Treasury policies slow the UK economy as planned

At a time when most of the world is following expansionary policies, the UK has gone cautious. Where the USA is cutting taxes and increasing spending, the UK has been putting through targeted tax rises on cars and homes. Where the Euro area keeps interest rates at zero and carries on printing extra money, the UK is reining in credit, putting up rates and tightening money.

The main policies which have worked to slow the economy include

  1. Tax increases on  Buy to let properties, and higher Stamp duties on second homes and expensive properties
  2. Increased VED on higher priced  new cars, and threats of more anti diesel action to come
  3. Increase in interest rates
  4. Removal of lending facilities for commercial banks
  5. Warnings about car loans and consumer credit

Two sectors have been specifically targeted. The first is the car industry. Higher Vehicle Excise Duties, anti diesel messages and a reduction of car loans has led to a decline of 37% in the sale of new diesel cars for the year to March 2018 compared to the year to March 2017. Note this has nothing to do with Brexit, as car sales were rising  for the first nine months after the decision to leave.  Overall new car registrations rose 8.4% in the year to March 2017, and fell 15.7% in the following year. This has led directly to lay offs in auto plants.

The second is housing. The higher Stamp duties introduced in April 2016 for expensive homes and all second homes/BTL properties led to a 14% fall in the number of residential property transactions in 2016-17 compared to previous year. The fall was especially sharp before the referendum. The decision to phase out mortgage interest relief for higher rate payers by 2020 has made investing in BTL much less attractive. There has been a general substantial  fall in BTL investing.

This is an interesting change of policy by the Treasury, given their statement in 2010

“The Private Rented Sector plays a critical role within the housing system, helping to meet growing demand and providing a flexible tenure choice….it is important the sector continues to grow”.

Given the work that went into attracting more auto investment here, and the encouragement to the BTL market, it might be time to review the need for further slowing.

(PS I own no BTL property and do not buy  a  car dear enough to attract the high VED)



  1. Mark B
    April 26, 2018

    Good morning

    The property prices were in a bubble and would burst sooner or later. Houses are for homes and should not be part of an investment portfolio. If people wish to get onto that business then it should be as a professional landlord.

    Consumer spending on cars was also going through the roof. Remember, many of them cars would be foreign and in particular, German. I hear that the German economy seems to be slowing so this is just as much as bad as news to them.

    Interest rates have been far too low for far too long. The UK and sterling would well to see them begin to rise.

    We need to get back to normalisation as soon as possible. Whilst this may not be liked by some life pre-2008 depression was a little better.

    1. Lifelogic
      April 26, 2018

      “The property prices were in a bubble and would burst sooner or later. Houses are for homes and should not be part of an investment portfolio. If people wish to get onto that business then it should be as a professional landlord”

      If you rent a house out you are a professional landlord. We are short of houses and need landlord and more house to be let out. It is good for job mobility and more supply keeps rents down. So what on earth is Hammond playing at?

      1. APL
        April 27, 2018

        “We are short of houses and need Landlord and more houses to be let out”.


        We are suffering from excessive immigration, a reduction of and reversal of which would address the ‘shortage’ you claim exists.

        1. Captain J Erk
          April 29, 2018

          Wrong; you can build as many houses as you like but this won’t make much difference to prices whilst the cost of borrowing is lower than house price inflation. Investors borrow and buy houses and leave them empty in many cities because they believe they will make money on the appreciation.

          The things that will stop HPI are higher interest rates or a bursting of the bubble due to an increase in defaults or some other event. Interest rates need to target HPI A house is probably the most expensive thing anyone will consume. Whilst HPI is in the double digits and borrowing rates in the single digits, the result will be more HPI.

          The BoE deliberately encourages property inflation because they believe it is the wealth effect that drives consumer spending. But in reality all the BoE policies do is create bubbles. Only targeting CPI and ignoring other inflation, which is what the BoE does, is like driving a car with only one wheel loosely attached to the steering wheel.

    2. forthurst
      April 26, 2018

      Over the last 25 years, according to Duncan’s party, mass uncontrolled immigration has increased house prices by a massive 20% – Phew!

      An easy way of increasing the GDP with respect to housing is to make the ownership of rental accommodation by foreign domiciled entities, illegal. JR thinks buy-to-let is a business – I think it is pure parasitism without any compensating benefit to society, but at least let the Treasury take some of the ill gotten gains.

      1. R.T.G.
        April 27, 2018

        @ forthurst
        “JR thinks buy-to-let is a business – I think it is pure parasitism without any compensating benefit to society,…”

        Those who are in a position to choose whether to buy or rent might see it in more symbiotic terms.

        Those who are not in such a position should blame our recent governments who, in the full knowledge of their immigration policies and other policies, have been unwilling to induce a level playing field to promote equalisation of affordability to rent or buy dwellings.

      2. Bergman
        April 29, 2018

        @ forthurst
        “JR thinks buy-to-let is a business – I think it is pure parasitism without any compensating benefit to society,…”

        ….Apart from providing homes for people who can’t or don’t want to buy.

        1. Paul
          April 29, 2018

          This is a circular argument, if the majority of BTL landlords exited the market, prices would have to fall to what prospective owner occupiers can afford. That would be a good thing with the net result that we would save number of people living in the same number of houses … only without so many middle men taking a cut.

          Its a shame that so many tories are not true free market proponents but rather prefer to see one cohort of society farm the income of another through restrictive planning regulations which ensure that property is always artificially scarce.

          1. Bergman
            April 30, 2018

            “if the majority of BTL landlords exited the market”

            Building would come to a standstill and the market would soon return to equilibrium.
            A one time blip only benefitting a small minority that would cause huge damage to the economy.

    3. Sir Joe Soap
      April 26, 2018

      House prices could have been more beneficially controlled by interest rate increases than stamp duty increases.
      Diesels were lauded as the responsible purchase for so long. As soon as the market is large enough, the gov shoves up the tax rate. This is dishonest.
      Interest rates – agreed.

  2. oldtimer
    April 26, 2018

    Chancellor’s used to mess up the car industry back in the 60s and 70s by sudden and significant changes in purchase tax rates. This, they claimed, was all in the cause of controlling demand. It usually ended in tears. I expect it will be no different this time around. The capacity of Chancellor’s and Treasury officials to screw things up know no bounds.

    1. Hope
      April 26, 2018

      JR, why has no one been disciplined or sacked in the Treasury for the fake reports poor policy decisions, announcements discredited the dept and country and woeful predictions? Why is Hammond still in position? I note the same person who negotiated with the EU for Cameron’s failed/ fake please for reform is also one of the top team for Brexit! Is May really that stupid? Of course the same could be asked about Carney.

      However, the answer is clear: May is approving all of this to incrementally keep the U.K. In the EU in all but name. She won’t cry in her beer! Good to see Mr Dodds making it clear the DUP will bring down the govt if it keeps N.Ireland in the customs union. He remembers May being underhand trying to give away N.Ireland in a December. A pity the rest of you have such poor memories and sit idly by.

      1. Mark B
        April 27, 2018

        We will not be joining the CU, just shadowing it. This is being set up for an argument for the PM to win. That way she can claim she kept us out of the CU and not talk about the fact she kept us in the Single Market via Regulatory Alignment.

    2. NickC
      April 26, 2018

      Oldtimer, You are right. The use of changes in hire-purchase terms (deposits) could turn off car purchases like turning off a tap. It became known as the “stop-go” policy. It was that, not marxist union leaders or useless management, that killed the British car industry.

      It was yet another unintended consequence, like Gordon Brown raiding pensions which led to the BTL boom in the first place. Politicians need to learn to simplify, and to recognise that their, and the civil serpents’, wheezes usually have damaging long term consequences.

    3. getahead
      April 26, 2018

      Chancellor’s is possessive oldtimer. Chancellors plural has no apostrophe. I’m saying this because your apostrophes make your comment difficult to read.
      Your comment however, is appreciated.

  3. duncan
    April 26, 2018

    You and your colleagues chose this statist, interventionist, EU supporting leader and her Europhile Chancellor and now the private sector has to suffer the downside of his political games as he formulates his plan to create his ‘Brexit is bad’ policies

    Hammond is deliberately injuring the British economy to make a political statement. How poisonous is that?

    Never underestimate the Machiavellian nature of today’s modern politician. They will even damage the interests of their own country for political advantage

    All of this nonsense could have been avoided if the following had happened :

    One, that traditional Labour voters who voted Leave in 2015 had voted UKIP at the subsequent GE. Why they then reverted back to a party that supports the UK’s continued membership of the EU is beyond me. Automated behaviour on a Pavlovian scale.

    And two, that Tory MPs had chosen a Eurosceptic to lead our party.

    The first I understand. Old style Labour voters are so conditioned and their critical faculties placed into suspension by years of class propaganda.

    The second. We dispensed with Thatcher and ended up with Major. Explain that one to a rational person though I suspect EU interference was partly responsible for this. Major was pro-EU. May is pro-EU. A pattern is emerging here. I sense my party isn’t Eurosceptic but a party that reviles change

    1. stred
      April 26, 2018

      Labour leavers believed Corbyn when the manifesto supported Brexit. He has now ratted on this, encouraged by the Europhiles like Starmer with a chance to put the boot into a hopeless Tory leader and helped by their untrustworthy MPs such as Soubry and Grieve.

    2. Andy
      April 26, 2018

      Margaret Thatcher was pro-European. She almost single handedly created the single market which Brexiteers – erroneously claiming to act in her name – seek to destroy. Of course Thatcher had more than a few disagreements with Brussels. That was good for her reputation both and home and abroad. But she was also a patriot.

      She understood the power of Britishness. She knew our culture and identity would thrive inside Europe. She was not scared like the Little Englanders. For all the EU’s fault Thatcher would have backed Remain in the referendum.

      Reply Not so. Out of office she concluded the other way

      1. Edward2
        April 26, 2018

        It’s tragic that the EU and in particular the single market, has been hijacked by left leaning protectionist politicians.
        Like Lady Thatcher, I thought it might bring a revolution in easy tariff free world trade.
        But it is now heading to being a rules heavy protectionist bloc which tries especially to exclude emerging nations.

      2. Anonymous
        April 27, 2018

        She was ousted because she became a skeptic.

      3. NickC
        April 27, 2018

        Andy, Mrs Thatcher did not “create” the EU’s single market, “single handed” or otherwise. She actively opposed the EU’s notion of a centralised rule driven single market. Her preference was for mutual recognition. But she lost. That’s what her Bruges speech in 1988 was about.

        1. APL
          April 28, 2018

          “Her preference was for mutual recognition. But she lost. ”

          That seems to have become a habit of Tory Leaders.


    3. Ghost of JB
      April 26, 2018

      At the last election Labour supported leaving the EU, SM, CU and ECJ.

      They have “refined” their position since then, whilst profiting from Leave votes. Shameful, and bound to backfire with their traditional supporters.

    4. a-tracy
      April 26, 2018

      “And two, that Tory MPs had chosen a Eurosceptic to lead our party.”

      Its all there was left, the others backed out in cowardly submission to goodness knows what background pressure.

    5. NickC
      April 26, 2018

      Duncan: “Hammond is deliberately injuring the British economy to make a political statement.” Indeed. As is Mark Carney. Neither want an independent UK to succeed.

  4. alan jutson
    April 26, 2018

    Well what a surprise, the more you raise tax on particular goods, the less of those goods people purchase.

    Seems the only tax increase which has had no effect on the economy, is the fiscal drag on Inheritance tax, as more and more estates each year are sucked into this scheme, but then not much you can do about dying.

    Isn’t it about time some tax allowances which have not moved in very many years, were also raised in line with inflation.
    The fiscal drag of not doing so has a similar effect to a stealth tax rise each year.

    1. Lifelogic
      April 27, 2018

      That ratted on promise was about the only good thing that Osborne said is perhaps better. It made Brown bottle his early election plans and kept him out.

  5. Narrow Shoulders
    April 26, 2018

    Again you have written an article cautioning against reigning in credit.

    One of the causes of the last collapse of our economy was too much easy credit in the system so why are you recommending further easy credit and low interest rates. If money is not priced correctly investment decisions may become frivolous.

    Easy money is easy money for the banks and those who can take advantage of rising asset prices not the general population.

    If you really want more money in the economy why not reduce PAYE, reverse the recent NI upper earnings limit rise, increase the £100K threshold or give back removed child benefit.

    That would be real helicopter money.

    1. Adam
      April 26, 2018

      Queen Elizabeth reigns in credit.
      MPs control the reins in Parliament.

    2. Lifelogic
      April 26, 2018

      If you really want more money in the economy why not reduce PAYE, reverse the recent NI upper earnings limit rise, increase the £100K threshold or give back removed child benefit.

      Indeed undo all the very many tax hikes. What matter in the real economy is not base rates but the huge margins the banks are getting away with due to a lack of any real competition.

  6. stred
    April 26, 2018

    The anti-diesel measures seem to have been as though the Greens were in government. The scientific basis for believing that 40k deaths pa is caused by NO2 is codswallop and the missions of electric vehicles, where 60% of particulates come from brakes and tyres is forgotten. New diesels can emit a little as petrol cars and hybrids run on petrol. The new £100m subsidised hybrid taxi is a hybrid. Let’s disadvantage our biggest success- JLR at the expense of Japanese companies that are going over to hybrids. Brilliant Mr Clarke.

    It is as if ministers are so ignorant of science and engineering that they swallow anything that green pressure groups and green civil servants tell them. Michael Gove is covering himself in greencrap and even wants to ban cotton buds now. 99% of the plastic in the oceans comes from Asian and African rivers where landfill is not controlled. All our buds go to proper landfill, unless someone is cleaning their ears while sitting on a beach and is too thick to take waste home. Now Claire Perry is saying that we need to go for 100% renewable energy by 2050 and we are closing the coal stations that just prevented blackouts. We might as well have the one green MP dunce in charge. Where do the Conservatives find these non-conservative fools?

    1. Lifelogic
      April 26, 2018

      “It is as if ministers are so ignorant of science and engineering that they swallow anything that green pressure groups and green civil servants tell them.”

      That clearly is exactly the position all egged on by the appalling BBC. Almost no MP’s or ministers have any understanding of science, numeracy or indeed logic it seems. If they do they will almost certainly never be promoted.

    2. Hope
      April 26, 2018

      It is really astonishing how these people who appear intelligent by education actually make such irrational and stupid decisions. May is a classic. She is also untrustworthy and you cannot beleive anything she says. The Tory Govt is of course following the EU policy on environment which affects coal power stations, and plastic. These Tory mouthpieces are exactly that. They are announcing EU policy as if it were their own. Moronically following Eurocommunism rather than lead even if it harms our country.

      1. Leslie Singleton
        April 26, 2018

        Dear Hope–Agreed–Shutting down even the minimal but still important residual coal powered stations is utter madness and in any event would only have an effect on the world in about the 10th decimal place–but again to us keeping them for say another ten years could be crucial. As ever who cares what MP’s think on this just because they have been elected? What do they know about it??

    3. Jagman84
      April 26, 2018

      Stred. I am beginning to look at this attack on diesel powered vehicles from another angle. Just consider the future of international air travel when oil reserves become more scarce. Hydrogen technology, the preferred alternative, is electrical energy intensive. Therefore, I see this Government agenda an attempt to ring fence diesel/kerosene for aviation. Militarily, this issue will be vital and is likely the reason for the know-towing to the Arabian states.

      1. stred
        April 27, 2018

        One prediction is that when the oil price doubles it will become economical to produce synthetic petroleum. But we will need more than double the amount of nuclear power. Renewables will not be able to supply any more than a fraction of electricity for heating and transport. Synfuels may, however, provide a way of mopping up the fluctuations in wind and solar. By the time they get round to building enough nuclear, most of the wind turbines will need replacing anyway-they only last 20 years, maybe less in the sea.

    4. KZB
      April 26, 2018

      Greatest life expectancy = Kensington and Chelsea
      Shortest life expectancy = Blackpool

      One thing Blackpool has in abundance is fresh air…

    5. Cis
      April 26, 2018

      Uptick, uptick, uptick!!!

    6. Mark
      April 26, 2018

      Time for zero emissions from Claire Perry. The silence would be better than any announcement she makes.

    7. APL
      April 28, 2018

      “they swallow anything that green pressure groups and green civil servants tell them. ”

      Who funds these ‘pressure groups’? Most of the time they are defacto branches of government, or foreign billionaire’s gateway to British government influence.

      98% of them should have. Been shut down on the second day after David Cameron took office.

  7. stred
    April 26, 2018

    The anti-diesel measures seem to have been as though the Greens were in government. The ‘scientific’ basis for believing that 40k deaths pa is caused by NO2 is codswallop and the emissions of electric vehicles, where 60% of particulates come from brakes and tyres is forgotten. New diesels can emit as little as petrol cars and hybrids run on petrol. The new £100m subsidised hybrid taxi is a hybrid. Let’s disadvantage our biggest success- JLR at the expense of Japanese companies that are going over to hybrids. Brilliant Mr Clarke.

    It is as if ministers are so ignorant of science and engineering that they swallow anything that green pressure groups and green civil servants tell them. Michael Gove is covering himself in greencrap and even wants to ban cotton buds now. 99% of the plastic in the oceans comes from Asian and African rivers where landfill is not controlled. All our buds go to proper landfill, unless someone is cleaning their ears while sitting on a beach and is too thick to take waste home. Now Claire Perry is saying that we need to go for 100% renewable energy by 2050 and we are closing the coal stations that just prevented blackouts. We might as well have the one green MP dunce in charge. Where do the Conservatives find these non-conservative fools? (corrected)

  8. Adam
    April 26, 2018

    The UK has the fundamentally expanding dynamic of population growth; increasingly out of control.

    A well-planned economy would proceed at a steady pace, without sharp peaks emerging unexpectedly, & without frequent intervening corrective measures to reverse previously-avoidable outcomes.

  9. Know-Dice
    April 26, 2018

    Off topic 🙁

    Has the Bromance between Macron and Trump had its day, with Macron’s speech to Congress?

    We will see, but it’s fun to watch…

  10. Lifelogic
    April 26, 2018

    The attacks on the BLT market (the 3% extra stamp duty and double taxation of landlord interest) are an outrage. A business renting houses is just as important to the economy as one renting cars, trucks, plant or aircraft perhaps more so given the population increases.

    Many people do not what to buy as they often only want short term accommodation as their needs may charge or they many move or are unable to get a mortgage. Why does Hammond want to rip these people off? Anyway if you tax profits that are not even being made you just slowly kill the industry and restrict the supply of properties to rent.

    With the absurd (up to 15% stamp duty) there is little point in buying unless you are sure you are staying put for quite a few years at least 5 perhaps 10. After all the dead in and out costs (of buying and selling) can be as much as 20%. Plus if you are not careful you get into the 40% confiscation on death tax!

    Hammond’s (and Osborne’s) agenda is absurd. Why on earth is the economic illiterate still at no 11?

  11. Denis Cooper
    April 26, 2018

    Here, at last, is some sense gradually emerging from government circles:

    “The UK would also take responsibility to ensure that goods coming into Northern Ireland, that did not match EU standards, did not move on to the 27 member states.”

    “On what he described as the “back-door” danger for the EU in the UK taking responsibility for keeping goods below Brussels standards from moving on from the UK, Sterling said: “The visibility and impact of a ‘robust enforcement mechanism’, to ensure goods not complying with the EU’s trade policy (whether through a lower tariff or diverging standard) stay in the UK, is a significant challenge.”

    If at present the UK authorities are capable of preventing significant volumes of such illicit goods being imported into the UK from outside of the EU, and the EU authorities trust that the UK authorities can and will do that and are happy for any goods to cross into the Irish Republic from Northern Ireland without any further checks, then there is no reason to suppose that in the future the UK authorities would be incapable of preventing the onward export of such goods to the EU and there is no reason why the EU should cease to trust the UK on that.

  12. ChrisS
    April 26, 2018

    About as close to criticising your own Chancellor as we have ever seen on JR’sD

    I’m someone who does have BTL properties and wanted to buy a car that attracted the higher rate of VED but I decided against it. That decision has deprived Hammond of £10,000 in VAT and will have contributed to the loss of a job or two in our car industry.

    What on earth is the man doing deliberately slowing growth when we need every tenth of a percent we can get ? Does nobody in Government understand this ? The one thing this Government has going for it over Labour is the economy, yet Hammond is trying to drive it backwards !

    Can someone, anyone, provide a rational explain as to why he is doing it ????

    1. Sir Joe Soap
      April 27, 2018

      I was looking at swapping houses but decided that 6 figure stamp duty wasn’t worth it and decided to stay put.

  13. Epikouros
    April 26, 2018

    One can be forgiven for thinking that the prime minister, the chancellor and the governor of the BoE are not only lacking in competence but being firmly in the remain camp are striving to undermine Brexit. Undermining it by following policies that are damaging the economy. How else can their actions be explained as their policies are patently obviously wrong at this time.

  14. A.Sedgwick
    April 26, 2018

    New MOT rules from May 20 seem designed to kill off older diesel cars. Government instead of admitting the howler of promoting these engines and having a genuine scrappage scheme e.g. cash not discount they are opting for the stealth version. I am surprised any private buyer is buying diesel.

  15. Christine
    April 26, 2018

    Although rental yields look good on paper there are huge risks involved. If a landlord is unlucky enough to get a tenant who stops paying their rent it can take months or years to evict them, with huge losses for the landlord. Councils also tell tenants they can only get to the top of the housing list if they get evicted. This causes more perverse behaviour. Why should a section of the community get subsidised housing where others who may have a lower income pay the market rate? It doesn’t surprise me that many landlords are selling up which will only lead to less supply and higher rents. Unfortunately Government’s fail to see the long term consequences of their policies and we constantly get these knee jerk reactions to fix one problem which then cause another.

    1. APL
      April 28, 2018

      Christine: “It doesn’t surprise me that many landlords are selling up which will only lead to less supply and higher rents. ”

      What’s happening to the houses these Landlords are selling Christine? Are they being demolished?

      1. Bergman
        April 29, 2018

        “What’s happening to the houses these Landlords are selling Christine? Are they being demolished?”

        No, they are just not being built in the first place.
        Landlords were responsible for a large proportion of new build properties being built.

        1. APL
          April 29, 2018

          Bergman: “they are just not being built in the first place.”

          So there are two factors impacting the price of property in the future properties are not going to be built, fair enough.

          And, demand is infinite because of immigration. Which has been a factor for half a century.

          Bergman: “No, they are just not being built in the first place.”

          A ‘Landlord’ who has no property portfolio? ?

          I’d ask you to kindly provide new builds by category, for example the major developers, and the niche developers with a final category – Landlords who build their own property portfolio.

          I’m prepared to lay a bet that Landlords who build their own properties ( rather than buying already built properties ) are a very rare phenomena.

          But cite the figures with an authoritative source, and I’ll happily have a look at it.

          1. Bergman
            April 30, 2018


            LONDON (Reuters) – London-focussed housebuilder Berkeley (BKGH.L) said it cannot further increase its volumes above current plans due to the planning constraints and government changes in recent years which have made buying a property to rent less attractive.
            “Domestic buy-to-let investors, who buy early in the cycle and provide security of cash flow to enable complex, capital intensive developments to be brought forward, are further impacted by additional transaction costs and the removal of interest deductibility,” the firm said.

          2. Bergman
            April 30, 2018

            And that is just the big players.

            Small builders and small developers have been even harder hit.

            Those sneered at by the political intelligentsia.

            The ones that get in their white vans at 7 am and graft until 7 pm, creating housing, taking a risk and building the country.

            The ones with good old Tory values such as being taxed on profit rather than turnover.

            The houses aren’t disappearing, they’re just not being built.

  16. Lifelogic
    April 26, 2018

    Other policies that slow the economy down.

    Forcing companies to report on gender pay gaps when they have far better things to do.
    The highest and most complex taxes for 40 years
    The threat of Corbyn & Mc Donnall which May and Hammond seem to so keen to arrange
    The work place pension nonsense
    The apprentice levy
    ATED tax
    the 20 increase in insurance tax
    the 15% stamp duty tax
    the failure to increase IHT threshold as promised to £1M
    the attack on pension pot largely only for the private sector.
    the idiot attack on being self employed through a service company.
    May’s lack of any sensible vision
    May throwing the last election with a vote for me and we will kick you in the teeth manifesto.
    The half brained attack on plastics, sugar and junk food.
    The idiotic plans for gazumping
    Say we want to stick to the European Model
    The attack on the rich and the non doms pushing them out of the country with their money.
    The endless payment to encourage the feckless not to work
    The minimum wage making it illegal to work if your work is not worth X per hour.
    The incompetence and delays in the dire NHS
    The very poor road network with huge undercapacity
    The failure to get new runways at Gatwick and Heathrow
    The green crap agenda and expensive energy
    The poor education system and all those worthless degrees in drivel.
    The endless government waste and the inconveniencing of the productive. HS2, Hinkley, the Taylor report …
    The lack of real competition in banking.

    plus and all the rest of this government’s daily lunacy.

    1. Lifelogic
      April 26, 2018


      Daft damaging OTT planning restrictions and OTT green crap building regulations.
      Absurd requirements for landlords and banks to act as unpaid immigration officials.
      Over the top sledge hammer to miss a nut health and safely.
      The out of control litigation structures.
      Absurdly restrictive and risky employment laws that encourage people to swing the lead knowing they are hare to fire.
      Hammond in his last budget further extended capital gains tax for offshore investors to commercial property (which makes funding for development and inward investment projects far less attractive and thus far harder to fund. Everything Hammond does is wrong totally headed. This will not even raise more tax overall, it just damages jobs, investment and the economy!

    2. Bryan Harris
      April 27, 2018

      LifeLogic –
      That’s quite a list…. well worth bringing up, from time to time…..

    3. Newmania
      April 28, 2018

      The most serious threat by far on that list ( most of which is more words than matter) is the looming prospect of a Corbyn Government .
      In fact Corbyn is never going to be the PM but the chance that he might be has been created by the vast well of loathing the Conservative Party have earnt by adopting the Polcies of UKIP an extremist right wing Party to whom a dim and childish conception of Nationalism trumps all other considerations

      This is your fault and , muight I add , trhat in the opinion of almost everyone who is not retired or unemployed the other threat is Brexit .

      1. Edward2
        April 28, 2018

        What we have is the least right wing conservative government.
        Windrush is a failure of bureaucracy not policy.
        Immigration remains at several hundred thousands a year.

        The polls show no change since the referendum in fact polls show an increased number want the government to get on with leaving the EU.

  17. Lifelogic
    April 26, 2018

    Under Mrs Thatcher we had tax relief to invest in BTL with the BES tax scheme. Plus we had no IPT on insurance (or medical insurance) and income tax and NI relief on them too. Relieving pressure on the NHS.

    A proper Tory government would have all these things plus education vouchers you could use and top up too!

    Alas we just have a Corbyn warm up act from daft, misguided, socialists of T May and P Hammond!

    1. Bryan Harris
      April 27, 2018

      It’s a sad fact that we do not appear to be going in the right direction, politically… Perhaps when we have got through our Clean (hard) BREXIT things will be better… but not if we kowtow to the EU…
      I’m afraid Ms May and too many ministers have been too closely associated with the EU for too long, and now edge very close to socialism… They abuse the far right, but it’s the far left that has damaged our country – there seems to be a lack of insight these days, just kne jerk reactions in a politically correct manner.
      If the Tories are going to save the country, again, then they need to return to their political roots, and stop being so mindful of offending those that intend us harm.

    2. rose
      April 27, 2018

      Also, under John Major, tax and control free rent a room at home, to offset the damage done by Labour’s controls.

  18. adams
    April 26, 2018

    As you say John your Gov is rubbish and all they can think of is to tax . You still stay in that Party though so all’s well with the world .
    Why do you think robbing savers of interest is a “good thing” ?

  19. Big Guy
    April 26, 2018

    Raising interest rates and tightening easy credit are sensible steps at this late stage of the credit cycle, but these should be accompanied by lowering, not raising taxes.

  20. ian wragg
    April 26, 2018

    With the motoring industry it is interesting how the clowns in the Treasury think.
    After demonising diesels which the latest models are cleaner than petrol, they will start on petrol driven cars.
    Their idea is to force us into electric vehicles which are neither practical or value for money.
    Yesterday we had the BBC extolling the virtues of wind, solar and biomass power generation and what clever people we are shutting down perfectly viable coal fired plants. No mention of the STOR diesels which have been used regularly during the recent cold spells and that some industries have been paid to reduce gas consumption.
    I was quite surprised that the BBC reported the 13% reduction in car manufacturing to the uncertainty of diesels and the swingeing tax rises. No mention of BREXIT.

  21. LondonBob
    April 26, 2018

    The distinction should be made between natives purchasing properties and foreigners purchasing property in this country taxes should not have been raised for all.

  22. Rien Huizer
    April 26, 2018

    Mr Redwood,

    The UK economy is uinderperforming relative to European peers (Scandinavia, Germany, Benelux, Austria) and especially showing signs that three growth engines of the past decade are not working well: (1) immigration (GDP growth despite productivity stagnation until very recently) (2) credit-fueled consumption despite a weak domestic banking system (overdue efficiency improvement, state involvement)*) (3) an artificially (and credit fueled) housing boom.
    Gvt action results in lower net immigration by productive individuals . Gvt/BoE action to prevent increasing systemic risks to the financial system results in tighter lending standards (and RBS is still predominantly state-owned). Gvt/Treas action aims at taking the steam out of the market for existing homes.
    None of these measures would be considered ill-advised by reasonable experts. They are straight out of the manual of OECD, IMF and various European authorities (the latter heavily influenced by British participants until recently).

    What else would you suggest for an economy still not safe from a hard brexit?

  23. Rien Huizer
    April 26, 2018

    Mr Redwood,
    Just a very short comment in addition to my earlier, longer one: the drop in domestic car sales requires more than a headline analysis. The majority of cars sold in the UK are imported, while the majority of cars built in Britain are exported. The impact of the “diesel” measures is not unique to the UK; in other European countries diesel sales are declining too, because consumers and especially car hire companies think they are a poor investment. Finally, changes in gvt policy boosted sales early last year (dominating the effect of Brexit uncertainty and a drop in real wages). UK car buyers are now under more normal conditions (except brexit uncertainty) and should be showing increasing replacement rates, within their budget constraints.

    1. NickC
      April 27, 2018

      Rien, The only “uncertainty” about Brexit is whether we’ll get it.

      1. Rien Huizer
        April 28, 2018

        You will get it but do not know yet what type. There is a bit of a difference between being a ” Norway” or a fresh start without trade protection and a bunch of zealots who want to follow Minford’s prescriptions..

    2. stred
      April 27, 2018

      Thank you for confirming that we are implementing Euro Greencrap when closing vital coal stations and destroying the diesel engine for no real health gain.

    3. libertarian
      April 27, 2018

      Rien Huizer

      How many EU local government organisations are thinking of putting emissions charges in place? Lots of towns and smaller cities have mooted this in the UK, Jaguar cars issued a statement confirming that diesel sales where the primary cause of their decline. Maybe if European car makers stopped cheating on their emissions data we might have a clearer way forward do you think?

  24. William Long
    April 26, 2018

    I think you are being kind (or sarcastic?) in suggesting these outcomes were the result of deliberate policy. It seems to me far more likely they were due to the failure to think through unintended consequences.

  25. FranzB
    April 26, 2018

    All I can see here is someone full of his own importance, pontificating on how things should be, but the same is a policy maker sitting next to government ministets and doesn’t seem to be making much headway with his own ideas, important ad they are? and you’d have to wonder why?..looks like everyone else is out of step except our own JR

    1. NickC
      April 27, 2018

      FranzB, Speaking of yourself?

  26. duncan
    April 26, 2018

    We are tired of this liberal left, virtue signalling, left-wing apologist. She is not a conservative and she will destroy our party if she remains as its leader

    It is time to confront the hard left and the Marxist Labour party

    We need a leader with decent morals and courage not this pathetic politician who panders to every vocal minority activist campaign

    April 26, 2018

    Some of the changes to buy to let taxation were well overdue and correct in my opinion.
    I can’t take out a loan to buy shares and then offset my borrowing costs against profits, so why on earth should I be able to do so at my marginal rate of income tax on a property portfolio. Madness and well done to George for getting rid of the anomaly/loophole.

    1. Lifelogic.
      April 27, 2018

      Property rental is a business and all businesses have to be able to deduct their costs to compute profits for tax. If you tax non existant profits you just kill the business as it runs out of money. So no houses available to rent. Interest is a cost of building or buying the houses to let. It is taxes on the bank who receive it already. Same as for car rental, plant rental, aircraft leasing, hotels ….

      It just pushes up rents for tenants and kills supply so pushing them up further. Just the 3% stamp duty can meet a circa 5% increase in the rent needed to pay for it.

    2. Peter Parsons
      April 27, 2018

      It’s worth pointing out that if you set up a company to buy and rent out properties and the company takes out loans, the interest on those loans is fully tax deductible. What this decision has done is skewed things in favour of large landlords as they now have significant tax advantages over a small landlord.

      This is bad news for tenants as they now risk finding their leverage in the market is reduced. If all the properties a prospective tenant views are owned by the same landlord the prospective tenant’s ability to negotiate the rent becomes severely constrained.

      Having a rental market where there are more, smaller landlords who need their properties occupied to pay the bills is more in tenants’ interest than one where there are only a few, large landlords who can afford to have properties sat empty and be prescriptive on rent levels.

      If anyone thinks having a market skewed in favour of a few, large players is in any way in the interest of the consumer, take a quick look at the domestic energy market.

  28. Andy
    April 26, 2018

    I find myself in the uncomfortable position of agreeing with the Bow Group.

    They’ve written to Donald Trump urging him not to come to London.

    Let’s hope he listens.

    The world’s greatest multi-cultural centre does not welcome bigots. Even if they are president.

    1. Edward2
      April 26, 2018

      We’re you equally indignant when Saudi and Chinese leaders came here?

      1. Anonymous
        April 27, 2018

        He’s not listening, Edward.

        Never does.

        Good relations with Trump would see Brexit success and that will never do.

    2. Anonymous
      April 27, 2018

      They welcome many bigots and despots in fact. Realpolitik

  29. mancunius
    April 26, 2018

    Wellington employed a great deal of sarcasm in his blasts against the ‘gentlemen of Whitehall’ – particularly those in the Treasury – impeding his progress in the Peninsular War with pettifogging enquiries about the amounts of raspberry jam supplied to the troops.
    At least he didn’t have to contend with a Treasury and a Parliament that was hypocritically, covertly, treasonously working for Napoleon’s Victory against Britain and not only ‘giving comfort to her enemies’ but actually on the side of the would-be invaders.

  30. acorn
    April 26, 2018

    “Yesterday [JR said] we got news that the total net borrowing of the public sector was £42.6bn. This compares with the March 2017 budget forecast of £58.3bn. So the result was £15.7bn or 27% lower than forecast.” Mr Hammond can easily blame the OBR forecast for his overtaxing the economy. (What are government Quangos for, other than taking the blame for amateur politicians’ cock-ups.)

    The only “gloomy” part of that data is there was £15.7 bn less, spent by the public sector into the private sector, than was forecast a year previous. ONS tells us private sector households, went into net deficit in 2017, first time for decades; trying to maintain their standard of living.

    So the Osborne – Hammond Conservative Neo-liberal plan to transfer public sector debt to private sector Household, is working fine.

    The above has nothing to do with Brexit, hard; soft or clean. It is basic fiat currency macroeconomics. It applies regardless of left or right / authoritarian or libertarian governments.

    1. Edward2
      April 27, 2018

      False correlation.
      Personal debt statistics are showing increases because millions of us routinely pay for things using cards and buy our vehicles by monthly purchase plans.
      Government deficit is falling due to increased tax revenues from new taxes increased tax rates and a bit of growth.
      The two are not connected.

  31. Denis Cooper
    April 26, 2018

    The MP who made the most honest contribution to the debate was actually the Labour MP who was rapidly sacked by Jeremy Corbyn for saying that it would not be sufficient for the UK to stay in the/a customs union with the EU, because to permanently avoid any impediments to the cross-border trade in Ireland it would also be necessary for the UK (or at least Northern Ireland) to stay in the/a single market with the EU. Otherwise, he explained, gradual regulatory divergence would eventually force the EU to reintroduce checks at the Irish border. Well, maybe that last problem could be solved in another way, such as the UK legally guaranteeing that only goods which conformed to EU standards would be exported across that border into the Irish Republic and the EU.

    While among the MPs who made the most dishonest contributions were those who claimed that staying in the/a customs union with the EU would be very similar to being in the original Common Market which British people voted for in 1975, while apparently forgetting that the Common Market removed tariffs and quotas but left many border checks in place, including on the Irish land border:

    “Customs controls were first introduced at the land border in 1923, shortly after the establishment of the Irish Free State. These controls, and the associated system of ‘approved roads’, were maintained to varying degrees until the European Single Market was formally established in December 1992.”

  32. anon
    April 26, 2018

    1) This was to level the playing field between occupier buyers and rentiers. It could have been better targeted at all business landlords, not just individuals.
    Specific capital allowance or short term interest relief could be given to encourage new builds and renovations only.

    2) Cars cant understand why we dont just move to fuel charge or pay per mile system, related to your car’s bonafides. Use more pay more , use less pay less.

    3) Interest rates have been forced low by QE . Why not just nationalise the banks? and stop pretending. Its obvious losses are socialised and profits privatised. Credit can then be rationed by goverment based on a multiple of your tax payments.

    4) ditto above , however council taxes go and inflation eats away at fixed income and those who hold small cash savings for pragmatic reasons.

    5) Car loans etc see above. I wonder how many loans are worth more than the vehicles.

    As someone pointed out earlier letting the salaried worker keep more of his earnings is a better way of supporting the economy ,banks which should compete down extraordinary salary levels in what are effectively state backed monopolies.

    Still waiting for NI and PAYE to be merged and equalised between workers & contractors. (Lower would be best) Higher allowances for pensioners may be needed to offset this.

    We don’t want a boom and bust.Although i do not trust the motives of Remainers i.e most of the government. Steady as she goes is fine.

    1. APL
      April 28, 2018

      Anon: “Why not just nationalise the banks? ”

      RBS is into the British taxpayer for £140 billion and counting.

      Other banks have been rescued by foreign money.

      Nationalisation? Already. Done!

  33. getahead
    April 26, 2018

    Where is LifeLogic to say this is what I have been telling you?

  34. Zorro
    April 26, 2018

    Say it as it is John….. Aren’t they deliberately sabotaging the economy to prove a political point?


    1. Sir Joe Soap
      April 27, 2018

      Also there will be a last minute offer by the EU – some trivial matter – which the government will declare a game changer and keep us in the EU

  35. Derek Henry
    April 26, 2018

    I keep saying it hammond does not know what he is doing.

    He completely ignores the UK sectoral balances which states quite clearly if the Government runs a budget surplus and runs a trade deficit at the same time then the private sector always ends up in deficit. private debt the debt that really matters.

    As the latest ONS figures shows clearly

    The households’ saving ratio fell to an annual record low of 4.9% in 2017 (since comparable records began in 1963) as growth in households’ spending exceeded the growth of households’ income.

    Latest estimates suggest households were net borrowers in 2017 for the first time since records began in 1987; this reflects five consecutive quarters of net borrowing by households.

    Real household disposable income growth slowed to 0.1% in Quarter 4 (Oct to Dec) 2017 compared with the previous quarter, as the impact of inflation on income intensified.

    Households accumulated slightly more debt (loans) in 2017 than they did financial assets for the first time since records began in 1987.

    If Hammond cannot connect the dots between these two things he should not be chancellor

    Deficit hits lowest level since 2007


    UK economy grew slower in 1st Q of 2018 than last Q of 2017

    He is going to give remainers what they want.

  36. Stephen
    April 27, 2018

    No, No. No on giving BTL tax advantages over owner occupation.
    Why should BTL buyers have a financial advantage over owner-occupier buyers, making it extremely difficult for first time buyers to compete for purchases? The more first time buyers are priced out of the market by BTL buyers and forced into rented accommodation , the less stake they have in capitalism. If BTL increases at its recent rates, BTLers will gradually hoover up the bulk of the housing stock, and most will become renters. Once bought for BTL, that property is unlikely to ever be owner occupied again.

    1. Bergman
      April 29, 2018

      Because BTL is a business and taxed accordingly, owner occupation is not.

      It’s like claiming McDonalds have a tax advantage over people cooking at home.

      Taxing business on turnover instead of profit is clearly wrong.

  37. ChrisS
    April 27, 2018

    Well, today, the results of Hammond’s cretinous policies have come back to bite him.

    A pathetic 0.1% growth in Quarter one 2018 should surely signal a change of direction ?

    It won’t of course, because Hammond has no idea how to get the economy going properly – or doesn’t want to – as I said in a post here yesterday, he’s deliberately slowing growth for reasons nobody understands.

    Could it be that these are policies he supports of which have been forced upon him by Europhile Civil Servants ? Is it part of a Remain campaign to trash the economy in a last ditch attempt to frighten MPs into supporting staying in the Customs Union ?

    I’m rapidly reaching the end of my tether with this Government. I’m afraid Mrs May has not got the strength of character necessary to get a grip and get things moving. We can’t afford a change of PM at this delicate stage of Brexit so it has to be up to others like Boris and Michael Gove to force Hammond to change tack.

    But do they have enough understanding of the economy to even comprehend what Hammond is doing ?

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