This government was right to express concern about Treasury orthodoxy and should have added Bank of England error. Together these terrible twins visited on us the European Exchange Rate mechanism which gave us boom/ bust 1988-92, gave us the boom/ bust of the banking crash of 2006-9, and now threatens to give us the Quantitative easing boom/recession of 2020-23. Ā The government did need to cushion the blow of the energy crunch, and did need to offset the recessionary forces that have been unleashed by the surges in energy bills.
The Bank of England should take more of the blame for the slump in government bond prices from the Thursday of their rate rising statement through to the collapse the following Wednesday. Their decision to raise the official interest rate, to point to more rises to come and Ā their decision to sell bonds to drive longer interest rates higher was the main cause of the bond sell off. To avoid spooking the markets again when they end their temporary prop to the markets they should announce they will not sell any bonds at these depressed prices to reassure markets.
Meanwhile the Treasury has resumed its belief that economic policy has to be steered by a commitment to get debt as a percentage Ā of GDP down. In recent years pursuing this policy they have cajoled Chancellors to put inĀ tax rises to do this. Instead a poorly performing economy has ended up with rises in state debt. The tax rises do not offset the extra spending all the time growth stays low. Last year when growth accelerated the deficit tumbled way below OBR forecasts.
The government should switch economic control to their growth target and the 2% inflation target. That Ā way we should allow lower tax rates as part of a growth strategy, and a counter inflation discipline that was sadly lacking in 2020-21.
October 8, 2022
Good morning.
They all have conflicting agenda’s.
The BoE needs to control inflation around the 2% target SET BY THE GOVERNMENT. To achieve that it needs to engineer a recession.
The Treasury needs to set economic policy to balance the economy. To do that it needs to raise taxes and cut spending.
Neither the BoE or the Treasury are up for election in 2024 so neither have to act in a way to keep their positions.
The government needs growth in the economy because if it does not achieve this, it is toast come 2024. So tax cuts and managing inflation are not its priority, staying in power is.
Blaming others for simply doing their jobs whilst a political party that has wasted 12 years, scrambles around trying to keep itself in power cuts little mustard with me.
Kama
October 8, 2022
The Conservatives have been in power for TWELVE years. Whatever is wrong with this country is not the fault of the Bank of England, the Treasury or civil servants. It is the fault of the Conservatives
October 8, 2022
It is the fault of all of them and indeed all the dire PMs and Chancellors we have suffered from John Major through to Boris and his tax to death and tip down the drain Rishi Sunak.
October 8, 2022
Lentona
The Tories supported Greenists and Immigrationists far more than the people who actually vote for them.
Our fortunes will not be turned around by 2024 so they will be kicked out never to return.
You simply have to be a mug to vote Tory. That is now abundantly clear.
October 8, 2022
MB,
“Blaming others ..”
Agreed and an ongoing theme recently.
The buck stops here. Not necessarily with Liz yet -but certainly with the three in charge before her.
October 8, 2022
You may not always agree with them but Andrew Neil and Peter Hitchens are respected,forensic and forthright journalists.Here’s their verdict (even) before Monday’s debacle(both,incidentally,in papers that editorally vigorously support Truss):
A Neil,Sat,1 Oct:”During the Tory leadership contest I had cause to ask several times if Truss knew what she was talking about when it came to economic policy(though I was never allowed to put that question directly to her).Many might conclude that question has now been answered-definitively.”
P Hitchens,2 Oct:”even I have tried to be kind about the Tory Party’s selection of Elizabeth Truss as it’s leader.What can you say about the rise to high office of someone so utterly unfitted for it.It is just embarrassing.”
October 8, 2022
Mitchel, which paper and editorials VIGOROUSLY support Truss? Do you have links to the articles you speak of please. I havenāt read much support for her from any paper since she was selected by the members.
I didnāt agree with getting rid of Boris, Iām not a member so I didnāt have a vote, I didnāt really care whether it was Rishi or Truss that took over the poisoned Tory party. Either would have been attacked from the moment they got elected.
I thought Truss dealt with the Queen dying and her duties very well. She really should have put JR in as advisor to Kwasi as he is aware of the pitfalls.
The MPs need to remember they decided to get rid of Boris and his big personality, the actual voters chose, and the actual voters still wanted him on the ballot, the MPs wanted the opposite of that big personality to stop the partygate and dodgy friends allegations.
Starmer isnāt ahead because heās a great personality, goodness gracious he is Liz in Trousers, the same sort of vanilla. Liz needs to ask Boris to help her out, if he ran as Manchester Mayor heās about the only person I think could take it from Labour (but why on earth would Boris and specifically Carrie want to live in Manchester).
October 8, 2022
‘Boris and his big personality’ – wonderful description of bullshitter.
October 8, 2022
Mitchel
Bear in mind that we are now on the Tory D team.
It’s over.
They refused to listen to the people who vote for them.
October 8, 2022
This begs the question … is anyone involved in running this country competent to do so, or even trying to work in the interests of the country? It appears NOT! How on earth did we end up with such incompetent, or uncaring, people at the helm?
October 8, 2022
Government incompetence is a problem plaguing much of the Free World right now. How to solve it? I suggest that we raise the minimum age for becoming an MP to 35, that CCHQ scrubs from its list of wannabe MPs any people who do not have a track-record of achievement, and that Parliament partners with the OU to develop a Masters in ‘Governance & Decision Making’.
October 8, 2022
The French have their Ćcole Nationale D’Administration.
It has been hitherto relentlessly mocked by brexitists, yet you appear to want to introduce exactly that here. Well, perhaps you’re starting to think pragmatically at last.
October 8, 2022
NLH,
I not sure exactly who you believe is recommending an Ecole Nationale.
It would be just another elitist institution like the public schools. Worse than that it would lay the foundations for a long term Managerial State.
October 8, 2022
The French are in quite a pickle, too. Their OECD Life Satisfaction score (for what it’s worth) is about the same as ours. So much for the Grandes Ecoles…
October 8, 2022
NLH,
It appears that the Ecole Nationale has now been abolished by Macron, who was himself a graduate. Apparently it was regarded as elitist and out of touch. No mention of The Managerial State in the wiki article though.
Profuse apologies for doing a Lifelogic and talking about early educational matters.
October 8, 2022
Moving forward needs a sensible brain to make decisions now based on what is most likely to happen later. The best person can decide, then others can act accordingly. Wisdom might increase by age 35 but a 1-year old computer might be better than hundreds of older adults arguing in a sound chamber and going awry.
October 8, 2022
Garbage in = garbage out. As we saw with the Covid modelling and The Daily Sceptic is now explaining re the Climate Change scam.
October 8, 2022
Unless the best brain can foresee and act to prevent it, other garbage will recur.
October 8, 2022
S-W
Well certainly something needs to change, and rapidly to.
I am astonished at the total level of seemingly utter incompetence of many Mp’s, and their Associated collection of information gatherers and advisors.
Why do we have MP’s shoe horned into constituencies where they have never worked, lived, or have no knowledge. why do we have closed lists of gender types imposed on us from HQ.
Surely the simple criteria should be local knowledge, a record of some proven success of management, preferably in a commercial, Science, educational, medical and or profession environment, and who are willing to work for the common good of the Country, rather than themselves.
At the moment we seem to have a rag bag of wanner bees, who cannot seem to follow simple management policy/procedures/instructions, and do not understand that to constantly and openly criticise in public your leader or boss in the media, will lead to failure for all concerned.
No we certainly do not want yes men and women, as that is equally as bad, but for goodness sake they need to show some team spirit and loyalty to the cause, and if you do not like the cause, then do not accept a position in the team.
Having said all of the above, the leader has to be strong, to allow discussion in private before policies are made, and once a consensus is agreed, then to stick to it and not flip flop around.
At the moment the Government, and all of the other main Party’s are looking like a ram shackle collection of individuals who seem to want to control everyone else’s lives, except their own !
October 8, 2022
But Central Office has redoubled its efforts year on year to meet as many diversity targets as possible.
But what about experience and ability , and even original thought?
Waved away with a we’ve ticked all these boxes….
Not quite reached Dianne Abbott yet, but give it time.
October 9, 2022
A friend in the military told me that last Friday his unit had to attend an hour meeting for diversity training and black lives matters month ā¦a the end of the meeting they all had to sign documents confirming that they had attended both sessions and understood the training ā everyone agreed it was a heavy top down tick in the box exercise
October 8, 2022
Berkshire Alan,
Cameron wanted to inflict HQ favoured candidates on local constituencies.
Diversity was considered A Good Thing. It also enabled HQ to reject people ‘Call me Dave’ considered “swivel eyed loons”.
October 8, 2022
There are many old career MPs who have been useless all their lives.
October 8, 2022
” and that Parliament partners with the OU to develop a Masters in āGovernance & Decision Makingā.”
Isn’t that the now generally-derided PPE “Philosophy, Politics, and Economics” degree, which in practice appears to be an indicator of incompetance and disconnect from practicality once in government?
October 8, 2022
Perhaps all MPs to have worked in the private sector for at least 15 years and have decent A levels in Maths, Further Maths & Physics and real Economics (not magic money tree/lefty loon Economics).
October 8, 2022
Seems like you are doing a checklist for your own election?
However, I think you’d make a better colleague for Sir John than dozens of others, shame you don’t qualify?
October 8, 2022
Not something for me as I like to tell the truth which is not the way to get elected, would not want endless public attention and anyway & if I lived in the UK and became UK tax resident it would cost me far more in extra taxes than the MPs salary so I would in effect get negative pay.
October 8, 2022
As children they were probably very good at Monopoly and then thought they could run the country
October 8, 2022
…with increasingly worthless paper money.
October 8, 2022
or Buckaroo………….and overloading the beast of burden!
October 8, 2022
Surely the Treasury view on debt to GDP can be what it may, the Chancellor sets policy, no?
This Chancellor failed a day 1 test to close down the OBR so its maladroit antics will hound him until he leaves office will they not given he cannot now act against it without it seeming to be inappropriately silencing a critic?
(The first date in line 3 is transcribed wrongly perhaps.)
October 8, 2022
The OBR’s hiring process needs to be the subject of an independent investigation. The office appears to be an extension of a left-wing think-tank.
October 8, 2022
As are all government departments. Blair and Brown stutted all departments, charities and Quangos with left wingers and 12 years on the tories have done nothing to redress this.
It’s almost as if they agree with their agenda.
October 8, 2022
Almost, Ian?
October 8, 2022
If only the country’s problems were as trivial as they were on Black Wednesday.
Where were the food banks back then?
October 8, 2022
How encouraging to see the financial ‘experts’ of the BoE being questioned and being publicly challenged like this, by a knowledgeable critic taking a different viewpoint. I’m not an economist but I see the value of debate informed by the facts of what’s actually happening. Now why didn’t we have this debate with the Covid experts, and why don’t we see more of it with the climate experts?
October 8, 2022
Hear, hear R. Grange. Nobody is EVER questioned for their incompetence, or dishonesty. They are often rewarded with a gong or ‘retired’ on a very generous pension. If government reflected private industry (as it should), they would be summarily dismissed with no golden handshake.
October 8, 2022
+1 to you and RG. We have a rotten system.
October 8, 2022
ā In recent years pursuing this policy they have cajoled Chancellorsā¦)
Which comes back to the same problem across many parts of the civil service, itās the same personnel behind the scenes whoever is in power?
October 8, 2022
Nail on head Sharon.
But the Pretendy-Conservatives did nothing about it …. and never will. In fact they do the opposite: if you follow Conservative Home and their Public Appointment updates you will see that they regularly appoint left-wingers to head Quangos and other organisations supposedly under Governmental control.
October 8, 2022
Sounds sensible, and itās good to hear real free market / low tax arguments again from a Conservative PM. That such arguments come as a surprise is a reminder of how long it is since we last heard them! Pre-Blair/brown.
It is therefore very frustrating that the mini-budget was announced in such a crack-handed way. It was and is obvious that mighty forces on the far and centre left, extending far beyond the political sphere, would be ranged against the new govt, and waiting to pounce at the first opportunity. Giving them an open goal in the way Truss and Kwarteng have done was exceptionally foolish. Unfortunately it makes it much less likely that it will be possible to implement the growth programme, and much more likely we will get a left-wing anti growth coalition after the next election. Nothing for it but to press on, but I suggest Liz Truss takes a hard look at whether she has the right people around her. We had heard sir John was to pop up in the treasury team, but sadly not. Perhaps a quick change there would forestall another such balls-up. It may be the BoE should take more blame, but we wonāt be able to shift public opinion now. The next balls-up like this will be terminal.
October 8, 2022
Sir JR
The main cause of the sell off was not just the BoE. But government announcing major tax cuts without any fiscal forecast, combined with a naive notion that entrepreneurs would sort out our lack of productivity and a significant balance of payments deficit on top.
Our credit ratings are now all negative.
October 8, 2022
āThe Treasury has resumed its belief that economic policy has to be steered by a commitment to get debt as a percentage of GDP down.ā The aim should be to get government expenditure down as a percentage of GDP to circa 25% and ensure what is spent deliver real value. Also that government only does the rathercfew things they can do better that the private sector.
From the Dailysceptic:- āDenmark has ceased Covid vaccination for most under-50s, but the UK has not, meaning it is offering vaccines to 32m additional, low-risk people at a potential cost of Ā£1bn. This is an utter waste of scarce public funds.ā
Not just a waste of money it is doing large net harm to young peopleās health for no reason. Wake up Truss and ditch them now. You have decent maths A levels so look at the stats and get yourself on the right side of this argument now.
October 8, 2022
Nick Timothy today is totally wrong as usual in his article:- āPastiche Thatcherism is not the solution to Britainās problems. The Budget was disastrous and unconservative: the ideology of Truss and Kwarteng is doomedā
We need far less government, cheap reliable energy, far lower simpler taxes, a sound currency and a bonfire of red tape. Without this we will not get decent growth. Truss and Kwarteng are far too big government and net zero so far to turn the UK economic ship around only 1-2 years left.
October 8, 2022
Anneliese Dodds MP, on any questions yesterday says āAll Labours proposals are fully costed and Labour will fund some of their (daft & v. expensive) programme by scrapping Non Dom statusā. But scrapping Non Dom Status will very clearly will reduce the overall tax take not increase it Anneliese. It will kill jobs, deter the rich from living in or moving to the UK or investing in the UK and this significantly reduce the size of the economy and the tax base. This is why Labour did not scrap it under Blair or Brown.
How on earth will less tax take fund anything? These halfwitted PPE graduates! Then again perhaps Ms Dodds actually understands this full well, but she is just lying and trying to appeal the the evil politics of envy as usual.
Daft or beneath contempt one or the other so take you pick.
October 8, 2022
So Downing Street has stopped the government from a government campaign telling people how to save energy. Good as we surely know already (switch things off, use LED lighting, warm only one room, electric blankets, bath less frequently and wear more thermals & jumpers) and if people do not know this they can easily look it up or will quickly learn.
Anyway who would trust the government? They still lie to us that walking and cycling produces no direct or indirect CO2, that the Covid vaccines were effective and very safe even for children, that cancelling a Sunak proposed tax NI increase is a tax cut, that EV cars save CO2 (they do not), that face masks work (sure), that there is an imminent manmade climate emergency (there is not), that CO2 needs to be hugely reduced (it does not), that the the increases in energy costs are due to Putinās way when they are mainly due to the deluded Net Zero religionā¦ Putinās war very likely the result of or much encouraged by the net zero lunacy.
Electricity from coal can still be produced for well under 10p a KWH so why are some people having to pay 40p+ answer the net zero religion, taxes, regulations and government market manipulation. Oh and idiot blowing up coal fires power stations before we had suitable replacements.
October 8, 2022
In what way have they Ā«Ā liedā¦that cancelling a Sunak proposed tax NI increase is a tax cutĀ Ā»?
Sunakās NI increase wasnāt proposed it came into effect in April 2022 for both employee and employer, he adjusted it slightly in July 2022, however from November 2022 next month it has been CUT from 13.25% to 12% that is a cut for the employee and a cut from 15.05% to 13.8% for the employer.
October 8, 2022
Sunakās CT taxes had not come into effect. If one says I will increase tax by 4% next year then scrap the plan one has clearly not cut taxes. Plus taxes are still going up anyway as we still have frozen personal, IHT, CGT (with no indexation), pension and other allowances & this at a time of rahter high inflation due to Sunakās deliberate currency debasement (which is yet another tax).
October 9, 2022
You were talking about NI, not only did he drop the rate that had already come in this April 2022, from November 2022 he not only dropped the rate, he kept the increased personal allowance of Ā£3000, effectively giving everyone an extra saving of 1.25% and all employers a saving of 1.25% from next month.
I agree about the fiscal drag on IHT, CGT, pension cap (which doesnāt affect the public sector pensions – we should be told the number of people in the public sector aged 65 and over with more than a Ā£45,500 – [Ā£60,000 pa supposedly from this year, Iāll need to see it to believe it] pension per year pension on top of their state pension which would require a pot of over the pension cap do they have to pay the 55% on their draw down on any money above that?).
October 8, 2022
Interesting to read the statement from Drax Group CEO, Will Gardiner on Draxās biomass sourcing in response to the recent entirely valid criticism of this irrational government biofuel policy.
For Biomass just read āwood (or young coal) imported on diesel ship and trucks, that produces more CO2 than coal not less per KWH). Still at least Drax has not been blown up by some moronic energy minister while being filmed grinning (not as yet anyway). If you really (foolishly) believe that CO2 actually is a serious problem you would logically never ship it rounds the world to burn it you would bury it or build with it.
It’s difficult to get a man to understand something (however blindingly obvious) when his salary depends on not understanding it.
October 8, 2022
Please direct us to your own blog…it would save us all skim reading or passing over so many lengthy posts.
October 8, 2022
LL. Love that last paragraph.
October 8, 2022
Correct, LL. Ā£1bn that we need spent on other things. How about putting it towards a pay rise for nurses that are at the frontline of dealing with the massive backlog those Covid overreaction policies created? How about support for councils that are facing soaring social service costs because of the fallout from the cost-of-living crisis? We need the government to economise, I agree, but we also need it to target the most deserving areas to spend on. This is the Tories’ last chance, for me, to convince us that they have the priorities right.
October 8, 2022
Politicians salaries and pensions payments should be tied with their performance, especially for those that get to high office. Sir John you talk about the rises in state debt as if it was the accepted way to do business. I can tell you that if I ran my household the way government does I would have been out on the street a long time ago. So here’s the thing we have politicians well connected financial whizzes who write columns jn the FT’s belatedly bemoaning about performance of the treasury and BOE.. but too late, too late! the damage is done and now it looks like galloping inflation is going to be forever capped by more borrowing and in the end – there will be no end except melt down and what do you know who is going to have to pay to pay to pick up the pieces – So aftef twelve years please desist because as M Gove once said we have had enough of so-called experts.
October 8, 2022
The main UK banks are still paying 0.4% on deposits and charging 100 times this 39.9% on personal overdrafts regardless of credit risk. This initially driven by the FCA regulations while under the Charge of the dope Andrew Bailey that forces one rate for all on them? Can we please have some real and fair competition in banking please? Where are the fair competition authorities why no action? The same banks do not charge 39.9% at their overseas branches? This rip of is just saved for the UK customers. Bank should be paying about ~ 3% on instant access deposits which is the fair market rate. Rip off Britain, banks charging 100 times what the money costs them.
October 8, 2022
I believe ‘out to lunch’ Bailey acted politically to stoke political tension and like the unions create an atmosphere of chaos and disorganisation. This helps to feed the rather naive public perception that the incumbents in No.10 are utterly incompetent and out of their depth which may or may not be true
The pension fund industry does have a fondness for leveraged speculative investment to mitigate the risk of inflation caused by both political and apolitical players using LDI which I suspect may have triggered Bailey’s concerns. This margin abusing financial speculation crashed the market in 2008 and LDI’s may trigger a similar effect but I have no doubt that Bailey’s gilt selling to drive up yields flipped LDI’s and triggered margin calls on pensions funds forcing Bailey to reverse its actions
Most on here know the Tory party (and this is not a dig at John who we all respect so he shouldn’t take criticism of his party as a dig at him personally) is morally and intellectually bankrupt. It has no guiding beliefs nor a moral foundation other than protecting the party from harm and that makes it vulnerable to attack and causes confusion in the minds of naive voters.
The Tories can act in two ways. They can publicly declare war on Socialism and the poison of progressivism and strip away all laws designed to drive that vicious and divisive ideology and then purge the State of it before it destroys our country or they can wave the white flag, fall silent and give the keys of No.10 to scum Labour and believe me, if Labour get into power they will turn this nation into a dystopian. racially infused, authoritarian cage of unimaginable proportions. They will target certain types
October 8, 2022
Your vision of Labour is not shared in the real world.
Greenism and mass immigration has blown up in the Tory Party’s face.
Six words will prevail at the next general election “Change” and “…could not possibly be worse.”
The country is going to rat shit quite visibly now. I’ve just visited Newcastle and what a shadow of its pre Covid self it is. Pensioners anxiously watching their smart meters.
October 8, 2022
I’m glad you didn’t quote ‘it can only get better’ . Last words before you pulled the pin out of the grenade?
October 8, 2022
Often dynamics have to pull in opposite directions to steer the most advancing safe course. In rail travel the service providing rail companies want to go fast while the ORR controls the optimum speed for safety.
In finance, the Govt tries to act as a safe and efficient service provider but the BoE acts like the Labour opposition as if trying to derail smooth progress. The OBR is similarly unpredictable.
October 8, 2022
Ok, the BOE takes more of the blame . So what? Politically itās irrelevant. The voters know where the real blame lies.
October 8, 2022
The voters know very little it seems and why should they?
Watch the mainstream media and there is scant evidence most of the “commentators” actually know what they are talking about either, or if they do, they are choosing to place their own political gloss on events.
How much informed detail do you hear about what is happening elsewhere, at best it’s glossed over. The UK is not experiencing this currency crisis (for that is what it is) alone, nor is it really the master of it’s own ship in this respect. Much of what is happening is the direct result of years of fiscal mismangement by westerm governments – most especially the US.
Markets watch the Fed closely and it seems Powell is determined to stamp out inflation in the US, so has increased rates aggressively. Neither Sterling, the Euro or Yen can stand against this pressure and have not done so. Andrew Bailey has not acted soon enough or large enough and that was clear long before L&K arrived on the scene. The EBC has exactly the same malasie and sooner or later something will happen to expose the weakness of the Euro too.
Not happy times but L&K are not at the root of this problem and I’m really tired of hearing them being blamed for everything. This all started many years ago and will take time and much grief to undo.
October 8, 2022
Yes- exactly
The Fed will raise again by another 75bps soon.
The BOE/FCA better have a plan that does not involve massive arbitrary subsidies to certain funds when other funds do not benefit from such subsidy.
The problem is between defined benefit (promises) versus contribution based ( no guarantee you will get anything of value back). Everyone should be compulsory in the same scheme,same rules and limits, based on actual real contributions.
Guess which camp the watchers & government employees fall in.
If we imported less this would be less of a problem.
October 8, 2022
Clearly Final Salary Pensions are not affordable in the private sector (thank you Gordon) and they are not actually (in practice) affordable in the public domain either – but no one will admit this.
Much of the Government laibility in this area is completely unfunded and simply paid out of the ‘petty cash’ currently. This obviously includes the State Pension but the index linked Fimal Salary pensions within the Civil Service are in the same boat. Hopefully, all new entrants are being employed on different terms but I wouldn’t count on it…
October 8, 2022
The problem isn’t with either the Treasury or Bank of England, but them being put in virtually impossible positions because of government policy of borrow, borrow, borrow, then waste, waste, waste. If they government was more efficient in what it did, the Bank of England would have an easy job.
We don’t need growth; we need shrinkage of the State.
October 8, 2022
I thought the BoE’s mission was to keep inflation at 2%?
I thought the Treasury’s mission was to balance the books?
When you say “Shrink the State” – I assume that are you including the NHS in that statement?
After all (at Ā£190B in 2022) it’s about 26% of total (e.g. all!) UK tax receipts. Income tax and NI payments are about Ā£161B this year – so that only pays part of the NHS bill. Where would you suggest we start making savings?
Perhaps in all the borrowings we’ve made to fund things that we cannot actually afford. Strangely, I don’t hear a whisper from any of our political parties as to how this conumdrum will be solved. Do you think Labour and the Unions have the answer? Do you think the Greens can help us with their “Green Economy”? Doesn’t seem likely to me…
October 8, 2022
The NHS is a good place to start.
Introduce workplace health insurance schemes, allowing people to opt out of the NHS with a proportionate tax rebate to help pay for it. Stop taxing these like they were benefits – an illness is no benefit.
Give up the treatment of lifestyle diseases to the charity sector, or private health insurance paid for by the individual.
The NHS is such an unwieldy bureaucracy, any money thrown at it just gets gobbled up with no improvement. Never so much money spent on it, but it’s short of doctors and nurses and the service is getting worse.
October 8, 2022
The idea to have debt as a reducing percentage of GDP is absolutely right, but do it by GROWTH and not taxing the hell out of us
October 8, 2022
Sir John
I expect if we investigated, we’d find that most of the senior Civil Servants at the Treasury (pre the recent “release” of Tom Scholar); at the BoE and the OBR have remained unchanged since Brown’s Government. Any that will have moved on will have been replaced by like-minded individuals, because that is how the Civil Service appoints people. They don’t want disruptors who will challenge the consensus and “cause problems.”
If you then put in like-minded Chancellors (Osborne, Hammond, Sunak) of course you get no change in policy direction or the means by which they attempt to deliver it.
The problem is caused by group think amongst individuals who all come from similar backgrounds – there is insufficient diversity of life experience or opinion in the senior echelons of the Public Sector. And the same applies in Parliament. We have far too many young, inexperienced “over-educated” MPs who have chosen politics as a career, having done very little else beforehand. Many are not capable of holding the Government to account or don’t see it as in THEIR best interests, and when they become Ministers they are incapable of controlling their civil servants.
October 8, 2022
āThe government should switch economic control to their growth target and the 2% inflation target.ā
Perhaps, but this is only re-arranging the deckchairs on the communist fifth column Titanic that is the CCA/Net Zero Strategy Build Back Greener policy heading for the iceberg.
Replacing affordable and reliable fossil fuel and nuclear with low energy density, intermittent renewables with no economic means for grid stability or backup is technically impossible and financially ruinous. Purchasing wind turbines, solar panels and the raw materials for batteries/motors/generators from coal-fired China will not bring us energy security.
There is no climate breakdown/catastrophe. Data over the last 500 million years from the start of the Cambrian explosion shows temperature is not led by CO2 levels and in fact the Antarctic Vostok Ice Core Data over 450,000 years shows that when both temperature and CO2 are historically low, as they are now, CO2 follows temperature.
CO2 fell to 180 ppm, just 30 ppm above the level below which plants cannot survive, 9 times over the last 450,000 years. We need to treble the CO2 level in the atmosphere to bring it to the optimum level for plant and hence food growth.
October 8, 2022
So, itās all down to the Bank of England and the Treasury!
Nothing to do with the government. Oh no, no blame for them.
October 8, 2022
The start dates mentioned, 1988, 2006, 2020, were all preceded by huge house price and asset price inflation caused by loose government policy.
October 8, 2022
And in other news get ready for a sell out on the ECJ etc. please tell me how a sovereign state has to subject itself to rulings from someoneās else supreme court that is not independent when we have our own.
Just like every other Minister, Steve Baker gets into power and true to form it ācorruptsā and he crumbles to the pro EU civil service
October 8, 2022
I’ve always thought highly of Steve Baker. Everyone seems in such a hurry to write people off these days.
Let’s see what actually happens before we jump to any conclusions, shall we?
October 8, 2022
Why did your government allow the left wing OBR to have so much influence, why did Cameron create them and put ex JRF people and Torsten Bells friends in charge? Weāre being taken for mugs thinking weāre voting for a right of centre government but instead weāre actually electing figure heads who just want to listen to people with an agenda that opposes conservative thinking of the voters.
Their previous head Sir Charlie Bean is briefing the Guardian today about the OBR report that isnāt published yet, donāt these people sign the secrets act or have a responsibility not to undermine the current government like this! He said, Ā«Ā probably show a large shortfall of Ā£60bn-Ā£70bn after Kwartengās mini budgetĀ Ā» and they are reporting on his as though fact. If this is what the OBR report actually says there is a grass in that organisation and they need to be dismissed and they should run for political office. Someone is feeding Bean, itās been going on for years. These people running the OBR are political and should come with a warning of such.
October 8, 2022
Here is another lie, Mick Lynch printed by the Guardian, even though they know this is false said Ā«Ā Theyāre saying that weāre an anti-growth coalition; they had to go out and print Ā£65bn to prop up the bond market but they want to blame railway workers for whatās going on in the country.ā
The government didnāt go out and print Ā£65bn at all. Your government are very silly allowing this sort of false statement being repeated in attacks every day. Sue him.
October 8, 2022
Can I just add, I thought Railway workers didāt work for the State, they work for private companies. Their wages are having to be topped up by taxpayers, not government taxpayers, because they donāt have enough customers and striking reduces paying customers further. I donāt know why the general public are just so placid about this. They want the rest of us to pay them more and more for less. Actually publish their FULL packages, shift allowances, weekend rates, sick pay, a pension the rest of us canāt buy, staff perks and benefits that they donāt class as income but are tax free benefits in kind. If they want more money today, give it to them with a nest pension but they canāt have both, the passengers canāt afford it. What other service is run for the employees and not the customers and then where there are no customers the government pays the gap?
October 8, 2022
There aren’t any shift allowances.
You need to now that they can and do start work at literally any time of day or night. Even 00.01am – they can be moved at short notice three hours either way of an official start time. Can be made to work 10 hour shifts 13 days on the bounce and get no bank holidays nor bank holiday pay.
Some get Sundays out of the working week but this is because the TOCs refused to negotiate sensibly on them.
The companies and directors made billions in profits during the times you speak of.
At present rates rail workers will not be particularly well paid and those qualified in other fields (that’s most of them these days) will soon leave rather that work such punishing start and finish times.
October 9, 2022
37/6 this is why they should be published if they are seeking public support. I read this https://railfutures.co.uk/do-you-have-to-work-unsociable-hours-in-the-rail-industry/
Week-ends arenāt compulsory, people do them to suit their circumstances, but there are many, many jobs where weekends are normal working weeks and bank holidays, retail, leisure industries, transport in general, if you work a bank holiday you get another day in lieu, how many days per year do you get when you start over the basic 28 days the majority get in the private sector and do they increase with service?
The week is advertised as 35 hours per week basic is that right or not? So are the extra 5 of 13 days not paid as overtime? Do they work them for zero payment? āMade to workā who is ātheyā that this happens to, and how frequently does it happen every month?
Which companies made billions in profit? Did they get any subsidies from the State (the other taxpayers)?
Did railway workers get full pay all throughout lockdown even if not working?
Which rail workers will not be particularly well paid? What is the pay and benefits package of them? Iām genuinely interested, these workers are picketing for our support to their claims for more shouldnāt we then know the whole picture.
October 9, 2022
One last question, how much are UK railway workers getting on their different grades compared to other similar railway companies abroad?
October 8, 2022
last question – – err …NHS? certainly GP partnerships.
October 9, 2022
MT the NHS has plenty of customers, too many we are told, the whole thing needs reform. There are some GP partnerships that have thousands more patients registered per GP working hours than other practices, I read they were paid Ā£155 per patient. If the GP practice has an extra 3000 patients yet people canāt get appointments with them where could they report this? This is the checks and balance that doesnāt exist. Anyone could take payment for 11,000 customers but only serve 7,000. The biggest practices should be checked, they donāt because if all those patients suddenly lost their GP there arenāt enough GPs to fill the gaps so SOME not all patients are left with extremely poor services.
October 8, 2022
a-tracy
Three years of pay freezes for rail workers post Covid (which they accepted uncomplainingly as it was a crisis measure) Railway directors raking in millions and companies making billions in that time and fare rises by RPI. Yet rail workers are being blamed for this rise.
The RMT should sue the Tories !
I’d like to see Ms Truss take on Dempsey or Lynch in a debate. It would be great to watch.
The Tories claim to want workers being well paid but where they are well paid connive to ‘modernise’ (aka Uberise) They continue with mass immigration to depress the pay and conditions of the rest.
Their attention should be focused on getting the rest of the workforce better paid but isn’t. It is focused on creating jealousy and bogeymen ready for the 2014 elections.
October 9, 2022
37/6 and what was inflation on the three years of pay freezes you are talking about, were they the covid years when railway workers got full pay for running near empty trains for months on end, even when the lockdown was eased? I worked throughout, all my colleagues worked throughout covid, without complaining and we were busy.
Again which companies were making billions and did the general taxpayer have to pay them any bailouts at all, did they claim furlough or not?
Rail workers are being blamed for what rise? And the Tories donāt employ the railworkers you are talking about do they if private companies are employing them and making billions? I agree the company directors should be the ones in the studio debating with Lynch or Dempsey and why arenāt they?
You canāt have it both ways 37/6 either you work for a company making billions or you work directly for the government which is it? We are all having to āmoderniseā use new technologies, the world is changing, what people want is changing, working from home has changed a lot, mobile phone and tablets have changed how people access information, pay for things yet you people resisted digitised ticketing for years.
If the rest of the workforce is better paid and the minimum wage is Ā£15 per hour Ā£30,000 per year, how much would a nurse and 1st year doctor after five years training on Ā£30,000 need, Ā£60,000k the people on the Ā£30k would be NO BETTER OFF>
October 9, 2022
Ive just looked up the inflation figures online.
2021 4.1%
2020 1.5%
2019 2.6%
Are you saying that if someone was earning Ā£30,000 for a 35 hour week in 2018 that the following three years they were still paid Ā£30,000 for a 35 hour week?
October 8, 2022
So what has been Conservative ideology for four decades, has suddenly morphed into Treasury orthodoxy. Hilarious.
October 8, 2022
Last year’s GDP bounce back of 7%, still wasn’t enough to get us out of the 9.6% hole it fell into previously.
I can’t wait to see what sort of miracle will bring J R’ s last paragraph into fruition. There again, a growth plan based on neo-liberal tax cutting ideology, has never worked before. This could be a Trussonomics first.
October 8, 2022
Acorn, the payments to the EU are supposed to start to drop off from this month, we are now keeping 80% of the vat in rest of the world imports, weāre not having to pay half a million pounds worth of taxes to the EU for prostitution and drugs, doesnāt this saving start filling your black hole?
October 8, 2022
Actually it wasnāt half a million 31 Oct 2014 ā The UK has been asked to pay an extra Ā£1.7 billion to the EU budget … have been made of the extent of the drug and prostitution markets.
You can bet your life theyāve been claiming this 1.7bn extra per year for the last 8 years too!
October 9, 2022
Have a look at the payment schedule. The bill is in Euro and the Treasury put a 5.6 bn contingency in its last report. There are capital movements in there as well.
https://researchbriefings.files.parliament.uk/documents/CBP-8822/CBP08039online.xlsx
October 9, 2022
Acorn, I took a look the payments are going down. From Ā£9bn (which would have gone up) then next year 2023 down further and on?
October 9, 2022
A Tracy
It doesn’t make any difference what so ever
October 9, 2022
NBill, are you saying the UK is still paying over Ā£9bn per year to the EU? Are we still paying a proportion of British VAT? Are we still paying the 80% of ROW import vat to the EU? Are we still paying the Ā£1.7bn per year for taxation on prostitution and drugs?
October 10, 2022
John, I did a bit of digging into NBillās remark and checked Eu accounts, they showed receipts from the UK net was Ā£49.579 billion 2020 and net Ā£47.456 billion.
In 2021 our total net contribution Ā£41.753 billion.
What are paying this year and why is it so much when weāre out of the customs union and the single market, what are we paying for now in 2022/23? I thought our obligation ended after five years other than to pensions.
Why do the media keep quoting we only pay Ā£9bn to the EU when it is five times more ++
October 8, 2022
I see that the PM has been discussing nuclear power with Macron. Has she not learned that French EPRs should be avoided because they are horrendously expensive, don’t work and take forever to try to build?
October 8, 2022
Does that matter. The CONS government just appeases Macron at every opportunity and gives him whatever he demands even if we get nothing in return. I will never understand why they are so willing to surrender to Macron, who continually threatens us and deliberately places obstacles in our way.
October 8, 2022
Mark :
The Lib Dem, Sir Ed Davey (Oxford PPE), Secretary of State for Energy and Climate Change for the Coalition Government, selected EDFās EPR precisely because it is āhorrendously expensive, doesnāt work and takes forever to buildā.
This decision was made to ensure nuclear was rejected in favour of Chinese wind turbines and solar panels for low carbon power.
October 8, 2022
As I keep saying, follow your arguement where it leads. In most years since 2001, monetary policy has been too loose, with low interest rates and lots of QE. This has been the fault of the Bank of England, although I suspect some Chancellors, particularly Rishi Sunak, have manipulated it behind the scenes. After all, Governors of the BoE want to be reappointed. The exceptions, when monetary policy has been tight, are 2008 going into a recession, and now in a desperate attempt to compensate for the largess of 2001.
We should end – or at least suspend – the ‘independence’ of the BoE and sack the Governor pour encourager les autres. And the Chancellor should ensure that base rate rises only slowly over the next year. We must stop inflation but it can be done more slowly. The current pain in the mortgage market will cost the Conservatives the election if they don’t.
And it ought to be obvious to everybody by now that the popular tax cuts can only be sustained if there are public expenditure cuts.
October 8, 2022
I see Blackrock’s aggressive promotion of LDI’s to the pension fund industry has become toxic. CDO’s brought down the system in 2008 and the idiotic embrace of LDI’s may do the same to the liquidity constrained pensions industry. With this in mind why did Bailey start selling gilts knowing that liquidity in the pensions sector was not what it should be? He must have known rising yields would trigger margin calls in these leverage LDI’s leading to a market event….
I did not a response from the FED to Truss’s mini budget. This riles my suspicions about US interference in this nation’s affairs. It as though the Yanks don’t like free-markets and responsible government budgeting..something is rotten when the US is targeting the private and promoting the State
Some politicians need to grow some balls
October 8, 2022
I know it has all been said here before, but not by Jezza Clarkson, the aging petrol head who gets off on idiotic cars and daft stories about farms. And I quote: (from last weeks Sunday Times)-
Right now, the list of things troubling this country is longer than at any time in my life. We’ve got Russian gas bubbling into the Baltic, a maniac in Moscow threatening to use nuclear weapons, a worrying re-emergence of Covid-19, trains that aren’t running. the real possibility of food shortages, thousands of people who can’t afford to heat their homes, runaway inflation, an immigration issue that seemingly can’t be stopped, some weird weather and the absolute certainty that at some time in the coming months, we are going to see full- blown riots in the streets of British cities.
I have never read so much from the wealthy car wrecker without a hint of tongue in cheek tomfoolery.
October 8, 2022
Mickey. Yes, he’s spot on with his observations.
October 8, 2022
Dear Sir John Redwood
The Economy is in a mess, Sterling is sliding again and mortgages are rocketing. The time has come for Britain to go back onto the Gold Standard!
Persuade the Prime Minister and her Chancellor of the Exchequer of the vital essence now of having a Bank of England mandated to 1) Peg Sterling to the Gold Standard using the Ā£150 billion of UK-owned Gold in the Bank of England, 2) Sell the Ā£100 billion reserve of US Dollars to buy Gold to back up Sterling, then having done that to print Ā£100 billion a year to buy Gold (or rather Gold-backed securities) from UK-based Gold companies and UK-based trading platforms. This would stop the depreciation of Sterling at a stroke and tame imported Inflation whilst putting Ā£100 billion of new, but backed-up money into the UK Economy each year would bring about the desired 2.5% growth without the need for fiscally-ruinous Tax cuts paid for by borrowing. Tax revenues would increase and the Glt markets would calm down quickly! It will also be essential to persuade your fractious colleagues of the merits of this policy so that primary legislation to change the Bank of England’s policies can be pushed through Parliament.
I am completely amazed that there are no Conservative MPs who realise that our Economic solutions (and the salvation of the Conservative Party) might be salvaged by returning Britain to a Gold Standard, and then Printing Money ONLY to buy Gold to generate sustainable Economic growth when the money cannot easily be borrowed. I grew up believing that Britain being on a Gold Standard was the only way to avoid a run on Sterling and high Inflation, and that money was printed only to buy Gold when it was absolutely necessary to get a bit more Economic growth to pay for Public Services, relieve poverty, etc: I have been progressively horrified at the apparent lack of basic Economic knowledge of those who get to high office and run the country- and we seem to have them in the Conservative Party!
I will urge you Sir, that if Lady Elizabeth Truss cannot up her game and/ or command the support of her MPs that you and your colleagues must get rid of her and her inept cabinet ASAP. If the Conservative Party is in any way to avoid getting less than 250 MPs after January 2025 there needs to be a big clear-out at the top and a new competent Prime Minister needs to assemble the new Cabinet based on their SKILLS and TALENT!
Ian Pennell
Reply The party has just chosen a new PM from a wide field of candidates!
October 9, 2022
a wide field of diversity, education, wealth, policies, confidence and mock sincerity.
October 9, 2022
The reality of the relationship between growth, interest rates and inflation is quite simple.
When you borrow money you need to grow more than you borrow or you will end up bankrupt.
Inflation is not growth. Itās an imaginary number.
Therefore growth needs to be greater than interest + inflation.
October 11, 2022
The Bank of England should be called the Bank of the United Kingdom of Great Britain and Northern Ireland.
Why is the national bank named after just one of the UK nations?
It is insulting to Scotland, Wales, Cornwall and Northern Ireland.
October 11, 2022
Isn’t it more than just the orthodoxy of just the Treasury and the BoE too?
The problem with trying to ‘balance the books’ at the moment is that if the Government cuts its spending it will cut its revenue too. So the move to tighten up fiscally will likely be self defeating.
The Ā£60 billion, or whatever turns out to be the final shortfall of the recent not-really-a-budget , can to a large extent be recouped from Windfall taxes in any case. It might not stack up at all in its macroeconomic impact in the way that many suppose but if the ‘markets’ and the economists at the Treasury thinks these are necessary then we probably shouldn’t argue too much at this stage.
The Government creates money as it spends, recoups some of that in taxes and most of the rest comes back as bond purchases fairly quickly. Where else can it go? So the more it spends the more that comes back even though some taxes might even have been cut. This is not to say that we should cut taxes right now.
As always, the case for a tighter or looser fiscal policy depends on the levels of inflation in the economy. Here the mainstream is on stronger ground even though the inflation is largely caused by external factors and hardly any of it is caused by rising wage levels.
Raising interest rates, which will be imposed if the BoE considers that fiscal policy is too loose, will make the situation even worse for everyone. This includes the Government too. The should be no need to remind anyone there’s only a couple of years until the next election so anything that is in any way controversial and could cost votes should wait until later. Even the best of economic strategies are unlikely to show any benefit that quickly. Mrs Thatcher would likely have lost heavily in 1983 had she not had the boost she needed from a successful war in the Falklands. Ms Truss probably won’t be so lucky.