Rachel Reeves was given a lot of extra freedom by officials and the OBR with their new fiscal rules. They built into the new model the ability to offset assets created or acquired by the borrowing, arguing markets would appreciate state capitalism in action. Why not credit government with future revenues from investments made?
The problem is the quality and risk of the investments. Two of the government’s bigger ones, British Steel and the Post Office are absorbing about £500 m a year each instead of generating dividends for taxpayers.The investments in renewable energy require guaranteed prices and subsidies which the government wants to partly shift from bill payers to the Treasury as costs. Carbon capture and storage “ investments” just mean dearer energy.
The government as it desperately seeks new investments through the National Wealth Fund and Great British Energy is likely to get shares in the more risky projects the private sector is nervous about. Government will become a shareholder as bail out financier of last resort if the project goes wrong.
Its money spent on rail will be subsidy, not an investment bringing profits and dividends. HS 2 is the biggest so called investment they blunder on with. There is no likelihood of profits or dividends with no trains running before 2040!
Building 1.5 m homes this Parliament as promised looks impossible. They now need to build 350,000 a year when they are only doing about half that.Council homes cost too much to build for the government to make a big dent in the target by building more of them.
The decision to spend to invest can only work if government reverses the habit of a lifetime and backs winners that can turn a profit. There is no sign of this happening. Borrowing more on this pretext will not bring growth or confidence to a flat lining economy suffering from dear energy and high taxes.
August 6, 2026
Indeed. When governments talk of “investment” they mean piss down the drain. Worse still they invest money they have taken (or will take off people who spend or invest it far better than government will. So the net effect is huge disinvestment. The bond market are not fooled by the government pretending they are “investing”.
“There is no likelihood of profits or dividends with no trains running before 2040!” Indeed and it will never make any profit and the disruption it will and has caused is a huge negative. Finished value will be about 5% of the cost – assuming it is ever finished.
August 6, 2026
The markets will see this fiddle as by an irresponsible credit card holder trying to max out while going bust. Interest will be raised even higher.
August 6, 2026
Today Glenda Jackson’s son in The Daily Mail writes off Reform for the general election.
“The two big parties deserved the shock Reform gave them – but the next election will still be between Labour and the Tories“
Dan Hodges has described himself as a ‘tribal neo Blairite’. He worked as a parliamentary researcher for his mother between 1992 and 1997, describing it as ‘straight-forward nepotism’. He has also worked in various PR jobs.
There seems to be an ongoing push to damage Reform. Though I don’t regard Farage or Reform as saviours in any way.
August 6, 2026
I hate that term; “Investment”. It was started, I believe, by Gordon Brown. What he should have said was, “Spending”. But “Investment” sounds nicer, but it is all the same.
August 6, 2026
ah they were calling it investment when they were pouring money into concorde development, that never made any money, and of course the UK aerospace industry is insignificant now.
August 6, 2026
HS2 is a bit like King Philip’s Armada in terms of waste of money on big scale / folly on big scale.
(£100 Billion to travel a bit faster by train to Birmingham and in 15 years time and all the hassle involved not just the money – What?)
Instead the eye-wateringly huge £100 Billion could have been spent on 1. Paying off our debt 2. Helping to turn Cambridge/Oxford/London into world’s second Silicon Valley (including developing the military self-defence of the future and selling this off to other countries and and helping more heavy manufacturing in the Leeds/Sheffield/Manchester area to boost the north). 3 Improving rail into and around London.
And then you got more money in your working-man’s pocket – not just the middle classes and the more wealthy.
August 6, 2026
Indeed but the Covid lockdowns and vaccine 6 times more expensive and net zero more like 100 times as costly and both doing or did large net harm.
August 6, 2026
I’m more sympathetic about Covid as the whole Western World, bar one or two, made the same mistakes. Germany spent twice per capita as UK. No-one had a clue what was going on.
Regarding Neto Zero, I don’t know. How do you get to such a big figure. I’m not necessarily disagreeing with you. But don’t understand the subject enough to comment in any detail or with much confidence (although I get the gist and agree with the gist of the arguments against Net Zero).
August 6, 2026
Alistair Heath is surely wrong again today…
August 6, 2026
Agree with your comments John, have never understood why employing more state employees, like civil servants, is also regarded as an investment when it just simply adds to the overall cost of so called “management”, not just with their wages, but office equipment, furniture, space (buildings) and the additional use of energy, and eventually their pensions.
Simply a complicated Smoke and Mirrors policy by the deluded, designed to cover up the reality of additional cost to the taxpayers.
August 6, 2026
Does the government really think that keeping Lucy Letby in jail is a good investment? This when all 15 convictions are so clearly totally unsafe. It will probably end up costing nearly £10 million in the end – trial costs, prison, appeals, compensation eventually (if lucky)… what a dire justice system and dire judges we seem to have to suffer under.
August 6, 2026
The only investment these cretins are doing is in feather bedding the Public Sector and the dole dodgers.
The time is rapidly nearing for the Great Reset and I don’t think it’s the one the Marxist/Fabians were expecting. It’s more likely a Bond strike with massive cuts in Public spending being necessary.
The sooner this happens the better.
August 6, 2026
@Ian Wragg – we can live in hope. But I am sure they are working on a ‘fix’ to germander the continuation of their life style. What did it take, just 7 days to bend the rules for the Manchester Election to protect themselves. If the UK Parliament put as much effort into growing the Country as the do of bending its structures for personal benefit all of us including them would be in a better place
August 6, 2026
So Britains first floating windfarm of 32mw commissioned in 2022 has been sold for £1. Government backed with a generous guarantee of £87 per mwh it’s gone bust. How much more of this nonesense are we to suffer before the lights go out.
August 6, 2026
Unbelievable ….but when its not your own money
August 6, 2026
What fool paid £1.00?
August 6, 2026
Maybe we ought to take some comfort from the fact that we are now nearly halfway through this nightmare, barring an unlikely GE appeal by Burnham.
House building is bumping along the bottom – a nearby Berkeley Homes site has had no activity for a couple of years at least. Admittedly negative but is our best hope to run the clock down on this crazy left wing outfit ?
August 6, 2026
Sadly I don’t believe the nightmare has started yet.
August 6, 2026
Building 1.5 m homes this Parliament as promised looks impossible.
You’ve more chance of finding Hens teeth or a fable Unicorn than this government or any other government to build 500000 thousand homes let alone 1.5 million
August 6, 2026
Good morning.
We, or the government, are happy to throw good money after bad because they are suffering from, “Escalation of commitment.” They are so ideologically committed that, with a few more billion pounds spent it will work. But it is not only our money, but also our future and future generations future.
Someone needs to say; “No!” and it does not look like the OBR or any other ship of fools.
August 6, 2026
correct governments rarely pick investments wisely. in our case there have been many classics they threw cash at which lost money.
however we do need some new reservoirs, prisons, navy ships, etc so we should get on with it. there are plenty of public sector waste which could be cut to make the books better.
August 6, 2026
They aren’t borrowing to invest, they are borrowing because their sums don’t add up. It will all be wasted and at the end of this parliament there will be nothing to show for the increased debt.
August 6, 2026
“Council homes cost too much to build for the government to make a big dent in the target by building more of them.”
Could a future blog expand on this? Why would a Council house cost more to build than any other house or is it the return on investment?
Reply It has the highest public spending cost
August 6, 2026
Housing, given our increasing population, seems to be the type of winner you demand in your last paragraph. Even if the return is coming from taxpayers through housing benefit. Those payments are made whoever builds (or does not build) the property.
August 6, 2026
@Narrow Shoulders – housing is not for the indigenous population they are on their own, housing is to keep the criminal boat arrivals of the streets
August 6, 2026
The traditional meaning of an investment is something that would become self-sustaining and make a return for future investment.
Think the World’s biggest investment fund the Norges Bank Investment fund is standing at $2trillion and funding a future for Norway (population 6 million). Over in Germany the money made available to rebuild the country (Marshal Fund) is still around today being reinvested for growth. Where is the UK’s portion of the Marshal Fund? Socialism ‘pissed up the wall’ as soon as they could to get re-elected.
Meanwhile in the Socialist UK (population 70 million), with an inept Parliament they spend, spend, spend on personal, very personal, ideological projects with fingers crossed in hope they will get elected once more. All the while they are sitting on the World’s 4th largest debt mountain of $4.4 trillion but no with future, no means to pay it, cancelling the means to earn and importing more without the means to pay. The UK Parliament knows how to increase the debt, how to spend what they don’t have, so create the burden on the Country and its People but are clueless on how to reduce it, to earn and actually fund a tomorrow.
Some religions teach you ‘reap what you sow’. Socialism teaches remove the seed-corn from today ensures tomorrows control of the masses
August 6, 2026
Hungry masses are very hard to control.
August 6, 2026
Let be honest the UK Parliament is hooked on using ‘our’ money to fund their personal election campaigns. The fact the what used to be just tax, is now them borrowing with ‘our’ credit card means nothing to them. It about them, and only them.
August 6, 2026
Its like we’re in the matrix in a pyramid scheme …..the only when to growth is more and more spending of taxpayers money
August 6, 2026
I invest; you subsidise; he squanders. And let’s not get started on “social investment” – that adjective wrecks the meaning of most nouns to which it is attached.
August 6, 2026
Disguising a loan to invest in a horse winning a race is likely to reveal a finish with an increasing cost of loss.
August 6, 2026
Absolutely agree with your comments. Governments and Investment are a joke, with the current one worse than the last. Why are our MPs so blind and ineffective when it comes to the UK economy? Well, let’s take a guess: most of them are PPE graduates and the E part obviously does not get taught very well, if at all.
Off Topic – When you look at the farce of the Cambridge Professor who has just resigned, and the fact that the University was defending him, when he was so obviously a fantasist or con man, perhaps that tells us something about the quality of teaching at Cambridge! Surely his claims to be a visiting professor at four different universities could easily have been checked? No wonder we have MPs ignorant of basic economics!
August 6, 2026
WE get constant reminders, daily, that absorbing illegal immigrants into our towns and cities just doesn’t work, it’s far from healthy and is not wanted by the majority, but HMG continue to impose them on us. Apart from anything else many illegals have taken houses away from our housing stock.
The government is constantly looking for a viable solution but lack innovative ideas. Time we looked at all of this from a different perspective.
Considering where most immigrants come from places with sub-standard housing and infrastructure, just maybe we should give them what they are used to.
I’m talking about providing new settlements for immigrants so they don’t use up our housing stock. Basic infrastructure should be setup like roads. water and electricity, a police station, a common wash room, an education building to demonstrate the British way of life, etc, while a single accommodation block would house new arrivals until they’d put up their own homes, for which HMG would provide basic materials. The size of each housing unit would be limited and it would be up to those living there to create some kind of exchange, some product they could trade for things they needed. The inhabitants would live as well as they could create things for barter or exchange.
They would be located away from existing towns and cities, but generally monitored and supported by the nearest city mayor.
No doubt some liberal-minds would find these suggestions unpalatable, but it really is time we did something to counteract the effect of uncontrolled migration and the inability to house our own.
August 6, 2026
When banks are approached by individuals or a business for a loan or investment they take a very disciplined approach, Why do the bank of England and treasury abandon all discipline and common sense when approached by the government?
August 6, 2026
I would support any government that introduced a law making it illegal for government & local government (or any state funded organisation) to borrow funds
August 6, 2026
“Borrowing more on this pretext will not bring growth or confidence to a flat lining economy suffering from dear energy and high taxes.”
Just as high, wasteful spending is a Trojan horse used to justify high taxation and wealth destruction in order to destroy the economy and eventually democracy, so also the Left invented the entirely false CAGW myth to be used as a Trojan horse to justify the rationing of expensive, chaotically intermittent “renewable” energy to bring about the authoritarian state they seek. Voters should download the government funded Cambridge UK Fires Report “Absolute Zero” to see what the Net Zero by 2050 means for how they are planning us to live:
https://ukfires.org/impact/publications/reports/absolute-zero/
August 6, 2026
where we are now is the result of 60 years of mis-government by parties of all creed and colour.
1955:Churchill”immigration is the most important subject facing the country but I cannot get
any of my ministers to take any notice.” Non-white population 50k+ but l like to think that he was referring
to immigration no matter from where.
Infrastructure improvement.2015ish:BalfourBeatty electrified and upgraded all the tracking and support
services for the railway SanFrancisco the SanJose 52 miles completed on schedule and on budget.
Cost £533 mio
August 6, 2026
National debt recorded today as at 3 £trillion
August 6, 2026
“Building 1.5 m homes this Parliament as promised looks impossible. They now need to build 350,000 a year when they are only doing about half that.Council homes cost too much to build for the government to make a big dent in the target by building more of them.”
The government should be building prisons not council houses for illegal immigrants.
August 6, 2026
Bad ‘investments’ are “liabilities’.
I wonder whether anybody in the Treasury or BOE are familiar with the word?