Angered by the cost of living squeeze and sky high energy prices, many people are now hostile to the whole idea of company profits. It is encouraging them to demand ever higher windfall taxes to confiscate more or less the whole profit, and leads on to demands for nationalisation. It is perhaps time to remind ourselves what profit making enterprises have achieved to raise our living standards, to provide well paid jobs and drive growth. It is also time to ask why countries like Venezuela that went the whole way in nationalising and imposing price controls ended up in poverty with large shortages. Many Venezuelans are fleeing the country to live somewhere where profits are allowed and living standards are higher.
The UK’s own experience with nationalisation was poor. A nationalised steel industry put in five large integrated plants but could never sell enough of the steel given their cost levels and spent the next two decades arguing over how many people to sack and how many plants to close. The nationalised railway had a poor record on safety, punctuality and service. It sacked many staff as its market share of the travel market plunged downwards. It lost a fortune for taxpayers who had to pay the bills. A nationalised phone company fell years behind the USA where competing private sector companies leapt ahead with better service and newer technology. In the UK there was little choice of phone, long waits to get a line and rationing including having to share a line with the neighbour for many customers. The electricity industry relied on coal power stations when cleaner and more efficient gas was available. The industry leapt ahead driving costs and emissions down by putting in combined cycle gas plants as soon as it was privatised. The coal industry was in long term decline, with bitter disputes about job losses and mine closures.
Wherever price controls have been tried investment falls and supply reduces. This makes the problem worse. Rent controls seem like a great and popular idea, but as rent controls come in so people withdraw properties from rental and shelve plans to build more. This usually makes the property shortage worse and results in higher rents in the medium term than if controls had not been introduced.
The combination of double corporation tax, a planned rise in the rate of business tax by 31%, and windfall taxes that will be imposed for several years whether there are windfalls or not is putting companies off investing in UK oil and gas production. These taxes will not only mean we import more and become ever more dependent on high and volatile world prices, they will also mean we collect less revenue in future. We will lose out on taxing good cashflows from oil and gas fields under UK control, and watch as we pay high taxes to foreign governments to import their energy instead.
Profits are used to pay for investments in extra supply, which in turn sustains more and better paid jobs. No profits, means no investments. Fewer investments means lower living standards.
February 20, 2023
Exactly, windfall taxes are profoundly wrong and totally counterproductive. Only daft socialists like Sunak would push them.
But then likewise for HS2, net zero, test and trace, the net harm vaccines, energy market rigging and crony/bent capitalism, the soft loans for worthless degree, counter productive lockdowns, taxation at these absurdly high levels, road blocking, rigged markets for EV cars, an absurdly large and unproductive state sectorâŠ
February 20, 2023
+1
February 20, 2023
An article about the role of profits in the private sector is akin to one about that of goals in football – unnecessary that is.
However, it enables John to pepper it with False Binaries to persuade those who cannot think in other ways to accept his rather strained conclusions.
There are countless alternatives to the discredited Tufton Street model other than the Venezuela one, e.g. Germany.
February 20, 2023
Not sure the inhabitants of what used to be the DDR are too keen on the German model; carpetbagging and asset stripping was the modus operandi.
February 20, 2023
Then the insanity of the dire “free” at the point of use (delay or just non treatment) NHS state monopoly and similarly for education so as to kill most competition with the rigged state virtual monopolies.
February 20, 2023
@Lifelogic +1
State terrorism against its own people comes to mind â destroy anything that works and is achieving.
Could you expect any different from what is still the Boris Johnson Government (his cabinet, this cabinet are still the same Collectively responsible Government that has given HS2, net zero and all the other Socialist Doctrines) There still not a Conservative in Government
February 20, 2023
Has anyone noticed that all our current issues, ie HS2, ECHRs, NIP, Net-Zero and Lock-Down, High Inflation, High Tax, High Immigration, Cost of Living Crisis, the State of the Union, Public Sector Strikes and the High Cost of Energy âŠhave all come about during the last decade under a Tory Government âŠeverything has been created, introduced and implemented by this government âŠsomething is very wrong at the top
February 20, 2023
Windfall taxes, or their equivalents, are a part of business. I work in IT sales. I have never seen a sales plan that didn’t involve the right of a company to impose some sort of “windfall tax” on an individual by modifying their sales commission if, by luck or good fortune, the sales figures they achieved were massively out of line with what was agreed and expected with regards to targets.
If companies are free to impose such a “windfall tax” on their sales staff, and they do, why should they not be considered to be subject to one themselves in situations of similar luck or good fortune?
February 21, 2023
PP If you are achieving such good results, perhaps you should move to a more friendly environment where you can benefit fully from your efforts. Rather as Astrazeneca are doing in Ireland.
February 20, 2023
+1
February 20, 2023
Good morning
Were those profits due to efficiencies and the such like or, as some would say, price gouging ? If it were down to the former, then fair enough. If it was down to the latter, then something is very wrong.
Let us take petrol and diesel prices for example. We all know that, when the oil price per barrel rises, and the pound falls, prices at the pump suddenly jumps. But when the opposite happens it take a blooming long time for them to fall. We are given a load of guff about why this is, but no one believes it. One also might say, “Why does the government look into this ?” Well as some here have pointed out, they don’t like to as they, shall we say, have skin in the game through fuel duty (tax) and VAT (another tax) all of which makes up about a third or so of the price. So every time you fill up your vehicle you are literally fuelling government expenditure. Funny that – NOT !!
So government wants to tax even more of the profits on an industry that supplies fuel to a mode of transport that they demonise, and so want to tax that the users literally off the roads, thereby reducing both the incentive for the producers of fuel and the consumers of fuel. All this would lead to massive drop in government taxes and an increase in borrowing because, as we all know, there can be no reduction to the size and expenditure of the State.
Is it me or is there something not quite right with the way we are going about things ?
February 20, 2023
Centrica has made a huge profit this year, when by following government policy there was disinvestment in gas and oil, leading to shortages and a price spike. The owner of British Gas retail buys gas on the futures market and sells for what the going rate is. When Europe lost its supply of cheap Russian gas and needed to replenish storage for winter, the UK pumped as much as possible to the continent, presumably at the very high market price. That is a windfall profit.. How much are customers paying now for the latest deliveries and what is the profit on the recently lowered market price? Does the regulator even ask ?
February 20, 2023
Mark B
No, itâs not just you who thinkâs government is going about things in the wrong way. It would almost seem they are actively trying to make things worse, and us poorer.
February 20, 2023
Yes but what do we do about NatWest CEO getting paid ÂŁ5.1 million?
February 20, 2023
TH -The Gov can use its 46% shareholding to influence pay at Natwest. If it decides to.
February 20, 2023
Yes Tony, a reward for closing banks and providing the most appalling service for customers? He may be paid even more when they force CBDC on us.
February 20, 2023
Well I donât really know but supposing we had a completely free market rather than a totally sewn up and rigged one then all companies would face competition. ( Levels of pay etc would follow performance and true profit).
Let small banks set upâŠissue their own notes. (Why notâŠgovts have devalued to the point of no currency!) Let them have proper local branches.
What if there were runs on small banks?
Could it be much be worse than this controlled demolition?
Iron control over every aspect of our lives lest in our dispossession we should endanger âŠwhat?
What are govts scared of?
February 20, 2023
@Cuibono +1
That’s what Governments preach, to make them (and only them) feel good about themselves â then go and do the complete opposite to manipulate based on personal ego. Governments, particularly UK Governments prefer to fight rather than work with the people that elected them.
February 20, 2023
+++Agree 100%
February 20, 2023
Go to another bank.
February 20, 2023
and they just closed Wokingham’s Natwest bank – nearest is now Bracknell.
Heresay the building owned but needed a lot of work to refurbish, but of course all the years of occupation – nothing down via the profits.
February 20, 2023
…nothing done via …
February 20, 2023
To be fair the next generation doesn’t seem to do in bank banking, cheques are now automated payments, what was a daily trip to the bank is now once per week or less.
I’m surprised there isn’t a one-stop shop that all the banks use, like a banking department store. If the bank doesn’t have anyone on the desk to discuss mortgages. loans, credit cards and investments face to face etc. some other bank will I’m sure.
February 20, 2023
“nearest is Bracknell.” For now.
February 20, 2023
@Tony Hart Yes the Government owned failed Bank like others that we are still paying for. They failed because they took massive risks had a dislike of customers and hadnât a clue what service is, so turned to Gordon Brown to bail them out.
We mustnât loose sight of the fact they now call themselves NatWest â the renamed the whole from Royal Bank of Scotland.
February 20, 2023
This when nearly all the UK banks now seem charge one size for all overdraft rates of circa 40%. No wonder they can afford such huge salaries! Do we not have a fair competition authority?
February 20, 2023
A lot of the profits made in the renewable sector only come about by the stupidity of politicians paying out obscene subsidies for both construction and operating purposes on which is basically a intermittentl power source. With no conditions applied to them regarding the distribution network required for the remote location best suited for their operational success when perfect conditions exist.
The vast profits made coupled with constraint payments ensure the investors in the majority of these foreign companies have been living with an ongoing happy hour environment for years with more to come over the lemming like charge to achieve NZ.
All the while the consumers in all markets get hammered and still during winter periods we all face the threat of blackouts.
February 20, 2023
Without subsidies the renewable sector is dead.
Stop the subsidies immediately.
February 20, 2023
Ian Wragg
Well mate this is a very good reason to stop them. Coming to our shores in the not-too-distant future. What will they do to keep their profits and investors happy? A really good read
Wind Turbine Makers Demand Taxpayer Bailout For Mounting Billion-Dollar Losses
Wind power makers suffer huge losses, want to abandon major project
American Thinker
Thomas Lifson
http://stopthesethings.com/2023/02/20/wind-turbine-makers-demand-taxpayer-bailout-for-mounting-billion-dollar-losses/
February 20, 2023
Gets my vote
February 20, 2023
Good point Turbo. It’s a rigged market
February 21, 2023
The renewables sector is now whining about the forthcoming profits levy on their earnings. Fine, I say. Ditch the levy. But end the subsidies too. Both overt, such as ROCs, and less overt such as carbon tax on their competitors, and freebies for network connection and grid transmission infrastructure costs, balancing costs, backup capacity costs, etc. The let’s ditch the windfall taxes on oil and gas and nuclear too. Re-think our electricity supply to provide competitive cost, reliability and reasonable security through diversifying power sources away from wind.
February 20, 2023
Profit is private and private is now despised by the western political class, as private is a threat to their ardent desire to control mind, body and soul. Therefore profit will be politicised and will be confiscated.
We’re heading inexorably towards a world in which profit is demonised, men are demonised and thought itself is demonised
That’s what LABOUR, THE TORIES AND THE SNP HAVE INFLICTED UPON THIS NATION and people still vote for these three reprehensible parties
February 20, 2023
All property (including profit) is theft.
February 20, 2023
What else motivates a business? Profit is needed, but rip-off should be dealt with.
February 20, 2023
+many
So the powers-that-be thieve everything weâve got!
Taxation IS theft.
âAnd so the greater thief goes loose..who steals the common from the gooseâ!
February 20, 2023
We get closer to Orwells 1984 each and every day. First we have the Ministry of Truth, but instead of 2+2=5 we have 100 genders, not 2. Woe betide anyone that ignores this command, even accidentally. Then we have Newspeak, where childrens books, documents and guidelines are being changed to remove offensive words. such as woman, mother, father, fat, attractive, etc. Then we change history which includes remaking films to replace white people with non-White people which ideally should be gay or trans, replace men with women and vice versa until people forget which way is up and what really happened. The demolition of unapproved statues fits in well, too, along with renaming of streets and soon it will be cities. What parts of 1984 can other see happening today?
I like to think there is a glimmer of kickback starting, but nowhere near strong enough …. yet!
February 20, 2023
Count me out Dom.
February 20, 2023
You did well in getting your criticism of the SNP as reprehensible. This site doesn’t seem to like anti SNP comments, or maybe it’s just mine.
February 20, 2023
Yes Sir John, and then this confiscated money is handed out in handsome subsidies for wind farms and solar farms that fail daily. Subsidies for ev’s that are too expensive, totally impractical and that few want, with battery packs consuming huge quantities of rare resources often mined by child labour.
Socialism at work. Venezuela here we come!
February 20, 2023
Maybe then the link between customer satisfaction and profit should be introduced/restored?
These companies act like (what I probably canât mention here) to do with totalitarian regimes.
They CLOSE ROADS to install their equipment without so much as a by your leave to the council and road tax payer and almost have powers of entry.
Profits sit better on the heads of those who provide a decent, polite, human service. Do any?
And they can just stop with their wokery preaching too!
February 20, 2023
It is a cartel – what else do you call it when they all charge the same? Profits yes, rip offs no. It is a direct transfer of money from the poor to the rich, no other explanation. Sir John tries to spin that the profits will be invested. Well they certainly are, but not in providing more or better service, but in their own share buy backs to make themselves even richer as the share prices rise. And then what? As the share prices rise, not through clever business, the Boards get record bonuses – all at the cost of the average to poor people. It is an insult and to defend it is to be complicit in theft. The Tories have lost the plot and should pack it in. These Tories (present day ones) are clueless and intent only on self enrichment. Time to pack it in.
February 20, 2023
Cuibono. I’m an egg carrier now and my husband is a sperm producer!! I claim discrimination. I have no ovaries and hes had a vasectomy. You couldn’t make it up.
February 20, 2023
+many
I think all of us who recognise the madness should claim discrimination and offence.
Personally I have never been so offended in my entire life as I am now on a daily basis.
Does our oh-so-liberal govt. find all this wokeness a jolly jape or something?
Cos I do not. Not in the tiniest degree.
February 20, 2023
I understand that in Scotland you can self identify as a Jedi Knight
February 20, 2023
F U S
Cynical you but, bless, it made me laugh.
The lunatics have taken over the asylum.
February 20, 2023
“Angered by the cost of living squeeze and sky high energy prices, many people are now hostile to the whole idea of company profits.”
I think there’s a lot more at play here. On the one hand Education has a lot to do with it (I mean indoctrination with leftist views). On the other hand the increase in wealth disparity is stark (alongside a concentration of power into blatantly self-serving hands).
It used to be that we could talk our way back to a more conservative and consensual path. Not any more. Politics is more polemical than ever (and dominated by the Progressives), the media has sold out, public discourse is being shut down and authoritarianism is on the rise. It’s very apparent that our governments do not have our interests at heart, and are not benevolent.
I could go on. It’s an unhealthy cocktail. If you undo some of these ills, perhaps we’d get back to a world where the Venezuelan route doesn’t look so appealing to so many.
February 20, 2023
In som respects itâs almost embarrassing to have to repeat such basic economic principles as Sir J has set out, but it seems repetition is indeed necessary on a regular basis, and ought perhaps to be shouted from the rooftops. The only real protection we have is competition in the marketplace, and not the altruism of politicians.
February 20, 2023
There is no market place, except among smaller companies. It is all rigged for the corporates to rip off the public.
February 20, 2023
Other suppliers are available…..NOT!
February 20, 2023
Whilst grateful to our host for allowing his readership to comment, and supportive of his views, I must point out that we have a (nominally) Conservative government under which these things have happened.
Just as Major paved the way for Blair, Sunk (and Cameron/May/Johnson) is paving the way for Starmer. No doubt the Conservative party’s reaction to the coming catastrophic defeat at the next general election will be to go further Left.
February 20, 2023
Funny how the EU Commission bends over backwards to make sure that tech taxes are FAIR yet has no thought for the tax payer who is forced to pay for projects that do him nothing but harm!
February 20, 2023
Rent controls are a bad idea, but rents are still too high so another control is needed. How about restricting those who are allowed to own residential property to only UK natural persons? Removing foreign ownership competition should squeeze the value and rent needed to cover the investment cost. Might help too if there was a cap on how much any particular individual is allowed to own. It’s not right that people should be held to ransom for a roof over their head.
February 20, 2023
I don’t own any buy-to-lets, but I don’t see the problem with people doing up homes to rent out as pension investment vehicles for their familiesâeven the Blairs. People prefer having their assets tied up in homes rather than trusting the stock market after Brown’s raid and subsequent busts. It’s still a gamble; the home is only worth what it is worth on the day you need to sell it, and not all homes have great returns like there is to be had down South.
February 21, 2023
Given the manner in which the BTL business is under attack it will be a miracle if the number of homes available to rent doesn’t fall sharply. Not only are many of their costs disallowed for tax, but they are now under threat of being prevented from renting out at all if they don’t obey government diktats on net zero. That threatens to see many evicted and properties withdrawn from the market, and will only serve to drive rents much higher. Large numbers will be homeless. Will the government put them all up in hotels, or are those just reserved for asylum seekers?
February 21, 2023
Isn’t Serco just sucking them all up for asylum seekers Mark? You’ve got to free up the homes in some way or another, and British youngsters are expected just to go back and live with their families when they become homeless to make way for all the new families.
February 20, 2023
Another blog in Sir John’s interesting series of “Conservatism and Economics for Dummies.”
It’s a shame the Blu-Green Socialists who are running the Not-a-Conservative-and-Unionist-Party aren’t interested and aren’t listening.
I suspect far more people are furious about the imposition of Net Zero and the war on motorists than profits the energy companies are making, although if they knew that the so-called renewable energy companies profits are generated by subsidies and pricing the energy at the same rate as gas they might be a bit more exercised but not the way the Government wants.
I wonder when the Government will admit that it CAN’T ditch the Net Zero lunacy because Johnson’s “Deal” means the EU is still in control?
February 20, 2023
“The combination of double corporation tax, a planned rise in the rate of business tax by 31%, and windfall taxes that will be imposed for several years whether there are windfalls or not is putting companies off investing in UK oil and gas production”
Many of the green persuasion will be delighted that higher taxation on the fossil fuel sector will discourage further investment in the N Sea. Unfortunately, Kwarteng’s imposition of draconian taxation on the renewable sector’s “excessive” profits will prevent any further investment in windfarms or solar parks, which harvest free energy and are the cheapest source of electricity available to us.
Today wind is producing 14.2GW – about 45% of demand. Clearly, we need more clean energy production
February 20, 2023
I have no quibble with profit, in a good company they are future investment and reward for investors. Profit does not always exist so the good years can balance the bad. My own experience and that of the oil companies is that profit and loss can result from circumstances outside ones control so talk of penalties is totally inappropriate.
Specifically on our high energy costs, government is to blame. Bizaarely in the case of fuel we extract from our own territory, we indulge a commercial framework of set extraction costs that allow the extractors and distributors to sell it back to UK users at crisis world prices. In this process government extract their taxes at every conceivable opportunity. It allows all to dib in the barrel before the end user get a look in. The end result is that heavy users of energy either export their business or go out of business, resulting in us importing basic essentials like steel. Additionally the domestic users have to be subsidised.
Then, just to emphasise their incompetence, government go for accelerated nett zero before there is any chance or wisdom in trying to achieve it. We do not have the means of achieving nett zero power inside the next ten years at best, so we suffer an excess of power user, subsidised, unreliable windmills and solar schemes. Then to prove governments virginity they refuse to exploit our own resources of coal gas and oil, prefering to import it at world prices, and making us vulnerable to any dictatorial whim. Even “Yes Minister” failed to go this far in suggesting ministerial or government stupidity on this level. Just for dessert they are in the process of failing to see the obvious failure of the NIP.
February 20, 2023
Profits are not the cause of sky high prices. The problem is the profligate government that simply cannot stop printing and spending or picking fights.
First we had a man who lived on the edge of his personal credit limit in spite of a huge income, now we have a man who married great wealth and who was trained by Goldman Saks which thinks money grows on trees. Literally paper!
Time for a Mrs Thatcher who understood what it takes to run a corner shop, knew how to make every penny count and grasped the amount of work required to create the wealth that the government steals from the people each day.
I would like to see us the âworld leaderâ in tax reductions. We need to aim for 13% which is the Russian number. Their manufacturing base seems healthy, itâs defence and healthcare industries are well funded – no strikes there.
Their President, the intellectual equal of JR is tying its currency to gold and enforcing âhonest moneyâ, while our JR is exiled by the Tory Parliamentary Party to writing solutions every day, all ignored.
How did they become us – Christian and capitalist and democratic, and we become this horrible mess? What happened? – stupid of me, we gave our country away to the EU and the self-perpetuating political class.
February 20, 2023
Rigged markets, including wind fall taxes and state bail outs of private companies, are wrong. I hope NatWest have repaid their state loans before considering staff bonuses.
February 20, 2023
Profits, on which we live, depend on plentiful, affordable energy. It kills me that I have to agree with the Chinese – but can you disagree?
âThe world community has the right to demand a thorough investigation into the Nord Stream explosions, given the serious consequences of the crime – Chinese Foreign Ministryâ
February 21, 2023
Too bad it’s the Chinese saying it, Lynn, but why isn’t the German government saying it? It’s their energy future that’s been blown up, it’s their companies that are looking at relocating to the USA (and China) because of massively rising energy bills in Germany. But of course they don’t need to ask who is the terrorist rogue state responsible for destroying their pipelines. They already know.
Funny thing about this whole business – the blast sent huge amounts of methane gas into the atmosphere, really bad for the planet. What did the Greens have to say about it? Nothing.
February 20, 2023
It is simple no âprofit no futureâ
So called price controls, as with subsidies, grants and so on is State manipulation coming from failed thinking. If an alternative is needed for more tax it would be far more rational to apply additional taxes of imported goods where they come from States manipulating the markets with their own form of subsidy.
The so-called free market only struggles when individual States try to enhance their own export potential by taxpayer subsidies. The usual one, each subsidy then requires another to create an offset. Price controls are similar in that they punish.
The reality, as was stated elsewhere recently. âThe burden of Government is what it spends. Taxation is merely the mechanism to transfer resources from the private sector to the state sector to facilitate it. If you want to reduce the burden of the state, then you have to cut Government expenditure.â
Far better a balanced budget, and a tax system that is fit for purpose and applied equally to all.
February 20, 2023
Sir Redwood, vote against the windfall tax on energy. It is an irrational tax which will cause our energy prices to go up.
Energy companies will switch investments to willing markets and we will become ever more dependent on the likes of Putin for our energy needs.
February 20, 2023
Profits occur because demand has a higher value than the cost of supply. Demand reveals what is wanted.
So why tax products and services that people want?
Tax instead those things that are worthless and unwanted.
Candidates include: waste, pollution, environmental harm, damage, junk food, violence, crime, overuse of scarce resources, litter, graffiti, hateful tattoos and other brands are available for taxable income.
February 20, 2023
Excellent article, but frightening it is necessary! A disgrace that our education system is so bad that it seems a majority don’t understand the basics. But on the other hand, company bosses are paid obscene amounts & some have not got the balance right between profits & service. But while the Government does stupid things, highlighted by other comments, like Net Zero, HS2, allowing Illegal immigration to reach ridiculous levels, over-taxing us, windfall taxes, never looking at & reducing the cost of government, green subsidies etc, what can you expect? Do you own a mobile phone? Answer for most people, Yes. How much did the government give you to buy it? Answer, nothing! If green
energy was cost-efficient it would not need subsidies, so that says it all.
February 20, 2023
The problemâs that have led to this kind of talk all stem from the Governments punishment taxes at a 70 year high. The Inflict damage because others will cope better than Government mentality.
The UK also has very, high energy costs simply from the Governments cross subsidy âLevy’sâ a Levy is still a Tax, a tax to manipulate peoples minds.
The failure lays at the steps of number 10, as said elswhere âThe burden of Government is what it spends. Taxation is merely the mechanism to transfer resources from the private sector to the state sectorâ
The often mentioned mantra on these pages âit is the economy stupidâ, and it is stupid people and a stupid Government that donât understand that, that is the problem. If we had a resilient, vibrant economy along with a âbalanced budgetâ none of this nonsense would come up.
But after 13years of Conservative blunders and their continuing Socialist ideals and Socialist propaganda â what can we expect.
February 20, 2023
âThe only thing necessary for the triumph of socialism is for good conservative to do nothingâ
February 20, 2023
Never mind that nationalisation has never cured anything – far from it! They have ruined industries.
Exactly, and without profit we will will not see innovators taking chances to invest in their ideas.
February 20, 2023
Companies should be allowed to create as much profit as they wish in a free market without interference from governments â however those same companies shouldnât receive any government support or subsidy
Taxpayer subsidy shouldnât be used to supplement profit when that profit is used to pay shareholder dividend âŠwhich is the current case with âallâ renewable energy companies
Taxpayer subsidy shouldnât be used to supplement profit of any foreign listed company
February 20, 2023
Does that mean you are opposed to the Governmentâs ÂŁ210 m subsidy to Rolls Royce for their SMR programme? Or to the ÂŁ100 m subsidy that the Government was planning to give BritishVolt before its collapse in January 2023? Or to the ÂŁ300 m that the Government is likely to give British Steel as ârescue fundingâ? Or to the ÂŁ92 m tax rebate that the Government gave Shell in 2021? to the ÂŁ35 m tax rebate to BP for 2021? Or to the ÂŁ350 to some millions of UK households that will help keep Centrica/British Gas profits high?
Or ⊠gov.uk 31/01/2021 âView subsidies awarded by UK Governmentâ.
Or more simply when will you realise that there is no such thing as a âfree marketâ.
February 20, 2023
Watch your back, Sir John.
Defending profits and profitability will never do. That’s not the purpose of the Conservative Party these days.
Wind your neck in, or de-selection beckons!
February 20, 2023
The mainstream becomes the extreme â either the Tory Party has lost the plot or SirJ has lost the plot âŠ.my money is on the new woke Tory Party
February 20, 2023
Ronald Reagan’s view of the US government back in the 1970s is apt:
“Back then, government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
This philosophy has bounced back in recent years, and all the major UK parties now go along with it. Your Party has fallen into this socialist trap and needs to find a way out.
February 20, 2023
Reagan & Thatcher made a splendid combination in making so much of our world a better place.
Quality has declined since, and those now in office are low standard.
What a drag.
February 20, 2023
In a free market economy profits are essential motivators . The right of choice is also important otherwise individuals are mummified . If companies see little future in their planning and day today operations employment of labour is restricted and whole communities are deflated ; investors look elsewhere . Water companies are not subjected to competition and users do not have the right of choice ; here there is real reason for change ; once again it is up to the lawmakers to invoke this change . Growth depends on the creators of wealth to want to invest in opportunities ; without this stimulus stagnation results . Everything depends on how the Government acts .
February 20, 2023
Nobody talks about compensating shareholders when their investments go down but as soon as a company makes a profit greedy politicians shout for windfall taxes. Take for example my Centrica shares. These have a capital loss of 61.23%. Iâm not asking for the Government to compensate me for this loss as it was a risk I knowingly took when I bought them. Centrica made a healthy profit last year after many years of no returns and people want to steal this profit. Just remember that shareholders pay tax when they buy shares, possibly CGT when they sell them, and tax on any dividends they receive, so HMRC is already getting a large cut. Also, many pension pots are invested in the stock market which affects current and future workers. This lefty conservative government is making the UK a very bad place to invest. Sunak and Hunt need to be removed and removed fast if the Tories have any hope of turning the economy around.
February 20, 2023
âRent controls seem like a great and popular ideaâ
They donât seem like a great idea to me. This government is forcing private landlords out of the market. We are fast approaching a disaster in the rental market where demand is outstripping supply. Why would anybody buy rental properties nowadays when they can get much easier returns by putting their money in the bank? This government is putting undeserving illegal immigrants at the front of the housing queue leaving the indigenous British people homeless. All because they have signed us up to the UN Convention on Human Rights. What about our rights? We are just labelled far right if we dare to complain. We never asked for any of this.
February 20, 2023
It appears to me that a significant minority of people are swayed by anti-profit propaganda but NOT the majority.
The propaganda is everywhere and most of it is funded by the public.
Take this example:
https://www.bl.uk/womens-rights/articles/remembering-the-grunwick-dispute
The Grunwick dispute was a significant event in our history, but the mainly government-funded British Library tells the story from the left-wing viewpoint.
This propaganda should never be allowed of course. However, instead of stopping it, the government/civil service find it easier to run with damaging socialist policies.
Thankfully, most people are not avid consumers of the British Library, the BBC, subsidised Channel 4 and etc. However, the minority who are affected have disproportional political influence.
February 20, 2023
Yep – I’m in favour of profits too. But let’s look at some news coming onto my laptop today, concerning a data breach by BA a few years back. In 2019, the ICO sought to impose a fine on the airline of some ÂŁ183 million – this despite the airline having made good all losses faced by its customers. (The fine was dropped to ÂŁ20 million.)
And now? A group of amubulance-chasers is seeking to extract nearly ÂŁ500 million from the airline in one of those ‘class-action’ lawsuits, on behalf of clients who have already been compensated. If they succeed, the cost will be borne by the funds and private investors who rely on dividends.
So what do I want from my MPs? I want them to clip the wings of the various regulators who seek to impose massive, barmy fines in an attempt to show how tough they are. And I want them to clip the wings of lawyers attempting shake-downs that the Mafia would be proud of.
February 20, 2023
If you step back slightly the real Elephant in the Room as far as energy companies go, is that the regulator sets the maximum that can be charged to the consumer, so all the companies then charge the maximum. Nothing about the pricing has anything to do with the market place everything to do with political manipulation.
What the UK Government doesnât permit is a competitive market place, as a Socialist Government it is against a free market.
If energy was a free open market the whole landscape would be different.
February 20, 2023
Net-Zero has indeed distorted the energy market place
February 20, 2023
ânationalised steel industryâ Unfortunately the flip side as the UK Steel Industry is in Foreign hands, they wont grow their businesses unless the Government forces the taxpayer to subsidies them.
Removing Industries that are important to the UKâs safety and security into foreign hands doesnât improve anything. As a rule they do not contribute to the UK other than employing a few people, all profits are removed and the tax paid on them is in their home domains. So in a round about way they want a taxpayer bail out then move the same money to their home market. They then get to compete with the UK having secured UK taxpayer finance for their home producers. A bizarre cycle of punish the UK taxpayer from inept Government.
February 20, 2023
Elon Musk led the way with his new business model â ââProfits arenât derived from the buying customer âŠProfits are derived from maximising government subsidyââ
February 20, 2023
Sir John, history and experience shows that Free Enterprise, Capitalism(investment other than by the state) and market forces ( with slight state control) are the best way to develop an economy and generate wealth for the majority. Even China and Russia have had to adopt this basic theory of good economics.
However the examples you choose to prove your point neglect other factors that modify the theoretical model. The impact of globalism and politics on the model can end up weakening the economy of a country.
The US tends to sanction socialist countries which does not help. Cuba a prime example. How do you compete with countries with lower labour costs and social care ? Particularly if you have nothing that they want to buy from you at the price they can afford. The big problem with the UK political class/liberal elites is they no longer value Engineering like the Victorians did. More like they don’t like it /understand it. Say compared to the Netherlands or Germany. You mention the steel industry. Was every requirement for steel to be used in the UK full filled using British steel ? Was all the coal required sourced from UK mines ? You always like to single out the Electricity supply Industry and old GPO. The same people where in the Nationalised Industries when Nationalised and privatised. The Government were in control and in view of there lack of technical understanding did not choose to question why falling behind the US. They could have invested more in development leading to production. I like your example of the party line and tested many of these. The problem was the cost of providing additional cabling for just a few subscribers who were at the remote end of the exchange coverage. Cheap electronic or digital technology was not available at the time we are talking a long time ago now. Happier if you compared the UK progress to how advanced the rest of Europe was compared to the US and don’t forget Canada
But Sir John can you actually show we are paying less for our utilities now than when they were Nationalised ? PS. using gas for power stations is not that sensible. Gas is really best used as a domestic fuel. You can have a really clean coal fired power station. But like gas will still generate a lot of plant food. Why did the government not instruct that more nuclear power stations be built invest in them ?
February 20, 2023
I of course as a businessman agree with this blog and more Conservative M.P.s should regularly be arguing this way.
Yet I say one may not only cite numerous examples (as John Redwood does here) of failures by nationalised industries and governmental profit-prevention mechanisms but one should also emphasise that where there is no adequate profit/loss control mechanism as in the public sector (where costs, including all losses arising from inefficiencies, are funded by taxes) there is practically necessarily inefficiency because nobody stands to gain personally in financial terms from efficiency. That is inherent. Furthermore unlike in the public sector in the private sector one has to be competitively efficient to get customers to make money. So the individual customer wins and the government wins when things are privately run with scope for profit rather than publicly run.
February 20, 2023
In relation to the Lancashire case, Starmer is swanking about having been DPP, while in the next breath he undertakes that he and his party will support a foreign treaty he hasn’t seen. What sort of lawyer is that?
February 20, 2023
Speaking of profitsâŠhow about those derived from â Constraint Paymentsâ?
Wind farms paid to NOT generate electricity.
Millions paid out in Scotland apparently.
Is that in addition to any subsidy..or is that actually the subsidy?
February 20, 2023
Speaking of profitsâŠhow about those derived from VAT …all that extra VAT on the higher petrol price and higher energy price
Our own government is profiteering
February 21, 2023
Profiteering from the green levy, apprentice levy, windfall levy, flight & holiday levy, net-zero levy, ULEZ levy, environmental levy, insurance levy, BBC TV Licence, Excise Duty, Community Infrastructure Levy âŠetc
February 21, 2023
Bank Levy, Statutory Gambling Levy, Health and Social Care Levy, NHS Levy, Dentist Levy, The Pension Levy, The Agriculture and Horticulture Development Board Levy, Building Safety Levy etc etc
February 20, 2023
From an article I read earlier;
According to estimates from the 2021 budget report, the new rates of corporation tax are meant to raise ÂŁ11.9bn in 2023/24, rising to ÂŁ17.2bn in 2025/26.
Miles Dean, head of international tax at accountancy firm Andersen LLP, said these estimates are âsincerely optimistic at best, but more likely deliberately delusionalâ.
âThe corporation tax rise will also likely further heighten inflation, which has already reached historic levels. The government is sending the message that weâre simply not pro-growth, but rather pro-tax,â he added.
February 20, 2023
Christine,
That is a very good comment about Centrica shares. I also own a few & am sitting on a big capital loss. Like you, I am not seeking compensation for the loss & agree that the government more than gets its share in tax on dividends & CGT.
It appears that there is no area of life that the government can not make more difficult by interfering.
February 20, 2023
NLH,
It’s another academic issue.
I am more interested in Damian Green failing to get selected, or Sunak’s plans for Northern Ireland.
Green deserves to be rejected, but that has nothing to do with payback for Boris Johnson’s removal. Johnson is deservedly finished, though his pals often hijack the news to claim he will return.
February 20, 2023
Maybe he should stand as a Reform candidate
February 20, 2023
A government that insists upon increasing the taxation for its citizens and its corporations cannot be a Conservative government.
Right now, the one we have is CINO, conservative in name only, as they are adopting socialist agendas that contradict the very manifesto, upon which they were elected into office in 2019. They are no better than the ‘Arthur Daley’ type of devious used car salesmen of yesteryear.
Revert to proper conservatism or begone from Parliament. You have already been warned by the succession of negative Polls why do you not heed them?
Revert to proper conservatism or begone from Parliament come 2024. Or before!
You are doing OUR country no good at all in your perpetually broken down decrepit state, so shape up or ship out.
February 20, 2023
They know all this, Sir John.
Once it is realised that they want us to become like Venezuela, then all their policies, such as Net Zero to destroy our economy with scarce supplies of expensive and intermittent energy, high taxation, wasteful spending, diversity replacing meritocracy, high levels of legal immigration, no effort made to control our borders against illegal immigration, odd judicial outcomes, become completely obvious and transparent.
February 21, 2023
If Net Zero is important then surely getting there in the quickest and most efficient way should be our priority.* No sensible private company will be prepared to commit to any NZ route after the incompetent muddle of the last 13 years, so it will have to be government led. To that end it will have to be nationised onshore gas subsidising nationalised small nuclear reactors in a crash programme akin to a war effort.
Net Zero in fifteen years is possible. So, is Net Zero important or not? Don’t we owe a duty to the world to set an example, to show the way? **
JF
*There can only be one priority, that’s what the word means.
**Put that way, my advice is ‘not’.
February 24, 2023
Thank you for this thoughtful blog post. I completely agree with you that profit-making companies have played an important role in improving our standard of living. I also think it’s important to remember that nationalization and price controls can sometimes lead to negative outcomes, such as in Venezuela. What do you think the benefits of profit-making companies are?