Many voters are angry that the U.K. government allowed inflation to hit 11%. That is part of the reason Conservatives lost so many votes as they were meant to be in charge.
The public also saw that Labour did not warn about the coming inflation to suggest any policies that might have prevented it. Their vote also fell.
The problem went unsolved because most MPs and all parties in the House said the Bank of England is independent, None of them wanted to challenge let along change the inflationary policy the Bank of England followed. This was both under its own powers and more importantly through the main policy of printing too much money and buying too many bonds which government and Opposition both backed and approved.
There is still no party calling for an end to the sale of bonds in the market at huge losses. This policy is not followed by the European and US Central banks though they made the same big inflationary mistake as the Bank of England. All parties want a better financial outlook to afford more spending and or tax cuts yet none can see how the Bank is sending huge needless bills to taxpayers.
Why? inflation in Japan, Switzerland and China stayed low despite the war and energy price surge.This shows it was not the war but Bank policy that caused the overall inflation. .
July 22, 2024
I have to say I have been deeply disappointed in the Tory Party during the last 11 years. Yes some good things were done but the level of incompetence by the Government and the fiasco of the 22 holding all PMs to ransome time and again was appalling .Theresa May’s idiotic mess with Brexit and the regular changing of the Secretaries of State from one incompetent minister to another was demeaning to say the least. You lost Suella Braverman, Boris Johnson, Ben Wallace and some other very good people who were trying to change but not able to do so. I found huge arrogance in some ministers. And terrible issue of all those new Red Wall seats lost. Shameful. From David Cameron to Rishi Sunak my beloved Conservative party has sunk to the depths. I came to this country in 1973 went through those awful Labour years till Margaret Thatcher. She have me the most wonderful chance in life to open a business from scratch which has become very successful. And the Party annihilated her as well. Always fighting yourselves instead of governing. I rest my case.
July 22, 2024
They promised what they knew the electorate wanted in five election manifestos (lower taxes, law and order, economic growth, sensible immigration levels, sound defence… but have delivered the complete reverse for four of them. They did not even try to deliver. So no one sensible trusted them in the fifth. They also promised net zero, an insane vastly expensive net harm policy – but they did unfortunately try to deliver quite a lot of this total lunacy.
The Tories have been dire for most of my life Heath onwards to Sunak. Even Thatcher made huge errors – John Major as Chancellor and letting him take us into the ERM so as to try to join the EURO. She closed loads of Grammar schools and buried us further into the EU without referendum permission. The catch 22 is Labour and the other options have been even worse until Reform came. But reform has no power just fairly sensible policies.
July 22, 2024
The main cause of inflation was currency debasement by Sunak as Chancellor and QE at the BoE. Very clever of them to manage to blame this on Truss’s few days in office. There was no inflation if you were paying using gold or indeed most other commodities just if you were using the devalued sterling.
Section 18 Forgery and Counterfeiting Act 1981 makes it an offence to reproduce a British currency note or part of one. Section 19 Forgery and Counterfeiting Act 1981 makes it an offence to make or sell or distribute or have custody or control of imitation British coins within a scheme for goods and services.
Alas these laws do not seems to apply to Chancellor Sunak or Andrew Bailey. So that is what they did another tax in effect on your wages and saving. Then they stopped increasing allowances by inflation as yet another stealth tax.
July 22, 2024
They then spent all the money on lockdowns, HS2, net zero, no aircraft duff “aircraft” carriers, worthless degree loans, net harm vaccines, test and trace…
July 22, 2024
JR,
The Uni party is not use to governing! It is use to being told what to do by EU and allowing quangos to implement EU law, regs, and rules!
Hunt yesterday still trying to promote the narrative “we” have a “two party system”. Hunt is deluded thinking the only choice of which shade of socialism the country is allowed. Hunt also deluded that as chancellor he had to do what he was told by OBR! Total tosser.
Time has come to oust both sides of Uni party. They want to destroy our way life, culture and values and act in lockstep to EU. Both have loved they are unable or u willing to govern.
July 22, 2024
The vast majority of UK’s recent transitory high inflation, was due to importing basic commodities at world spot market prices. The Spiv City of London does not make money by having long term contracts for basic commodities, unlike the countries that did have such contracts; and, did not suffer the transitory hyper inflation the UK suffered over three or four quarters.
July 22, 2024
It is a shame you have never got yourself into Parliament and then made it to PM. You are clearly right about everything. Can you let us know what happens after death?
July 22, 2024
Thats easy nothing!
July 22, 2024
Like we have nearly all feared under the present eco / green nonsense …..the lights go out and don’t comeback!
July 22, 2024
You get assessed for tax.
July 22, 2024
So Lord Blunkett has urged the Prime Minister to stand firm on the two-child benefit cap, saying parents must take responsibility for choosing to have bigger families.
I have always disliked Blunkett, a man who had to resigned twice in total disgrace, yet still ended up in the Lords. I think I am on Suella Braverman’s side on this. It is not the children’s fault and I suspect the lack of benefits does not deter many of these women from having more children anyway. Perhaps the Lords should all give up their subsidised dining, bars and £300+ tax free daily allowances to help pay to feed and clothe these children.
July 22, 2024
1.5 million children and about 0.5 million families are affected it seems. So much fat elsewhere that could be cut start with killing net zero, carbon capture, renewable subsidies, HS2 and the loans for duff worthless degrees circa 75% of them.
July 22, 2024
Do not forget all those immigrant families the taxpayer supports. Also when Sliny Cameron was in office £33 million child benefit sent to EU children who never set foot here! We were told Slimy would stop it, he did not.
How much are we now paying immigrant children here or in EU? None should be eligible.
July 22, 2024
A couple I know have a daughter, child number two was boy twins….hmm! Which twin doesn’t get child benefit?
July 22, 2024
Guidance is available on the Government website.
“However, the two-child benefit cap, introduced in 2017, prevents parents from claiming child tax credit or universal credit for more than two children. There is a multiple birth exception to this cap, which applies if:
A household already has two or more children and then has a multiple birth after April 6, 2017
The claimant has twins and claims child tax credit for the first time
The claimant has a multiple birth with triplets (or greater) and has no children on the claim “
July 22, 2024
Is there not an exemption for that? I hope so.
July 22, 2024
If those ‘22 MPs’ had not done as they did the Country would no longer be an existing entity. How so-called Conservative members can say they owe everything to Thatcher and then castigate the last of her standing army is beyond me.
But it is the reason the party itself is lost. It’s remaining rum members are as confused as the MPs.
July 22, 2024
Question, what criteria do the central banks of Japan, Switzerland and China have for controlling inflation. What is the basis for the valuation of their respective currencies. Where does the decision of last resort lie as to how much of their currencies is in circulation. If their economies run on better criteria than our own there might be much to learn and adopt.
The supposed iron wall in the UK between the BOE and Government exists because political government could not be trusted to handle the economy free of politics, particularly as election time approached. However who can say that the BOE , OBR and Treasury do not have their own colluded political agenda. Evidence surrounding the departure of the Liz Truss government suggests that they do. Residual EU law and regulation on the UK statute book, ref control of pension investment, further suggests that many financial tools are not in UK government hands.
The BOE may claim to have reduced inflation to the target 2%, but there seem to be many measures of inflation, such as the price of food, that are not part of the calculation, rendering the 2% result questionable. Many of their own professional peers question the competance and entrpreneurial drive of the economists of the BOE, OBR, and Treasury, suggesting they could do a much better job. Results seem to confirm this.
While these three departments are left free to play with the tools for creating funny money, beyond the limits of taxation, ie:- bonds and quantitive easing ( financial DulcoEase), then government and the people must suffer the consequeces. However UK governments cannot be trusted either, so based on the three countries you list, what is your answer.
July 22, 2024
What is the basis for the valuation of any currency? I’ve always thought there should be some sort of equivalence between the cost of labour in different countries. Why is the labour of a person in Country A only worth a tiny fraction of the labour of a person in country B? It seems stupid to me that it is so. It leads to production moving to the low labour cost countries and balance of payment deficits for the high labour cost countries. And of course, mass immigration and emigration.
July 22, 2024
Look at Purchasing Power Parity stats.
When people tell me that ‘Indians live on less and £1 a day’ I marvel at how inexpensive everything in India must be. No Briton could live on a £1 a day.
July 22, 2024
Maybe from a food bank?
July 22, 2024
You spend more than a £ before getting out of bed.
July 22, 2024
Mike Wilson
Country A might be in the middle of Africa where labour is diected to staying alive through use of not much more than manual power. Country B could be well post industrial revolution, highly mechanised, driven by science and capital. One man B will produce infinite more value per hour than man A. Whether he is any happier is another debate.
Labour and its cost is a decreasingly important factor in the production of wealth than it was, so the movement of production to low cost labour areas much less significant. Science and engineering rule. If you wish to explain the decline of the UK look to poor management and absolutely incompetent doctrine driven politicians. Just watch it play out in our newly arrived government, little different from the last one.
July 22, 2024
@Agricola I take your points but … I think that generally we are talking about the production of goods. We used to have factories here with people operating machines to make clothes. Now those factories are in countries with a much lower cost of labour. The factory is the same, the machines are the same, the people are the same – apart from earning a tiny fraction of what someone here must earn. Lots of businesses have made the decision to close factories here and build, or buy, factories in the Far East. Some of them even ship out the equipment. All to take advantage of cheap labour. It often strikes me, as I pay £90 for a pair of trainers, that they came out of a factory in Indonesia or Vietnam or Cambodia probably costing the American brand owner a couple of bucks. Which is why I still don’t understand why the exchange rate creates this disparity. The minimum wage in Vietnam is (roughly) 5000 VND an hour. The minimum wage here is (roughly) £11.50 an hour. This suggests to me that £1 should equal 5000/11.5 = 435 VND. The actual rate is (roughly) £1 = 33,000 VND. Which suggests that the value of the work done by someone here on minimum wage is worth 75 times the work done by someone in Vietnam. 33,000/435 = 75. I just don’t get that.
July 22, 2024
Re bond sales at huge losses, just who is applying the pressure to sell and why?
July 22, 2024
More pertinent David is who is profiting from the sale of the bonds. As always follow the money.
You can be sure the deep state, real powers are making a fortune the same as for renewable energy.
July 22, 2024
+ 1
The banks and Investment Institutions (like Blackrock) will be benefiting. It’s a classic “privatise the profits, socialise the losses.” We are effectively bailing out the banks again.
July 22, 2024
We never get answers. In Stalins day if you criticised you were ‘an enemy of the state’
The public sector is Stalinist with an elitist crony ‘you scratch my back’ etc culture etc hence a vendetta against whistle blowers allowing mediocrity to be the norm.
July 22, 2024
+1. I was going to ask the same question. Our kind host, both inside parliament and now outside, has been doing his best to spotlight this ridiculous policy and get it changed. Nothing has changed, so what is going on in the bank?
July 22, 2024
I’m sure they’re busy working out how to finance the Reeves spending spree starting with public sector wages.
July 22, 2024
Morning Sir John,
As always, your thoughts are interesting but, I agree that the bank was part of the problem, however the real problem was energy costs. Every aspect of our lives and country rely on energy, be that, gas, electricity, heating oil or fuel for motor vehicles. Fuel pricing was the real driver of inflation and that was caused by the government’s deluded climate and net zero policies. Get the green taxes down and artificial green energy subsidies down and inflation will come down.
July 22, 2024
Net zero was indeed a huge cause of energy price inflation economic and environmental suicide. In the US they are often 1/3 of the price of ours.
Jeremy Hunt on Laura Kunesberg yesterday apologised for his part in the poor pre-pandemic planning. True things like the inability to be able to make PPE and other equipment locally and quickly were obvious errors. But he was not asked about the huge (probably criminal) errors of:- The net harm vaccines, even coerced into people who did not need them even had they worked and been safe, the vastly expensive net harm lockdowns and all the crony capitalism, fraud and waste as they too the state debt up to 100%+ of GDP.
The inflation was surely not a mistake but a deliberate plan? Either that or “unequivocally safe” Rishi Sunak and Andrew Bailey & the BoE are even more incompetent than even I think they are.
July 22, 2024
@ Lifelogic – recall Hunt’s apology was only for his activity in government (pandemic planning) and he had left office when the Covid responses were devised.
July 22, 2024
Well for five years he did little to sort out the dire NHS structures. He did not speak out about the vaccines risks and damage, the attempts to force health workers to take these “vaccines”, the net harm lockdowns, vaccines even for children and people who had had Covid… ministers under Boris even tried to trash the reputations of the experts who were telling the truth. Like Clare Craig and the Barrington Declaration people.
July 22, 2024
The energy business plan of UK government, by ignoring our own fuel sources and being less than beneficial to end users results in all users paying three times what they pay in the USA. The only beneficiary is government via punative tax. I have asked our host, many many times, he knowing where the bodies are buried, for a detailed explanation of the UK business plan. Not a word has been forthcoming, so suspicions breed that it is a less than honest plan. The field is yours SJR.
Reply There is a net zero plan, which requires run down of fossil fuels
July 22, 2024
A reply to Cliff of Wokingham.
July 22, 2024
That isn’t a plan. It is an aspiration. What, actually, is the plan? I have never heard anyone explain what this country will look like when we are at net zero. How will our transport be fueled? How will our homes be heated? Where is the power coming from? How will it be stored? What’s the plan?
July 22, 2024
A totally mad, pointless, damaging aspiration, indeed one that is impossible to achieve aspiration.
Until perhaps we sort out controlled fusion energy and even then. But we have plenty of fossil fuels until then.
July 22, 2024
If you look at the recently published Future Energy Scenarios you will see that the plan is you will be poor, you will be cold and you will be hungry. We ate supposed to halve energy consumption despite a rising population. Within that it’s assumed that some industry will survive but that is unlikely given the energy cost they would face. That means even less energy us planned for the population. Perhaps the real plan is a population cull. I see it is expected that a sixth of Conservative voters will die by the next election. Personally I doubt there will be as many left.
July 22, 2024
To reply “There is a net zero plan, which requires run down of fossil fuels” a mad vastly expensive, economic suicide plan with zero benefits.
Currently about 90% of all human used energy comes from fossil fuels in the UK, Worldwide less than 5% is renewables. Even renewables need loads of fossil fuels to build, backup, connect and maintain them.
July 22, 2024
Reply to reply.
That is a cop out. We have paid world prices for our energy way before Nett Zero was invented, irrespective of whether that fuel came from the Middle East or our own sources. Where did the compulsion to pay world prices with all their volatility for our own fuel come from. Was it EU pressure as suggested by one inside source or was it shere government tax greed. Alternatively was it the drillers who said, we will extract it for you but only at the price we can get for it on the world market. I want a detailed explanation of what the business plan is for home grown energy, not an all too typical HOC answer from a ministers scribe.
Reply Energy is a global market so if you buy your own domestic energy you will pay a price related to the world price. Transport costs will be lower than imports and you may get domestic discounts/term contract discounts
July 22, 2024
R to R
For heavens sake WHY. The USA does not pay world prices for its own energy. Why in gods name are we expected to pay world prices for our own energy. Who is responsible for creating and running this scam. A clear, none ministerial answer, would be appreciated.
Reply All the time we have pipes and cables connecting us to Europe producers can sell their product easily abroad at world prices. US gas does not have pipes to Europe and limited LNG conversion capacity so US gas is sold more cheaply to their domestic pipe system.
July 23, 2024
I do remember our host getting very annoyed, (well for a politician, I don’t know how they keep so diplomatic), about the use of inter connecters from eu countries. The long term consequences being very apparent for even a casual observer. No doubt these decisions signed off by totally unaccountable quangos.
Reply Yes I was annoyed. I proposed more domestic generation including gas turbines so we didn’t need the imports .
July 22, 2024
The BoE should not be selling gilts at a loss, but this may not now be contributing much to inflation, which has now fallen back close to the 2% target.
Many think that apart from the fossil fuel industry quadrupling the price of gas before the Ukraine war, the cause of the British inflation at 11% was price gouging by UK plc companies who saw an opportunity to get away with massive price increases, particularly for food
July 22, 2024
Well they closed the gas storage and had a mad war on CO2 plant, crop and tree food.
Located beneath the seabed off the east coast of England, Rough is the largest gas storage facility in the UK. After closing in 2017, activities resumed in October 2022, with its capacity subsequently doubling during the summer of 2023. Rough currently accounts for half of the UK’s total gas storage.
Note that “food” is energy (1 kWh equal to 860 kcal) and it takes loads of energy to fertilise, grow, harvest, butcher, process, package, to fish, freeze, deliver, chill, cook. Expensive energy gives expensive food. It can take as much as 50KWH+ of fossil fuel energy to produce 1KWH of some meat based human foods. Typically circa 4KWH on average so walking and cycling so fuelled – are far from net zero!
July 22, 2024
Also note only a small % of the food you eat perhaps 20% ends up as motion/kinetic energy. Most ends up as heat. So walking a mile needs perhaps 1kwh of energy to produce the extra food needed for this walk & more if a large meat eater. Enough for a small car to take 5 people circa 5 miles! Yet the Gov. web sites still lies that walking or cycling produce no CO2 direct or indirect per mile!
July 22, 2024
Lifelogic
Food also contributes a bit to wind power, but not the right sort of wind it would appear, hence the reason they want to drive us all away from eating meat, but then cows that also produce milk surely have the same emissions.
July 22, 2024
How on earth can inflation be 11% then in a matter of months not years it is reaching down to some arbitary 2% wanted?
To me it demonstates levers being pulled for purposes other than reflecting availability of accurate priced energy, need to sell Government assets for what reason, productivity of key industries, employment level, and workers actually reporting for work not striking.
Micky Mouse economy ‘run’ by disturbing motives.
July 22, 2024
The reason it can change so quickly is because it is a measure of the increase not a reflection of costs.
Gas and electricity price falls so reduces the increase in prices.
Prices are still eye-watering
July 22, 2024
Just to illustrate: In year one prices go from 100 to 111, the year one inflation rate is 11% (=(111-100)/100).
In year two, starting from 111, at the end of month 6 prices are 113, at the end of month 12 prices are 114.
So inflation rate in this second year is (114-111)/111 so inflation is 2.7%.
But then if six months later prices are 115, the inflation over these last 12 months is (115-113)/113 = 1.8%. (NB: that’s inflation between year 1.5 and year 2.5). And the government (whatever its colour) can say it has defeated inflation and put it below 2%.
But as said by other contributors here, if salary/pension over these (12+12+6)=30 months (=2.5 years) have not increased by a total of 6% [= (11+2.7+1.3)/2.5 , that is salary/pension also increased from the equivalent of 100 to 115) over these 30 months, then people are poorer.
In fact no need to pull levers, just basic maths taken over a sliding period (instead of keeping a fixed reference period, eg always Apr-Mar every year) and presented to a public unlikely to bother with these simple calculations.
July 22, 2024
SG : “Many think that apart from the fossil fuel industry quadrupling the price of gas before the Ukraine war…”
Total nonsense.
BTW the price of gas generated electricity is today back at around £50-£60/MWhr. The offered prices for the new wind CfD contracts to be awarded in September are £88/MWhr for onshore wind, £100/MWhr for fixed offshore wind and for floating offshore wind, recommended by the PM at his GB Energy speech in Scotland, £242/MWhr.
The average power over the last 8 days from the 30 GW of installed wind has been 3.5 GW with an average demand of 25 GW.
According to The Royal Society’s Large-Scale Electricity Storage Report these renewables prices will need to be doubled to achieve reliable power using wind/solar with hydrogen storage, a figure BTW which relies upon electrolyser efficiency and wind capacity factors doubling by 2050.
July 22, 2024
I’d be interested to see the numbers. If they bought a bond for £80 and sold it for £70 they have made a loss of £10. Whether they sell it or not, they are going to have to redeem the bond for £100 when it expires. But, while they own the bond, they don’t have to pay the coupon. So this has to be set off against the loss. I wonder what the actual numbers are.
Reply The losses are much bigger than 10% on the longs. The bank owns the bonds so they receive the income,not pay it. They get paid back £100 on redemption. The interest and repayment comes from Treasury. Selling the bond way below repayment value locks in a needlessly large loss.
July 22, 2024
It is my contention that inflation (the not so accurate and frankly dodgy official figure) doesn’t even enter into a voter’s calculation when deciding on who to vote for simply because inflation is a personal issue subject to income, geo. location, personal circumstances and lifestyle.
July 22, 2024
I agree. I don’t think it’s a particular percentage that matters to voters, so much as a general feeling of life having got a lot more expensive recently. But if you want to quote a percentage, why not the ONS finding that the overall price of food and non-alcoholic beverages rose around 25% between January 2022 and January 2024? Since a lot of people go shopping at the same regular intervals (weekly shop at a supermarket, especially), they’re going to notice how the cost of living has been going up. The ONS also reported that many people were buying less food as a result of inflation. They noticed the sharp increase in the cost of living, and reacted to it by reducing their little luxuries.
Inflation is seen as to do with the way the country is governed (Sunak pledged to reduce it, accepting it was under his control). If the Tories are perceived as costing you more, you won’t be inclined to vote for them. That’s likely to be the main reason why their vote collapsed.
July 22, 2024
Well perhaps, but most do surely do notice when their mortgage doubles, their food and energy bills go up by 25% or even 100%+ in some cases. When their wages only rises by circa 5% or often not at all.
July 22, 2024
@ DOM – that you might be right is challenged by much evidence, not least the phrase now in the political folklore of the United States that says “it is the economy, stupid”.
July 22, 2024
If inflation is 11% one year, everything you have has to increase by 11% (including your savings) to show no rest-terms loss.
It’s time politicians and Government were forced to speak in ‘real-terms’.
July 22, 2024
The problem with Politics John is very often it is the peoples perception over reality. with politicians very often using spin/lies over truth, and the Media’s obsession with 24 hour news, no matter if it reports fact, fiction, or opinion.
The Governments of all colours have made the error of over promising, and trying to run and get involved in almost every aspect of our lives, with numerous regulations, benefits, subsidies, taxes, fines and laws, to such a degree that most people now think the Government is responsible for everything that goes wrong or happens in their lives.
The days of personal, or family responsibility for our own actions and choices appears to no longer exist, because Politicians are trying to run a Nanny type State, with control over everything, which is failing, because it is not possible when you are trying to run a democracy, and giving people an element of freedom.
July 22, 2024
@ Berkshire Alan “The days of personal, or family responsibility for our own actions and choices appears to no longer exist” – agreed,and although politicans have not helped, it is surely a reflection of how society has changed. When was the last time anyone was heard accepting some poor outcome arose from their own actions or neglect rather than laying blame elsewhere?
July 22, 2024
Generation have been brought up to believe that the world (their neighbours) 9ye them a living, and that the Government is there to take from the workers and give to the idle.
If they are short of anything, why would they not blame the Government for ‘not doing its job’?
July 22, 2024
Most certainly inflation was caused by the QE programmes in US, UK and and Europe (from 2020 to 2022 inclusive). All that printed money was unearned and thus had no economic justification in these economies. When spent, demand in these regions massively exceeded supply and thus these regions experienced inflation, eg US printed an extra 40% of its economy between March 2020 and March 2022 (ie M3 money supply). That transmits to a 40% extra demand which the US economy did not have the capacity for and the consequence of this imbalance is inflation.
July 22, 2024
No so much in the USA because the rest of the world is required to sop up a lit of that excess and hold it as the Reserve Currency. So the USA has got away with financial murder. When it loses the Reserve Currency status, shortly, all that money and debt USD 35 TRILLION, will hand on the heads of the US taxpayer, and will crush them.
I don’t know what Trump can do to avert that imminent disaster.
Perhaps JR could give us his thoughts?
July 22, 2024
Brazil has just announced it is joining China’s BRI.And a hugely significant gas deal between Russia and Iran has just been signed-Russia will finance a pipeline running north to south in Iran,making Iran one of it’s major gas hubs,taking 109 bn cubic metres pa(for comparison Europe used to buy c150 bn pa of Russian gas) and,apart from its own needs,will distribute it onwards to west Asia and in due course probably to India and Pakistan also.Iran and Russia have also just integrated their payment systems.Who needs dollars?!
July 22, 2024
Since the BoE has long been independent of the government, and has to stand by its own decisions, I wonder why it has been immune from any critical or questioning comment by government politicians. Or for that matter from the opposition front bench. The occasional backbencher (especially our good host) has raised questions about its policies, but that’s all. Is there some kind of political omerta which keeps most politicians from discussing the BoE and its role?
July 22, 2024
Good point but the fact of the matter is that the Treasury still pulls the strings with a nod and a wink.
July 22, 2024
It’s NOT independent. It’s just the unsackable skirt behind which the Treasury hides.
July 22, 2024
Indeed.
July 22, 2024
The vast majority of the population are completely unaware of the Bank of Englands actions and its results and affect, thus the Government gets the blame.
July 22, 2024
Part of the unsuccessful “project fear” campaign undertaken by the right-wing media was the allegation that “Labour cannot be trusted on defence”
Interestingly, The MoD announced plans last week to regenerate the nation’s ability to produce forgings for gun barrels in collaboration with the nationalised Sheffield Forgemasters
The UK ceased manufacturing large-calibre gun barrels following the closure of key facility the Royal Ordnance Factory Nottingham in 2001. RoF Nottingham was the sole producer of barrels for the Challenger 2 tanks and our AS90 tracked howitzers until it was closed and the site redeveloped.
Forgemasters’ manufacturing capabilities include pouring Europe’s largest single casting at 570 tonnes. The company operates two forging presses capable of exerting 4,500 tonnes and 10,000 tonnes of pressure, which are essential for producing high-quality steel components.
It seems that the new SoS Defence John Healy has decided to rectify Geoff Hoon’s decision to close RoF Nottingham and rebuild an important defence manufacturing capability.
July 22, 2024
Don’t worry, SG, I’m sure many of us are aware the pro-war left is back in power.
July 22, 2024
The perspective of someone inside the political world. Outside, the public don’t think about whether the opposition did, or did not, warn about anything. Ask 100 people: ‘Did Labour warn about the recent high inflation or suggest policies to prevent it?’ and you will get 100 blank looks and 100 people saying ‘What?’
Trying to involve Labour in the blame game is pointless. Tory voters blame the Tory government and deserted it in droves.
Reply Labours attitude matters as they are now the government. If they had understood the problem and been critical in Opposition we would be closer to changing bad policy now they are to blame
July 22, 2024
The BOE is on the front line, but in the rear we have government causing problems. Combine the effects of paying people a year or two not to work with wasting huge amounts on failed PPE, HS2 etc. and importing millions of net users. Resources must be found somewhere, and inflation steals from cash accounts to fund those users. The three countries you mention don’t have those problems.
July 22, 2024
“Many voters are angry that the U.K. government allowed inflation to hit 11%”
“Allowed” surely it was deliberate policy QE, vast government waste, lockdowns, net zero… what did the “experts” at the Treasury i. Government and at the BoE think would happen?
July 22, 2024
+1
I agree; it was deliberate which is why Sunak/Hunt didn’t try to change the Bank’s policy. Sunak was effectively appointed by the IMF and B of E who conspired to sack Truss …. so the question we should be asking is “why would the IMF want the policy to continue?”
July 22, 2024
I wrote recently to Chancellor Reeves to draw her attention to your thoughts on the Bank of England’s bond selling antics so we might see some changes soon if civil servants have, improbably perhaps, let her see my letter.
(I have wondered whether letters from the public (bespoke, not copies organized by a campaign) have much influence when sent to recipients in public office. Perhaps it depends upon the subject written about.)
Reply Letters and emails help. They do have to reply to them all and therefore have to discuss a line to take on new queries.
July 22, 2024
@ Reply – thank you for responding: that is encouraging news.
July 22, 2024
Higher interest rates for older voters with savings have been a benefit as this group has largely paid off their mortgages. People seem more concerned with uncontrolled immigration, crime, the broken NHS, Net Zero, wokism, and our rising debt levels. They were fed up with 14 years of lies, broken promises, and the Covid debacle. I can’t tell you why they thought Labour is the answer but they will soon find it’s not.
July 22, 2024
Why?
It’s because the BoE’s task is not to keep inflation low or to promote economic activity or to protect or improve the standard of living or the wealth of the country or its citizens.
It is to deliver Net Zero, a policy started by the former Governor, Mark Carney who is now chairing Brookfield Asset Management and the Glasgow Financial Alliance for Net Zero.
We have to remember that PM Johnson informed us that we must “Build Back Better” which has to start with economic destruction, aka his Net Zero Strategy, and PM Sunak, when Chancellor at COP26 declared “So our third action is to rewire the entire global financial system for Net Zero.”
The NG ESO FES 2024 report says that to achieve Net Zero energy consumption must be severely reduced through “customer engagement”, viz impoverishment and rationing.
July 22, 2024
+1
I agree that it’s deliberate.
July 22, 2024
“All parties want a better financial outlook to afford more spending and or tax cuts yet none can see how the Bank is sending huge needless bills to taxpayers. Why?”
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We have to be realistic and accept that a large proportion of the electorate takes little or no interest in politics. People who follow events closely; have strong opinions and are prepared to “fight our corner” (like those on this thread and other comment pages) are a very small minority. And those who are prepared to do it from a conservative perspective, are even fewer. Left-wing opinions dominate in Parliament; the Civil Service; the Quangocracy; the MSM, particularly the BBC and C4 and the Universities.
The vast majority don’t join the dots between the Covid Tyranny the Net Zero lunacy and inflation. They have no comprehension that the Bank of England has been systematically transferring £billions of losses onto taxpayers which will take generations to repay – if ever.
It’s easy for the Establishment to “blame Putin” and the Ukraine war when the economic destruction was entirely of their own making. The uninterested majority in the electorate understands simple concepts like war creating shortages and shortages leading to inflation, however wrong it may be.
I clearly recall Farage and Tice talking about the Bank of England’s policy so it’s not true to say that no Party is addressing the issue. But they know that it isn’t an issue many voters will understand or get sufficiently exercised about to change the way they vote.
Whereas mass immigration and the Establishment-supported criminal invasion in the channel will.
Reply Yes Reform talks about the Bank but has not called to stop the bond sales
July 22, 2024
It’s a weird conundrum that politicians and governments are so petrified of the very quango /institutions that they create / endorse /fund ….why are governments so scared of the BoE, OBR, BBC and the hundred think-tanks
July 22, 2024
Sir John
On the media yesterday;
‘I think ordinary, decent British families want controls on migration, they want the government to show restraint on spending and keep taxes down, they want welfare to be reformed so it’s fair to people who get up early and work hard.’ Shadow chancellor Mr Hunt
This from the man that did everything but what he preachers. Today’s Diary talks about inflation, Mr Hunt was the architect of the UK’s recent spike in interest rates. We already had high taxation (and let’s not forget borrowing) thanks to the Conservative Government, what we didn’t have was an economy earning the money to pay for our future. What did Mr Hunt do, he raised taxes and created even more borrowing. Those he made the demand on had to cough up more there was no choice, to exist have a future they had to raise prices to pay for his demand – price rises cause inflation.
Mr Hunt was Mr Inflation
July 22, 2024
So it took being thrown out of government to wake him up?
The best thing he can do now is stop pontificating and serve his voters as a good constituency MP.
July 22, 2024
Sir John
The UK has forced itself into a never-ending spiral, at its core we have what some now call orthodoxy, or even group think, a way that things are done ‘traditionally’. But it is not working, so why keep digging the hole?
In a recent TV ad, I noted the push for AI, the way these ‘large language models’ have combed the World and then through compartmentalization of findings have defined answers to questions. It is not free thought, it’s not even artificial, it is known orthodoxy, known group think. That brings us around to the situation with the BoE and the OBR, their methods as they describe them can easily, simply and way more cost effectively be replaced by AI.
I don’t believe it solves the real questions, the political nuance of thinking outside the box and solving situations, but it does solve the situation of keep spending a fortune of our money on regurgitating the thing that are not helping – the orthodoxy, group think of the BoE and the OBR.
It also asks the question why do we have MPs, Governments, when they are refused their democratic empowerment, to ask question of those they use our money to fund? The politics are not needed, MPs have made themselves impotent, lets just use AI
July 22, 2024
People were quick to jump in and criticise Liz Truss. But while the presentation might have needed some polish, she was seeing that old methods of orthodoxy and group think were destroying us. Right or wrong something had to be done, it still has to be done
What appears to have happened is that the traditionalists (the problem) feared for their job, the head of the BoE saw his time was up on his failures to address the flaws of LDI. Then with more gusto than they use in their own jobs these entities took to briefing against a democratic leader of Government. She did not create inflation, it was impossible in the time span.
July 22, 2024
The new Chancellor has recently announced the greater empowering of the OBR, so as she sees it a future errant government can’t make political Decisions and spend our money without the OBR’s say so and sanction. The need for government is removed – the unelected and now unaccountable OBR becomes the Government.
Then to show how hypocritical she and Labour are, she announced the removal from the taxpayer £83 billion of their money, our money, to form her GB Energy, so as to enable Milliband to spend has he wishes.
Where is the OBR review? Where is the OBR’s proof of concept?
July 22, 2024
IB :
Yes, Labour intend to make Parliament powerless by transferring power to unelected institutions, quangos, NGOs, judiciary, regulators, committees, Ofs, czars, etc.
It is time we had referendums for the big decisions such as immigration and Net Zero.
July 22, 2024
Any monetary system where the currency is not based on real assets eg gold has a large inherent propensity to inflation because money can simply be printed or debased. Even with gold an increase in supply will cause inflation eg the gold the Spanish Empire looted from South America.
The Bretton Woods system depended on the US not printing money and gold being fixed at $35 per ounce. Once the USA defaulted perpetual inflation was inevitable. The UK authorities have followed exactly that path.
July 22, 2024
Sounds as though we need a modern day Oliver Cromwell, who in 1653, told the then Rump Parliament of parasites, “in the name of God, go”.
However, today we need a leader strong enough to get rid of the expensive dead wood among the 650 HoC MPs (and Lords) replaced with those who are there only for their expertise, knowledge and dedication to OUR country. And no more self-serving, ‘professional’ politicians who sit in Parliament just for their own ends. Is there such a leader among them, or will we have to wait much longer?
https://speakola.com/political/oliver-cromwell-speech-dismissing-rump-parliament-1653
July 22, 2024
@Derek +1 – well said
Halve the number of MPs and elect the upper chamber, would be the sound starting place. But the self-serving in it for ‘me’ will fight logic tooth and nail. Democracy mustn’t arrive in the UK brigade must be removed. Parliament must become our legislators, and government must start managing – to much of the tail-wagging-the-dog.
July 22, 2024
Since Labour were elected have the BoE sold any bonds at a loss into the market ? My assumption was that they would stop that policy as soon as their preferred government was installed.
July 23, 2024
Why is this information not available anywhere. There must be someone who can collate it.
July 24, 2024
22/07/2024 reuters.com ‘Bank of England plans expanded repo facilities to avert money market crunch’.
22/07/2024 bankofengland.co.uk ‘Let’s get ready to repo! Speech by Victoria Saporta’.
So John, will you allow this to appear today or will you censor it again?
Reply Happy if people will want to read that . It confirms the Bank does not know what the correct level of reserves or gilt holdings is. It has to offer repos to offset excess tightening which bond sales may create. These items do not tackle the fiscal policy impact which is what I am concentrating on.
July 22, 2024
I have not seen inflation, what I saw was a supply shock and printing of money.
First came the printed money and no need to pay your rent or mortgages and free money from banks for all businesses, needless to say the plebs had a right patry sitting at home spending this new found wealth but with shipping container all in wrong places because of the Pandemic, empty container being shiped thousand of miles to be filled which was going on to the plebs bill but they were still buying, houses and cars, you name it plebs had it.
Government then went on to put up energy prices and plebs have been falling back to earth ever since and of cos five and half per cent rates which makes no diffence. USA 3 trillion dollars a year borrowed and the economy is starting to die along with Japan and China with no stimulus this time for the world markets so all eyes will be on Europe and USA for provision of printed money maybe or maybe not. USA 6 trillion a year.
July 22, 2024
We have a political class that think what some call the Blob, the Quangos including the BoE, a collection of the unaccountable, unelected section of the State, that needs the taxpayer to hand them money for them to survive – should get to call the shots directly. We the taxpayer thought as it seems wrongly, they would advise and government and parliament who would then make the decisions.
We have a Political Class that want their orders given to them by the unaccountable, unelected section of Society and the World. That’s not a Sovereign free democracy, that a dictatorship. On that basis we do not need an elected government or MP’s.
How can any entity that looks for hand outs from the taxpayer have so much power?
Part of the point of a government reinforced by a questioning parliament is to ensure the money they take by Law from us is used responsibly, that is choice is held to account by parliament and it produces results for us all. We placed those we elected as the sole ones responsible for that task. By all measurement our MP’s our government has gone AWOL, they all point blank refuse to manage.