

      The increased price of electricity was exposed last week after a freedom of information request. It will be 40% for domestic consumers and more for industry. DECC had argued that to publish the figure would have been confusing, as the cost would not increase, as we would have insulated our house by then, under the Green Deal. The subsidies for wind when blowing or not blowing and the burning of American trees, with electric cars batteries etc would therefore be cost free.

      Unfortunately, they forgot to mention that, had we insulated and continued to generate electricity like America or China, the cost would have been reduced by far more.

      They also forgot that the cost of insulation under the Deal and regulations has been made far higher than it needs to be and that in 2016, standards will be increased again. Freezing pensioners will have to pay even more to insulate their small houses, often with solid walls which are the most leaky in Europe. No wonder they kept the minister qualified in PR and sacked the one who understood what was happening.

      When the Saudis have knocked out North Sea and fracking, watch the oil price rocket. But this will be just what the Greenies want of course, as our planet is more important and a population reduction will also be welcome.

      • Lifelogic
        Posted December 18, 2014 at 12:13 pm | Permalink

        It is PR lies and spin over logic and engineering every time with vote blue get green crap with Davey, Huhne & Cameron.

        If the oil price goes up again then the North Sea and fracking will clearly increase again it will not just die and go away.

        • stred
          Posted December 19, 2014 at 9:52 am | Permalink

          Sudden price dips cause some to exit and in the time taken to come back after closing the price can go higher.

  8. JoeSoap
    Posted December 18, 2014 at 7:50 am | Permalink

    Yes, you might be more “real world” than Labour on economics. We all know that. But they are more “real world” than you on Europe. You keep being told that no treaty change is possible. Now the President of France is telling you. But you refuse to listen. It is a symptom of the same problem. I doubt UKIP would have argued for silly price-fixing either, but they also aren’t arguing for a 3 year moratorium before a referendum on Europe, while the rest of Europe constantly snipes, name-calls and says NO. Why not get into the “real world” on that issue, too?

    Reply I am also real world on the EU. If we don’t get a good result from renegotiation we vote for Out.

    • DaveM
      Posted December 18, 2014 at 8:42 am | Permalink

      Don’t worry, the French president will probably be Marine LePen in a couple of years.

    • Brian Tomkinson
      Posted December 18, 2014 at 9:03 am | Permalink

      Reply to reply,
      You may claim you are but the problem is that your party is not in the real world on the EU.
      One of your arch eurofanatics, Lord Heseltine, told us on the Daily Politics earlier this week that the UK will eventually join the euro. This from a ‘big beast’ of your party that you would have us believe wants less, not more, EU and an end to ever closer union. Pull the other one!

      Reply Lord Heseltine is no longer an MP and not standing for election.

      • Lifelogic
        Posted December 18, 2014 at 12:15 pm | Permalink

        No but his is one of Cameron’s favourites just like Ken Clarke who will be standing again.

      • Tad Davison
        Posted December 18, 2014 at 3:13 pm | Permalink

        Heseltine also warned of the skills shortage too Brian, and he said it will go right through the economy. And thanks to our poor education system, and his party’s push towards ever-closer ties with the EU, guess where we’re going to get our workforce from in future if our own kids leave school without the right skills?

        British industry might well have to raise wages as a consequence, but patriot that I am, I would rather our own people benefitted from a rise in living standards and spend the money in our own economy, rather than bring people in from elsewhere for them to send the money home.


      • Max Dunbar
        Posted December 18, 2014 at 5:26 pm | Permalink

        Reply to reply: Brown, another ‘big beast’ and a back-bench MP, also had a disproportionate amount of influence during and after the referendum campaign and he will not be standing for election either. Heseltine is given airtime to canvass his views with the public by the unelected BBC.
        Reform the over-powerful BBC and its 3rd party political campaigning.

      • matthu
        Posted December 18, 2014 at 10:02 pm | Permalink

        But no senior Conservative MP has yet denounced Lord Heseltine! In fact, it is hard to tell the difference between Lords Heseltine and Mandelson these days, their utterances being barely distinguishable.

        Reply I completely disagree with Lord H on joining the Euro and much else of what he says about the EU!

    • agricola
      Posted December 18, 2014 at 9:34 am | Permalink

      Yes John you are in the real world re. the EU, but in the light of Hollande’s declared intent to block any possible re-negotiation, is it not time you took a more aggressive stance within the H o C on this subject. A series of pertinent questions from you and your like minded colleagues at PMQs might make Cameron realise that the time has come for action not words. An unequivocal statement that on the election of a Conservative government the first business would be a referendum in July 2015 on in or out. If out is the decision of the electorate then the immediate invoking of Article 50 would result.

      Such action would enhance the chances of a Conservative victory in May next year. It would concentrate the minds of those in Brussels because not only could they lose the UK but a subsequent domino effect would be likely. We read that Greece is currently on the tipping point of leaving. Brussels might fudge round a Greek defection but I suspect a UK one would be mortal.

      Reply I think we have more chance of winning an Out referendum if the country has discovered how bad a deal we currently have and if the EU is unwilling to reform our deal radically by going through a renegotiation.

      • Lifelogic
        Posted December 18, 2014 at 4:55 pm | Permalink

        Do you really think Cameron will do that, given his record of saying one thing then doing the complete opposite behind his back?

    • Lifelogic
      Posted December 18, 2014 at 10:07 am | Permalink

      If you are “real world on the EU” then you must know the renegotiation will deliver nothing of any substance. It is yet another Cameron deception like his IHT promise and “I am a low tax conservative at heart” and we are “repaying the debt”.

      Cameron will never even be in a position to deliver it, even if he did want to.

      • Tad Davison
        Posted December 18, 2014 at 3:18 pm | Permalink

        Few people trust him LL. I certainly don’t. JR says he’s against Neo Cons, but Cameron sounds more like one of them with each day that passes. Could be too late to get rid of Cameron now though, so a four-party split could be on the cards next May (five if we include the Lib Dems).


    • Tad Davison
      Posted December 18, 2014 at 10:27 pm | Permalink

      Reply to reply:

      I wish I knew what this ‘good result’ would look like John. And whilst we don’t know, there’s room for a slippery con-man to do all kinds of things and wrap it up as some kind of success, even though it might fall well short of our expectations, or indeed what is in the UK’s best interests.


      Reply The public would see through any attempted con.

    • William Gruff
      Posted December 18, 2014 at 10:51 pm | Permalink

      Reply to reply:

      I am also real world on the EU. If we don’t get a good result from renegotiation we vote for Out.

      The ‘real world’ truth is that renegotiation of any of the terms of membership of the EU, or repatriation of any surrendered powers, is not possible under the present constitution of the EU and those who genuinely think it is are living in the same la-la, bing-bong fantasy land as those who believe we will be offered a referendum on exit by anyone currently sitting at Westminster.

      Only a gullible idiot will vote Conlaberal on the 7th of May next year.

      Reply Untrue! Many of us want an In Out referendum and will vote Conservative to get it.

      • William Gruff
        Posted December 20, 2014 at 8:24 am | Permalink

        Reply to reply to reply:

        We’ll see. I expect no change except the further surrender of powers to the EU.

  9. Richard1
    Posted December 18, 2014 at 7:58 am | Permalink

    Yes this is just another example of the hapless Mr Miliband floundering around looking for a populist-interventionalist policy, only to be made a fool of by the market and real world events. In any event I wonder interviewers didn’t point out that part of the reason fuel is expensive is green taxes mandated by Mr Miliband’s climate change act.

    Another thing: Labour have latched on to public spending:GDP forecast to fall to 35% (‘the lowest level since the 1930s). Firstly interviewers should be asking them why that’s a bad thing when most of the most prosperous and high growth economies have spending to GDP levels at this level or lower (Switzerland, Singapore, the US etc). secondly, Labour claim 1) that will not be going for much higher spending than the Conservatives and 2) that the economy will grow faster under Labour’s plans. Leaving aside the absurd nonsense of Labour’s plans, doesn’t simple maths imply that if these two things are true, spending/ GDP under Labour will be even lower than 35%?

    • Denis Cooper
      Posted December 18, 2014 at 10:37 am | Permalink

      But for a fraction of a per cent that 35% forecast would be the lowest since a brief period when Gordon Brown was Chancellor, not since the 1930’s.

      • Richard1
        Posted December 18, 2014 at 1:43 pm | Permalink

        As Ken Clarke pointed out this is only because Brown was pledged to follow Conservative spending plans for the first 2 years of Labour govt. As soon as he could he did what he really wanted to do – and all Labour govts do – which is tax, borrow and spend. Brown ran deficits in all years from 2000 when even keynesian theory would say he should have had surpluses or a balanced budget. This is one of the main reasons Labour’s great recssion following the financial crisis was so bad. people should not underestimate what bad news the last Labour govt was and any future Labour govt would be.

        • Denis Cooper
          Posted December 19, 2014 at 2:18 pm | Permalink

          Daniel Hannan has written an interesting article:

          “What did Britain really look like in the 1930s?”

          • petermartin2001
            Posted December 21, 2014 at 11:56 pm | Permalink

            Interesting but is it correct?

            GDP fell less in the UK than other countries during the 30’s. But, this was against a backdrop of the poor economic performance of the 1920s. Leaving the gold standard in 1931, helped UK recover quicker than other countries which hung on longer but even so unemployment rose to over 25% by 1933.

            There was no “roaring 20’s” in Britain. GDP fell by 25% from WW1 levels as Britain returned to a gold standard and effectively priced its own exporters out of world markets with unemployment rising to over 20% in the early 20’s.

            The validation of Keynesian economics of which Mr Hannan seems to disapprove was in its utilisation to bring maximum resources to bear in the winning of WW2. Although it must be said that the Germans were Keynesian before Keynes and used similar ideas to mobilise for their war effort too. German unemployment fell from 33% in 1933 to just about zero by 1939.

            Reply The UK economy as a whole recovered before the outbreak of war and not mainly owing to the manufacture of armaments. The development of whole new industries from radios to early plastics, from new synthetic fabrics to cars created good growth especially in London. Just look at all the new 1930s factories in their deco styles on all the main routes into London, and the vast new private housing estates of the suburbs and beyond. The problem then was the decline of the great traditional industries in the north, where the lack of a comprehensive welfare state left real poverty and unemployment on a scale we all would find unacceptable today.

    • Stephen Berry
      Posted December 18, 2014 at 10:47 am | Permalink

      The dramatic fall in the price of oil is a massive boon for the world. Cheaper goods are the real basis of economic and social progress. Many people mistakenly suppose that rising wages are the basis of higher living standards. In fact, it is the rising purchasing power of wages which is the key. Living in an inflationary age hides this truth from many people.

      Many politicians will be wrong footed by the drop in the price of oil, not just the SNP and Ed Miliband. One assumes there will also be a fall in North Sea revenues for the present government.

      Richard1 is right. The Conservatives should not hide their light under a bushel. If George Osborne’s plans will result in public spending coming down to 35% of GDP, this should be shouted from the rooftops so that even Douglas Carswell and Mark Reckless can hear.

      As a Classical Liberal, I usually have the experience that when I’m arguing for the free market my opponents, whether socialists or conservatives, are people who want to bring a halt to changes they feel to be unsettling. But I’m not worried by the continuation of the profound and uncontrollable changes which modern capitalism generates, changes which will only be accelerated by cheaper energy.

      • Richard1
        Posted December 18, 2014 at 1:48 pm | Permalink

        Yes. It really is strange that someone like Mr Carswell (I dont know anything about Reckless) thinks UKIP is the right political home for him. After all, UKIP are now: against flat taxes; oppose any private sector involvement in the NHS; join Labour in opposing removal of the spare room subsidy and appear to be on an overall lurch to the protectionist left. They do still have some sensible policies, such as opposing green crap and HS2, but the direction of travel is not economically liberal.

        • Stephen Berry
          Posted December 19, 2014 at 11:11 am | Permalink

          UKIP have the problem of wanting to appeal to the typical Tory voter in the south and the typical Labour voter in the north. They will have to perform quite a few policy gyrations if they are to have a chance of pulling off this trick successfully. Of course, all parties in search of votes in a democracy have to make such compromises. I would feel more indulgent towards UKIP and their particular electoral problem if they were not so critical of other parties when they make similar ‘policy adjustments’.

          As for ‘Mondeo Man’s’ question as to why, as an economic liberal, I comment on a Conservative website? I reckon that the Conservative Party is the most significant political force in the UK today which has sympathy for economic freedom. In any case, it may be more fruitful to follow a blog where you generally agree with only some of the things being written. Better that than a blog where you face universal hostility or, perhaps even worse, endless mutual back slapping!

      • Mondeo Man
        Posted December 18, 2014 at 6:40 pm | Permalink

        Then why comment on a *conservative* website ?

      • APL
        Posted December 21, 2014 at 9:43 am | Permalink

        Stephen Berry: “The dramatic fall in the price of oil is a massive boon for the world. ”

        It means one of two things. Demand for oil is down, implying a drop off of economic activity. Otherwise known as a recession.


        Someone, somewhere is pumping too much oil and causing a glut. My guess is that is happening too, and I think Saudi Arabia is still the only country with the ‘clout’ to effect such an change.

        It has of course ruined the Russian economy, and trading in the Rouble has all but ceased. Maybe the Saudi’s have a thing against Russia, or they are acting as proxy for the US in their disagreement with Russia.

        Whichever, it is unhealthy for World stability.

        Reply Demand is up, supply up more, mainly from the US

  10. petermartin2001
    Posted December 18, 2014 at 8:05 am | Permalink

    Yes, the Labour Party are barking up the wrong tree with talk of a cost of living crisis. There is a crisis, but it due to a shortage of decent well paying full time jobs. I suspect that many employees will be raising their eyebrows at the suggestion their pay has risen by 2%. It has been a while since pay rises were considered normal in most jobs.

    Yes, more than half a million jobs have been created but what kind of jobs? And , how have these jobs been funded? I would suggest that mainly it is by private sector borrowing. All that does is bring forward what private sector spending there is in a future period to the current period. Or, at least, that is one way of looking at it.

    Consequently, aggregate demand is higher in one period than it would otherwise have been but only at the expense of lower than aggregate demand in some future period. So unless private credit is issued at a constant rate, the economy will be distorted. A boom in one period becomes a bust at some future time. Just after the next election, I would suggest!

    • Leslie Singleton
      Posted December 18, 2014 at 10:52 am | Permalink

      Peter–What is wanted is more decent well-paid full time employers. Personally I would not dream even of considering setting up a business these days or if I did the last thing I would do is employ anyone. A friend with his own inherited family business has gradually cut his staff to the bone and as I say would rather die than get back in to employment law and all the rest–instead he stays up late at night doing what’s necessary himself on a succession of new computer and accounting systems. Everything including the kitchen sink gets thrown at or taxed from employers as exemplified by that ghastly government advert which joyously pointed out that employers have to contribute to workers’ pensions, pensions which might only be received after 50 years and perhaps a dozen different employers. This is one of Labour’s few “successes” viz the demonising of employers. If ever there were a case of shooting oneself in the foot this is it. Negative Employers NI to reimburse employers for what they do for the nation would be a good start. This would unarguable encourage prospective employers to start up and hire.

      • Leslie Singleton
        Posted December 18, 2014 at 2:20 pm | Permalink

        Postscript–And I have just heard of this new ridiculous and naive pronouncement by some EU Court about obesity. I turned it off before it got very far but I already know enough to be certain that it is now going to be harder if not impossible for overweight people to get jobs. These EU Courts seem to have no nous or savvy at all.

        • Leslie Singleton
          Posted December 19, 2014 at 9:12 am | Permalink

          PPS–And what about alcoholics–cannot see much of a difference myself? Are employers going to be forced to maintain drunken employees perhaps by having to supply alcohol in amounts drawn up by the EU so the employees are not inconvenienced? The minute one mentions the wretched EU anything is believable.

    • libertarian
      Posted December 18, 2014 at 2:10 pm | Permalink


      Oh for goodness sake how many times do you need to be told. Ever tried using Google if you don’t believe me, after all why believe me I only do this for a living.


      We are at the start of a MASSIVE job boom. 1.7 million new jobs have been created in the last 3 years.

      Less than 11% of employers offer zero hour contracts, less than 5% of the workforce are on zero hour or part time work. The average wage is £26k pa the average wage of self employed is £31k . Of the 560,000 jobs created in last 9 months 480,000 were full time, permanent jobs paying in excess of the LIVING wage. There are currently 31 million people in empolyment in the UK the highest number ever and 27 million of them work in the service industries

      You ask how have these jobs been created. Simple they are nearly ALL in private sector SME’s. The growth of new small businesses is huge, especially in Digital, creative, technology, pharamacuetricals and health care. There are currently 4.2 million SME’s in UK

      My lastest survey respondents show that 76% of SME’s plan on recruiting more staff next year

      We have a jobs boom on our hands, a skills crisis and ANOTHER 1million jobs due to be created in the next 12-18 months.

      The trouble with the tribal political types on here is that you live in a bubble of your own. The world is evolving and its evolving at a fast pace. Change, creativity and growth are endemic. Its why economists and other theoretical academics are ALWAYS wrong because they can never factor in change and technological innovation. Its why Prof Blanchflower former MPC member and leading academic economist has got almost every prediction he’s made wrong. He told us unemployment would be 5 million by now. In fact its FALLEN to 5.9% and going down.

      Unless the politicians do something to screw this up ( sadly quite a high likelyhood ) we are seeing a massive paradigm shift the equal of the original industrial revolutions. Its unfolding before your eyes .

      We urgently need to completely readdress education, skills and democracy especially at a local level as this is where its happening.

      • petermartin2001
        Posted December 21, 2014 at 11:33 pm | Permalink


        You paint a rosy picture. I’m not sure if it is one that will be recognised as realistic in the depressed former industrial heartlands of the country where the acute social problems lie.

        The challenge is to tailor the economy to suit the skills of the workforce as well as increase the skills of the current workforce to meet the needs of the future economy.

        There’s going to be plenty of discontent from contributors to this blog if this ‘brave new world’ of yours is based on ” Digital, creative, technology, pharamacuetricals and health care” companies largely staffed by overseas graduates.

        • libertarian
          Posted December 23, 2014 at 9:00 pm | Permalink


          As usual you are totally detached from reality. You obviously never tried google as I suggested. I own & run a software business that analyses employment data, trends and statistics. I do know the REALITY ( not rosy pictures).

          Please identify those areas with acute social problems caused by lack of employment opportunities.

          No it is definitely NOT a challenge to make jobs suit skills available that is plain stupidity. If you believe that then I’m afraid you have zero credibility.

          I didn’t mention anything about being staffed by overseas graduates, don’t make stuff up just to try to justify your left wing silliness.

          • petermartin2001
            Posted December 24, 2014 at 11:25 pm | Permalink

            “Please identify those areas with acute social problems caused by lack of employment opportunities.”

            I suppose we can start with Middlesbrough. One third of all homes are workless there. It’s a nice idea that Middlesbrough’s unemployed can all be retrained to be IT professionals, or be found jobs in the newly emerging hi-tech and health markets, but just a tad optimistic I would suggest. But , of course, some can.

            So we need to improve education to maximise those numbers but not forget those who won’t ‘make-it’ – so to speak. If we do forget them, we’ll have them hanging around doing nothing for year after year. We’ll have generations of people who’ve never had a job. That’s been the case in Londonderry. Even when we’ve had near full employment in Britain, including Middlesbrough, there has always been high unemployment there.

            Those adverse economic conditions helped fuel the troubles in NI. That’s the reality. We see it happening in Europe too with extremist political movements of the right and left springing up as a direct result of the very high levels of unemployment, especially among the young, that we see there. That’s the reality too.

  11. Ian wragg
    Posted December 18, 2014 at 8:22 am | Permalink

    So employment is up. Let’s see if tax receipts follow or are we just subsidising minimum wage jobs. If pay rises are beating inflation which may or may not be true doesn’t help Joe public when 32% is taken off in tax and national insurance.
    I see Hollande is going to veto CMD ‘ S reform plans
    When will he learn no one is listening.

  12. Narrow Shoulders
    Posted December 18, 2014 at 8:26 am | Permalink

    Mr Redwood

    Trite headlines such as this belittling the struggle many of us out here are having to maintain our standard of living for political purposes is another reason Ukip resonates with some and others are turning away from voting.

    Price and tax increases since 2009 without commensurate pay increments have adversely affected our standard of living, we are still struggling. A temporary respite in oil prices has not reversed this with housing costs and other costs of living still under pressure from open borders.

    1% inflaton is good news now but the excesses of the previous decade have not yet been paid for (and they will be by us as your administration continues to borrow to fund large, benevolent government)

  13. DaveM
    Posted December 18, 2014 at 8:36 am | Permalink

    I notice that all of this is ignored by the BBC. They are today focusing on the £180m that Cable claims the govt could have slapped on the price of Royal Mail, and cuts to local councils.

    And delighting in the fact that the UCL is competing favourably with those horrible elitist establishments in Oxbridge. I would have thought the success of a third university like that would have been the cause for celebration rather than the fact that it might put Oxbridge down.

    Of course, the only part of your post the BBC would have focuses on would have been the “Private sector pay has been going up by 2%.” bit with the emphasis firmly on ‘private’. They would no doubt have found a way to mention the NHS as well.

    • Mondeo Man
      Posted December 18, 2014 at 9:48 am | Permalink

      The BBC have also latched onto Russell Brand.

      To overshadow justified and overdue conservative anger in the country. Instigating a leftist revolution to neutralise the rightist one.

      This suits the Lib/Lab/Con party, no doubt. They can argue that centrist ideals are the aggregate of the general electorate’s feeling and can continue to dance around the head of a pin on policy.

      • DaveM
        Posted December 18, 2014 at 1:28 pm | Permalink

        I wouldn’t worry too much about Brand – The Sun has a hate campaign out on him now – no-one survives one of them!!

    • Dame Rita Webb
      Posted December 18, 2014 at 12:36 pm | Permalink

      Whats the value of an Oxbridge degree these days? I came across an interesting titbit the other day which claimed that half of the Harvard class of 1983 were on the dole or were now self employed independent “consultants”. I have not seen anything about our “elite” universities but I cannot imagine the situation is much better. All I can offer is the results of a quick sweep of my classmates from 1986 on some of “networking”websites. It would appear that those who are still pulling in the big money are those who left the UK or are working in a family firm. However I did come across quite a few that have suddenly discovered the pleasures of going off as self employed “indie consultant”after years of working in a “blue chip”.

  14. Antisthenes
    Posted December 18, 2014 at 8:37 am | Permalink

    “remedied by an energy price freeze’

    We know what price controls lead to. Shortages and diminished investments. Historically and currently we have ample evidence that this type of policy is self defeating. What does ReEd want to do make the UK into another Venezuela. Probably as all lefties fail to learn the lessons of history when it points out the fact that their ideologies, polices and practices are seriously flawed which generally speaking are most of them.

    • Lifelogic
      Posted December 18, 2014 at 10:15 am | Permalink

      Perhaps they did not cover this basic economics at Oxford PPE. Or perhaps Ed just missed that lecture.

      Surely it is time to stop funding for Oxford PPE until they produce something of value from their dreadful sausage machine. I think I found Tony Abbot and about 5 others who were not too dreadful in the very depressing list on Wiki. Along of course with at least half the courses at UK universities which are clearly duff.

      Reply This continuous barrage against PPE (which I did not do myself) is silly. The course is not responsible for decisions and judgements people make 20 years later in a political job.

      • Chris
        Posted December 18, 2014 at 11:56 am | Permalink

        This attitude towards PPE at Oxford was present back in the 1960s, and not without reason – nothing new. I saw it there, and I suspect Mr Redwood was well aware of it too.

        • petermartin2001
          Posted December 18, 2014 at 8:33 pm | Permalink

          If I’ve any problem with PPE courses it would be with the E !

          Politicians should be recruited more from the Engineering profession. There, it is taken as a given that the specification for any construction should be that it works and is reliable. Bridges shouldn’t fall down, TV sets should deliver a picture and sound etc.

          They may still have a problem with some aspects of economics to begin with but they’d soon figure it out for themselves. It would be unlikely they come up with anything quite so badly designed as the Eurozone project in the first instance . But they’d look at the theory and they’d look at the practice and work out what needed to be done.

          Engineers, like the Queen, would notice that conventional economics had no theory for predicting the 2008 crash. So they’d look at the evidence and work out one. They would build economic simulators. They would input all the tax and spending changes which governments had in mind and work out what would happen to the economy as a result and choose the best option.

          They would be continually refining their model to ensure the best agreement between theory and practice. They would not repeatedly try the same thing and expect different results.

          Reply Some of us did predict the crash, which any sensible student of monetary economies and banking should have been able to spot.

      • Dame Rita Webb
        Posted December 18, 2014 at 12:40 pm | Permalink

        JR because its an upmarket version of “media studies”. Its three easy subjects (I know because I did politics and economics) which just are not as demanding as say physics or maths which I avoided like the plague after “o” levels.

      • Lifelogic
        Posted December 18, 2014 at 3:28 pm | Permalink

        Perhaps you are right, I rather suspect it is the dreadful types of people who aspire to study PPE that is the main problem. Then again people who come out of say Cambridge Maths, Physics or Engineering usually do have a grasp of Maths, Physics or Engineering at the end. Whereas many from Oxford PPE clearly have little grasp of Economics at all.

        Look at the list below it is a hugely depressing only five or six who are perhaps sound.

        Mind you I am not that keen on most Lawyers either, many could usefully get a far more productive job, or at least a rather less damaging one.

      • Lifelogic
        Posted December 18, 2014 at 3:51 pm | Permalink

        Ok no more – I rest my case surely it cannot be entirely a coincidence we get so many of these types:-

        Danny Alexander, Ed Balls, Alan Beith, Tony Benn, David Cameron, Barbara Castle, Yvette Cooper, Julian Critchley, Anthony Crosland, Edwina Currie, Ed Davey, Angela Eagle, Maria Eagle, Michael Foot, William Hague, Edward Heath, Chris Huhne, Jeremy Hunt, Baroness Jay, Roy Jenkins, Gerald Kaufman, Ruth Kelly, Susan Kramer, Lord Mandelson, David Miliband, Ed Miliband, Rhodri Morgan, Brian Paddick, James Purnell, Rachel Reeves, Barbara Roche, Siôn Simon, Jacqui Smith, Elizabeth Truss, Shirley Williams, Harold Wilson ….

      • JoeSoap
        Posted December 18, 2014 at 7:05 pm | Permalink

        Not silly, but prescriptive.

        There is a strand of PPE undergraduate who wants to “change the world” by proselitising other students to their cause. I saw it in Oxford as a mere Chemistry undergrad in the 70s, and I don’t doubt it continues now.

        Unleashed on the world, these people carry their baggage and trade into politics. They are the Kings of Society – normally they are male. Miliband is a classic of this type. They don’t tend to have worked in our product development, software, manufacturing or anything making anything. Their stock in trade is changing other peoples’ beliefs to their own, not actually changing others’ lives for the better or delving into the mechanics of what might actually work for people.

      • Lifelogic
        Posted December 18, 2014 at 7:09 pm | Permalink

        History as a subject is rather more sound. But what parliament is hugely short of is the sort of people who would rarely seek to be there. Preferably rational engineers, physicists, honest business people and scientists – people who are not career politicians on the make and would not usually aspire to be an MP. People who tell the truth rather than tell people what they think will get them elected. Then later default on it and kick their voters in the teeth.

        The system that pertains gives us what we get. Aided hugely by the BBC propaganda unit.

        We want people who look at statistics and figures to see what is the best thing to do to improve things for everyone. Rather than the current PR/spin types who look at them to find how they can be selectively distorted, used to mislead, cherry picked and then used to con voters.

        Most people who would seek to be an MP are probably by definition rather unsuitable to be one in my experience. We see this very clearly with the expenses scandal, their subsequent reaction to it, the recent further expenses cover ups, the conflicting “consultancies” and the way they protect their over generous MPs pensions while robbing everyone else’s pension.

        This rather than setting a good example.

      • Lifelogic
        Posted December 18, 2014 at 7:13 pm | Permalink

        “The course is not responsible for decisions and judgements people make 20 years later in a political job.”

        Perhaps not, but maybe the fact that they chose PPE indicates (to a degree) the sort of person they are.

        Ed Miliband certainly seems to be following the very damaging direction of his academic father’s lead some 20 year later though.

      • petermartin2001
        Posted December 22, 2014 at 1:29 am | Permalink

        James Hacker: Bernard. Humphrey should have seen this coming and warned me.
        Bernard Woolley: I don’t think Sir Humphrey understands economics, Prime Minister. He did read classics, you know?
        James Hacker: How about Sir Frank? He is head of the Treasury.
        Bernard Woolley: Well, I’m afraid he’s in even greater disadvantage in understanding economics. He’s an economist.

        James Hacker: But that’s an outrageous view.
        Sir Humphrey Appleby: Yes indeed, it’s known as Treasury Policy.

  15. agricola
    Posted December 18, 2014 at 8:38 am | Permalink

    All very good news John, you would need to be particularly myopic to even consider voting Labour, an idea in it’s present form which has run it’s course.

    Don’t get too much satisfaction from it because I wonder how much is fed by our enormous debt. When I see that going down I will feel somewhat more relaxed.

    There is another story making news today that I find disturbing for a number of reasons.
    Your government to it’s credit has been big on apprenticeships with growing success in private industry. The story in government is alarming. Tens of thousands would like to train as nurses in the NHS, but management of the NHS has decided it is cheaper to employ nurses from overseas than to train home grown ones. Four out of five nurse employees in the NHS are now apparently from overseas. In purely monetary terms this may be correct, but it kicks British youth in the teeth. In the process you could well be draining European and worldwide health services of people they really need. I know EU government is culpable in creating a shrinking employment situation within many of their member states, but should the NHS be allowed to take this short term solution.

    It costs at least £2,000,000 to train a fighter pilot in the Royal Air Force. How long before the MOD realise that advert in Pravda could save them a few pounds in training costs. What it might do for the loyalty of our defence force is another matter.

    • Chris
      Posted December 18, 2014 at 9:25 am | Permalink

      Agricola: did you know that Cameron and his government apparently cut 10,000 training posts for nurses since the last election. Not surprising therefore the current plight of our homegrown nurses. (Info from Louise Bours, UKIP health spokesman, and D Tel. May 2014 article, and Dec. 17 article).

      Reply This government has recruited extra nurses and doctors.

      • Chris
        Posted December 18, 2014 at 11:45 am | Permalink

        Reply to reply: yes, apparently from outside the UK. Not what we should be doing, and not what our homegrown potential student nurses need and want.

      • libertarian
        Posted December 18, 2014 at 2:20 pm | Permalink


        Nurse training posts have been INCREASED by 4% and are now up to 20,000

        See here

        These are UK nurses studying at UK Universities for Nursing degrees

      • JoeSoap
        Posted December 18, 2014 at 6:52 pm | Permalink

        In the meantime you pay perfectly capable people to sit at home in the UK twiddling their thumbs. Crazy.

    • Chris
      Posted December 18, 2014 at 9:35 am | Permalink

      Just to expand on my comment with regard to training nurses, the D Mail has a detailed article today about how managers in the UK go overseas to recruit blocks of nurses to work in the NHS, of ten 50 or more:
      “..Last month the Mail visited a recruitment fair in Porto, Portugal (pictured), where Bedford Hospital hired 25 nurses. They were offered contracts without any formal English tests…” These nurses could not find jobs in Portugal!

      The reason apparently for this outsourcing is cost: in the UK it costs £70,000 to train a nurse and yet the NHS can recruit 3 nurses from abroad for the same price.

      The article is well worth reading and the veracity of what has been reported can be checked up easily enough. The situation is a disgrace, and of course it is fundamentally linked to our membership of the EU.

      • Lifelogic
        Posted December 18, 2014 at 3:57 pm | Permalink

        Indeed I agree fully. And there is no need at all for most nurses for have undergraduate degrees, it is a practical skill in the main (outside a very few specialist areas) and should mainly be learned on the job.

    • Mondeo Man
      Posted December 18, 2014 at 9:51 am | Permalink

      There used to be different grades of nurse training. SRN SEN. Not all nurses need to be graduates but this is what the training demands.

    • Lifelogic
      Posted December 18, 2014 at 5:03 pm | Permalink

      Should be really be training royal princes to fly at £2M a time when they serve for .so little time post training. What is the training cost per useful hour of flight post training?

  16. Mike Wilson
    Posted December 18, 2014 at 8:41 am | Permalink

    We’ve had inflation of best part of 5% for years with little or no wage inflation. Globalization and immigration have put downward pressure on wages. Stupid government initiatives like tax credits put downward pressure on wages.

    I saw on the box the other day (Andrew Neill on Sunday – interview with Duncan-Smith – look at it on iPlayer – it is mind boggling) that someone working 24 hours a week, earning the minimum wage, whose wage was (somehow – don’t why – numbers did not add up) shown as just over 10k a year – had their ‘wage’ increased to just under 30k by tax credits and housing benefit! And, apparently, if they moved up to 40 hours a week – they would effectively ‘earn’ just £500 to £1000 a year more!

    No wonder employers pay so little! The rest of us make up the wages!

    Mind-boggling incompetence on an epic scale! And you talk about inflation coming down a bit!

    • Lifelogic
      Posted December 18, 2014 at 3:58 pm | Permalink

      Indeed there is no point in paying more as they benefit so little also there is little point/incentive in them doing more hours. It is clearly bonkers.

    • Narrow Shoulders
      Posted December 18, 2014 at 6:24 pm | Permalink

      Under the Universal credit soon to be introduced nationally an individual earning minimum wage will be able to take home thirty six thousand pounds a year.

      That is the equivalent of fifty thousand pounds a year before tax once higher rate thresholds kick in.

      The fifty k earner then has to compete against the minimum wage earner for housing stock and food costs. Open to anyone from the EU with kids who wants to come and work

      No wonder business likes the EU

  17. alan jutson
    Posted December 18, 2014 at 9:01 am | Permalink

    Well its better for some I would agree, but when you have had your income cut by 25% or more for a few years, as many did in the private sector, the fact that it has risen a bit since then, does not give cheer all round.

    Yes of course we have seen some improvement in some areas, but huge numbers of small businesses were either put out of business or had to cut back so severely that they are still a shadow of their former selves.

    Whilst I am no fan of borrowing, and always reinvested out of our profits, many sound trading businesses were also wrecked by the Banks who wanted repayment of existing loans/overdrafts more rapidly, as they clawed back on their lending to satisfy the governments capital requirements quickly.

    1,750,000 new jobs but unemployment down by only 552,000 means what?

    !,200,000 Jobs taken by our european friends, instead of from our own unemployment list.

    Meanwhile the National Debt is still rising at a huge rate, just a little slower than before.

    • libertarian
      Posted December 18, 2014 at 2:29 pm | Permalink

      Each year people get a year older ? Then once they reach 18 and onwards they enter the job market. Now once upon a time people used to leave the job market between 60-65 years of age. Thats changed people are now staying in work up to 70-75 years of age. So the number of people available to work has risen whilst unemployment has dropped by half a million. You really also need to bare in mind that unemployment is nothing to do with job availability. Some people are unemployable, some people are not able to work but would like to, some people don’t want to work and the largest number of people are TEMPORARILY unemployed whilst seeking new job opportunities.

      • Narrow Shoulders
        Posted December 19, 2014 at 8:10 am | Permalink

        True but that is still 1.2 million low paid jobs for subsidised Europeans

        • libertarian
          Posted December 19, 2014 at 11:44 am | Permalink

          Narrow Shoulders

          I don’t know why I bother !! Go back and read at least 3 of my posts on here with the figures and facts about UK employment.

          The new jobs are NOT low paid, they are NOT subsidised and they at NOT importing workers to do them in large numbers

          Why are you all obsessed with low paid jobs? They are a very small part of the jobs market and heres why

          1) Workers with no experience tend to start out on low wages for first year or so until they have experience

          2) Unskilled work with no intellectual content tends to be low paid and is done by people who suit this kind of work and is often topped up with in work benefits

          3) In some parts of the country low pay isn’t as low as other parts in terms of cost of living

          4) We have exported large numbers of low pay jobs overseas

          The UK average wage is £26,000 the UK Average Self Employed wage is £31,000 the UK average wage for IT/Digital workers is £42,000

          The average UK salary for someone with between 5-10 years experience is £30,736 The average wage in London is £35,500 the average wage in Aberdeen is £34,000

          There are 1.6 million people earning the minimum wage roughly in the UK today which means that 28 million earn MORE than that

      • alan jutson
        Posted December 19, 2014 at 8:48 am | Permalink


        Yes I understand all of the comments you make, and certainly any calculations on jobs, vacancies, unemployment, self employed, part time employment, non registered unemployed etc, are getting ever more complicated due to a wider spread of practices and working opportunities.

        But do also remember that whilst some pensioners continue to work (a more modern fact bourn out of necessity) eventually most do stop as they get older, and eventually of course pass away..

        My point was that it was such a shame that we still need, or allow people to enter our country, when we still have a huge number already here without jobs. But I guess that brings us back to education and training.

        • libertarian
          Posted December 19, 2014 at 11:57 am | Permalink


          Exactly, we are addressing the wrong problem. Long term unemployment has nothing to do with a lack of jobs. We have more than enough jobs for full employment. Despite the fact that the UK population is now 77 million people we have only 1.8 million unemployed there were 2 million unemployed in 1931 when the population was only 46 million !

          The problem is of a mix of different problems that are all thrown into the same pot by central government for beaurocracy purposes.

          Amongst the long term unemployed are various groups with different issues

          1) People with drink/drug addictions

          2) Ex offenders

          3) People with mental health/depression issues

          4) People with injuries and disabilities that find it difficult to get work

          Then we have those people who lack skills/qualifications and basic literacy ( far too many people for a 1st world society).

          We have issues with NEETS that is people 16-24 not in education or employment, this in my opinion is a direct result of political failure forcing people into useless exam passing, staying at school too long and having University as the only target option

          We then have a small but hard core group that choose to live on benefits

          Our education system is one size fits all unfit for purpose. Survey after survey of business owners in the growth sectors will tell you what is needed but as with most other things the politicians don’t listen to people in the real world, they live in their little bubble

  18. Kenneth R Moore
    Posted December 18, 2014 at 9:18 am | Permalink

    The coalitions only policy is to use mass immigration to drive down costs and open up the market to work that isn’t viable without in work susbsidy. Where I live in York 1200 new homes have just been given the go ahead on a site that used to provide employment to local people . The roads here are already gridlocked at peak times – what is going to be built on next – village greens ?…back gardens ?.

    Nobody has explained why the ‘1.75m new jobs’ isn’t adding a substantial amount to income tax receipts ?. JR talks of the ‘high rate of growth’ but it is an illusion designed to keep his party in power in a doomed attempt to create an economy large enough to service Mr Osbornes monstrous debt.

    Furthermore we aren’t about to enter a new era of cheap energy – the low price is just a temporary blip.

    Reply Because a) big rise in thresholds means people on lower incomes paying less b) high higher rates have lost us top end earners and incomes.

    • behindthefrogs
      Posted December 18, 2014 at 2:14 pm | Permalink

      Te local councils are already building on our village greens. You only need to look at the proposed development of Elms Field in your own constituency.

    • Mike Wilson
      Posted December 18, 2014 at 3:28 pm | Permalink

      Reply to Reply – and lots of people on low income jobs means the rest of us have to top up their wages with tax credits and housing benefits.

      Hey, why not get 10 million more here earning £1 an hour. No problem, we can top their money up. We have so much money we don’t know what to spend it on next. Just think of the employment statistics.

      Truly, this country becomes more of a madhouse with each passing year.

      • alan jutson
        Posted December 19, 2014 at 8:49 am | Permalink


        Sadly what you describe is not far from the truth.

        Problem is many Politicians cannot see it. !

    • Narrow Shoulders
      Posted December 18, 2014 at 6:29 pm | Permalink

      Reply to reply
      Then why subsidise the jobs in a through in work benefits and subsidies? Make business pay for its labour. It doesn’t seem to have an appetite to contribute to infrastructure.

    • Kenneth R Moore
      Posted December 18, 2014 at 10:02 pm | Permalink

      Thank you Mr Redwood,

      The change in thresholds and the higher rate is a factor. However if so many of the ‘1.75m new jobs’ didn’t pay around the minimum wage then they should be offsetting these changes to a greater extent. Clearly the OBR took this view before they had to take a reality check and revise their figures downwards.

      Increases to in work benefits such as housing and tax credits have also been soaring underlining my point – GDP is growing but there is little to show for it.

      It is your leader that has started defining the national debt in terms of GDP so that he can attempt to hoodwink us into believing he is making progress on the deficit.

      ‘many more months of pay outstripping prices’.
      This is just a fantasy – the economic equivalent of walking on water. Any scarcity value of labour in the unskilled sectors that might leverage up pay rates has been destroyed by the coalitions failure to tackle immigration.
      The cost of living crisis goes on for many….

    • petermartin2001
      Posted December 19, 2014 at 12:10 am | Permalink

      “high higher rates have lost us top end earners and incomes.”

      I have at earlier points in my career been in the fortunate, some would say, position of having to pay tax at the top rate. The taxman rules that the proceeds of share options have to be paid as income tax rather than CGT.

      I don’t remember being given any choice in the matter. The only way I could have deprived the taxman of his revenue was to have declined the income in the first place!

      So, implicit in your comment, is that there is a high degree of tax evasion/avoidance happening in the economy. Some of which would be downright illegal!

      Reply Not so. People who own or have considerable influence over successful companies can simply pay themselves less and retain the money in the company. That is legal and reduces Income tax receipts.

      • petermartin2001
        Posted December 19, 2014 at 12:50 pm | Permalink

        Well I suppose that is possible. But that would boost corporation taxes for those companies. You would argue that it wouldn’t fully make up for the lost income tax, as corporation taxes are lower, so there would still be a partial loss. Two things could happen to that ‘lost’ revenue. It could sit in a bank account doing nothing. Or, that money could be spent, by the company, on new plant and equipment or hiring extra workers or whatever. In which case it still would end up going back to Government anyway as taxes were levied on every transaction in which that money was involved.

        The first possibility would have a deflationary effect on the economy, but no more deflationary than if that money had been removed by taxation in the first instance. At some future time that saved money will be used and become available to the taxman once again.

        The second possibility would have a reflationary effect. Those are the important effects to consider. The purpose of taxation in a totally fiat currency based economy is primarily to regulate the level of economic activity in that economy to ensure it is operating at close to its maximum level but not so close that it allows inflationary tendencies to develop.

        Generally speaking, though, the higher the level of taxes the more deflationary their effect. We need less of that right now, so I would agree with you that taxes do indeed need to be lower and that lower taxes (not just the higher rates of income tax) could bring in more revenue due to the increased economic activity they would help generate.

  19. Iain Gill
    Posted December 18, 2014 at 9:21 am | Permalink

    Inflation figures are rigged and you know it is. Cost of housing is not in there, and so on.

  20. Andyvan
    Posted December 18, 2014 at 9:44 am | Permalink

    So, if you believe government figures(!) public sector pay is rising at double inflation and fuel prices have dropped 5.9% whilst oil prices have dropped by 40% plus. What wonderful news. Add to that the still gigantic and rising debt moutain George has built up and it shows considerable political skill to present this as good news and even more gullibility to believe it.

  21. English Pensioner
    Posted December 18, 2014 at 10:05 am | Permalink

    The inflation figure for most pensioners is considerably higher.
    The “basket of goods” includes thing like electronic equipment, televisions white goods, mobile phones and car fuel.
    The bulk of most pensioners’ income is spent on food and heating, and the former in particular has been rising in price quite rapidly. If we have mobile phones, they are usually cheap PAYG phones for emergencies only, and if we still drive, our mileage is well below the national average. We may get free bus passes, but that only works if there are buses nearby. Many have to take a taxi for their weekly shop if they don’t have a neighbour with a car, or won’t ask for help, and taxi fares are certainly not falling!
    Yes, we must welcome any fall in inflation, but please remember that there are many of us on whom it will have little if any impact.

  22. oldtimer
    Posted December 18, 2014 at 10:15 am | Permalink

    Good news is better than bad news. Labour getting its forecasts and policies wrong is not new. Nevertheless, on the money front, two fundamental problems remain namely the cost of electricity (a function of both past and present misguided government policy) and the still ballooning national debt (both also a function of past and present government policy). Consumers are paying the excessive price of these policies and that will continue for the forseeable future. As Fraser Nelson has pointed out, the PM and Chancellor do their cause no good by asserting they have cut the deficit by half when it closer to a third – and by resorting to playing with words and definitions to do so.

  23. A different Simon
    Posted December 18, 2014 at 10:17 am | Permalink

    How about including an item for “making provision for old age” in the inflation basket ?

    I.E. indicating how much the average private sector worker without should be aiming to save per year .

    I think there is more of a chance of me (doing something very unlikely ed) than John daring to talk about the options open to private sector workers for securing a dignified existence for their old age .

  24. Denis Cooper
    Posted December 18, 2014 at 10:26 am | Permalink

    “We need many more months of pay outstripping prices.”

    I think you mean years, not months.

    Bear in mind that for two whole years the rate of inflation was well above target, with pay lagging behind, and those increases in CPI have not been undone because the rate of increase of CPI has now come down, any more than the accumulated government debt has been reduced because its annual deficit has been reduced.

  25. Chris
    Posted December 18, 2014 at 12:06 pm | Permalink

    I believe the only way that we will see more economic growth and prosperity in the UK is if we leave the EU and instead have a trading agreement with it, thereby undoing the shackles that bind us to this failed economic model. Mr Redwood seems to believe that Cameron can renegotiate a new deal, but how many times do our politicians have to be told that the fundamentals of the EU are not going to be subject to renegotiation. Already Cameron has climbed down over freedom of movement as he has realised the folly of his position. Today, Francois Hollande has made it abundantly clear that Cameron does not have a hope of renegotiation, and that France will veto any efforts by Cameron.

    This is perfectly legitimate within the EU framework, so no one should be angered by France. What so many are angered by is the apparent utter stupidity and dishonesty of our Prime Minister in advocating a policy route that cannot be followed. As has been said many times before the electorate is not unintelligent and they do not seem to be taken in by Cameron’s assurances.

  26. Gary
    Posted December 18, 2014 at 1:29 pm | Permalink

    The Swiss National Bank annnounced rates of -0.25%.

  27. Peter Stroud
    Posted December 18, 2014 at 2:11 pm | Permalink

    Miliband is rather like a general, announcing his battle plans months before his enemy is likely to arrive, and with little or no idea how large are its forces.

  28. David
    Posted December 18, 2014 at 2:49 pm | Permalink


    Enjoy your posts but why is there no traction in the country to vote conservative. You have good economic news, a weak leader of the opposition but no momentum as we approach the election.

    • Lifelogic
      Posted December 19, 2014 at 5:55 pm | Permalink

      Because Cameron is virtually as bad as Miliband.

    Posted December 18, 2014 at 2:59 pm | Permalink

    Did I miss something about the oil price? Did I miss the part about the low oil price is only going to be applied to oil bought by the UK?

    In that the oil price is a definitive factor in the prosperity of a country ( it isn’t ) then the UK’s competitiveness has not changed. But it has lost income via the cut backs in its own oil production, the loss also of taxes and payments for oil workers’ unemployment benefits.
    The commuter is not going to double his trips to work because the resultant fuel price is marginally lower. He will only benefit really if he uses a substantial amount of fuel. Haulage companies for the most part do not have plans to pass on their savings on fuel to wholesale warehouses and retailers as with many products they are on thin profit margins.

    I see the BoE is banking on the oil price remaining low and has stated there will be a net benefit to the UK. This must a case of Santa Claus giving a gift of iffy information. Why on earth would anyone believe the oil price is going to stay low or decrease further? Even as I write there are people writing excuses for the oil price reaching a bottom and then rising..nearly 2% in the last 12 hours . They are saying it’s a “dead cat bounce “. Perhaps some speculators are hoping so but with oil production being cut back, now, in Canada, in the UK, and in the USA in massive terms then perhaps the BoE better stick to banking and not worry about the ins and outs of an industry they obviously do not understand. Oddly it was ex-PM Brown who also made a catastrophic error in regard to oil production. He increased the taxes on it and the companies pulled out after taking the easy-to-get oil and leaving the hard-to-get oil in the seabed which amounted to 25% of the total.

    Have the oil fracking companies in America who cannot survive on these low oil prices, nor their workers had their scheduled grand December meeting yet? Will they be giving President Obama a Christmas message? Is everyone aware that the fracking companies in the USA are regular and generous contributors to both Republican and Democrat candidates’ ( as individuals ) election campaigns? Will President Obama get a special Christmas message from his own Party?

  30. APL
    Posted December 18, 2014 at 7:10 pm | Permalink

    JR: “Inflation at 1% – what does that do to the “cost of living crisis””

    Firstly, this is the loss of future purchasing power.

    I’ve no doubt that ‘parliamentarians’ on index linked pay rises, promised now but bunged after the next election, don’t think there is a ‘cost of living crisis’, but as usual, the tweedle dum and tweedle dee of british politics, AKA the Tory and Labour party, conspire against the ordinary wage earner.

    98% loss of value in the pound sterling since 1914. At this rate, it won’t be too far into the future when a Mars bar will cost more than a pound.

    Well done, but hardly a thing to boast about.

    • Denis Cooper
      Posted December 19, 2014 at 2:42 pm | Permalink

      Which works out as an average loss of 4% pa compound, twice the present CPI target of 2% pa.

      • APL
        Posted December 19, 2014 at 5:48 pm | Permalink

        Denis Cooper: ” twice the present CPI target of 2% pa. ”

        And inflation has disproportinately impacted certain catagories of asset. Housing and Stocks, come to mind.

        I recall in about 1981 talking to a friend of mine who had just bought a semi detached in South Wales – at the time, hardly the most desirable location, for £1000. Today, a similar property is pushing £200,000. There is not one additional brick or stick of timber in the property.

        But the politicians prefer us to trade sticks and stones, rather than be industrious.

  31. Margaret Brandreth-J
    Posted December 18, 2014 at 7:31 pm | Permalink

    Putin is a little upset by the fall in oil prices and says that he thinks this is a conspiracy. Of course this pivotal commodity is better for the buyers when it is cheap , providing it is not overtaxed and hails an improved outlook for all who use oil.

    I think you should have been in sales John; only joking.

    Reply I set out the good news as well as the bad news in an attempt to provide a balanced and informed commentary of where we are. Some people on this site are against all good news for their own political reasons.

    • Narrow Shoulders
      Posted December 19, 2014 at 8:06 am | Permalink

      Reply to reply

      For their own political purposes?

      Or because they form part of the demographic that has been disproportionately targetted by your administration keen to appeal to those sucking on the state’s teat whether that be through contacts awarded, subsidies handed out or benefits and services received.

      The remainder of us continue to be sucked dry so feel no optimism.

  32. Javelin
    Posted December 18, 2014 at 11:25 pm | Permalink

    Did a presentation on oil prices. Not what people expected.

    I pointed out oil prices were being lowered as an existential act by the OPEC countries. I saw no demand side problems from the BRICS. This is about OPEC stopping shale investment at $75 a barrel and the US no longer being dependent and OPEC and Islamic militants taking over in OPEC countries. So lowering oil prices is purely done to stop US and EU investment in shale.

    Interestingly shale investment and even Green investment – I note 44% efficient solar panels last month – will have the consequences of creating Islamic states in the Gulf and the potential for years if wars with Muslims and possibly civil war in Europe. If you think cheap fuel can only bring benefits try it so cheap they can’t afford US weapons in Saudi or UAE and we have half a dozen Islamic states smuggling guns in oil tankers to UK sleepers. Then you will know the real price of cheap fuel.

  • About John Redwood

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

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