Author: johnredwood

Whoever dreamt up the name Operation Chainsaw to describe Ministers’ efforts to get back some lost public sector productivity was clearly no friend of the idea. As the head of the civil service union, FDA, said “The idea that you can simply get more for less is rhetoric”. His statement swept aside the idea that better management and new technology allows productivity gains. He ignored the fact that productivity has been falling. He has to defend the proposition that year after year we should expect to have to pay more for less.

Ministers are right to highlight the fall in productivity since 2019 and to ask senior staff to get back the losses from covid lockdowns as the private sector has already done. It does not take any new technology or investment to recreate 2019 productivity levels in the pre AI age. AI gains could come  on top.

The principles behind the drive, to expect more of senior managers and to link bonuses to productivity delivery are fine. Ministers should also demand to see any new external recruitment before advertising, as natural wastage is a friendly way to shrink an overstaffed organisation.

We have suffered from the dangerous doctrine of the independent body. Many MPS and the main parties have accepted the idea that politicians cannot be trusted to make good decisions. Crucial areas are given away to independent bodies. They appoint panels and Boards of experts. All too often their group think and abuse of patronage leads to disastrous decisions and big waste of money.

I have often criticised the biggest loss maker, the Bank of England. Apparently most MP s think it is just fine for them to be planning total losses of £240 bn (OBR forecast) all to be paid for by taxpayers. Much better they think  to mug the pensioners and slap on a jobs tax instead. This  was the same

The world establishment cries out for peace in Gaza. It is less keen on peace in Ukraine where more think Ukraine should fight on to try to wrestle some territory back from Russia.

President Trump wants  peace in both places. He is more determined by his own efforts to bring it about in Ukraine. In Gaza he is challenging the Arab states to draw up a plan that could work.

The outlines of the deal in Europe seems to be for Ukraine and Russia to accept much of the changed borders brought about by the Russian invasion. Ukraine would not be offered NATO membership now any US security guarantee. The European countries are split. France and the UK have offered peace keeping troops but need a US guarantee. President Putin has ruled out accepting such forces near his border.

If Presidents Trump and Putin do outline an Agreement based around current borders redrawn by war what should Ukraine do? European countries have no wish to join the war on Ukraine’s side. They might be able to step up financial and military aid a bit, but cannot this year replace the US military contribution.

Meanwhile what would a peace settlement look like in Gaza?

 

 

The government came to power saying it would put jn an industrial policy. So far it has been running an anti industry policy for the UK.

It is banning all new oil and gas drilling and development, running down this tax generating high pay industry faster.

It is toughening the complete phase out and closure of all factories making petrol and diesel cars.

It has failed to sure up some of the promised investments in electric vehicle manufacture, and not attracted new ones

It has promised lots of green jobs, whilst the wind turbines and solar panels are still imported

It decided to allow the closure of the UK’s last blast furnaces to make new steel

It allowed the closure of Grangemouth oil refinery

It launched a big tax attack on businesses with its National Insurance and iht increases

If it wants an industrial policy it needs to

Reverse its tax rises

Set a competitive Corporation tax rate like Ireland, which brings in more tax per head

Get energy prices down a lot by encouraging more gas power generation as baseload

Lifting the bans on oil, gas, ICE cars

Using its planned increase in defence spend to commission more orders from Uk based competitive production

 

 

The net zero enthusiasts tell us the costs of net zero will be low. They say a net cost of around 1% -2% of 2050 GDP. They decline to put an annual cash cost on the combination of investment and subsidies, wishing to net a lot of alleged gains from these true costs  and express it as percentage of an enlarged GDP they forecast for 25 years time.

There are other estimates. The OBR said the investment cost will be around will be £1312 bn with a net cost of £321 bn. Mr Hammond when Chancellor thought the costs would be £50 bn a year or £1.5 tn over 30 years.

Clearly the gross costs will be huge. 30 m motor vehicles to replace with battery cars. 30 m homes to have electric heating. Thousands of industrial plants to be replaced with new electric factories. A massive expansion of electrical generation. The replacement of all gas fired power stations. A Switch to syn fuels for aviation. A switch  of food production away from animal products.

This investment takes three forms. A small amount will be investment in extra capacity for growth, which we would need to do anyway. A bigger amount could  be replacement of existing investment when they are worn out. Again that adds no extra cost if the replacement is as good value as the original or it adds marginal cost where the replacement is dearer or less effective. Then there is the big spend on conversion and premature replacement which is all additional cost.

There are large extra revenue costs. The state will pick up large bills for the mounting redundancies as blast furnaces and Grangemouth   are closed to be followed by others. There are large subsidies to get people to buy EVs and heat pumps. Renewable generators get   favourable prices and terms.

There are obvious targets to save public money on this wildly expensive command. Stop the £20 bn on carbon capture and storage. It is all extra cost. Cut the over generous subsidies to renewables, running at several billions a year. Wait for battery cars or syn fuel cars to become cheaper and better before buying them.

The £1300 bn “investment” is only part investment. Part of it is a wasteful premature replacement of  perfectly good machines, vehicles and heating  systems. Making them  will simply  add to costs and world CO 2

Some of you said you did sometimes want to talk about opposition parties here. I pointed out this  site deals  primarily and daily with government deeds and words. I agreed I would run the occasional piece on an  Opposition party.

Reform under Nigel Farage won five seats in Parliament and  improved its poll ratings significantly  in recent months. It changed its constitution following criticisms of its structure. This week it has catapulted itself onto front pages by removing the whip from its second most effective critic of the government, Rupert Lowe. Last November the Deputy Leader Ben Habib resigned from the party and set up a Political Action Committee to judge and criticise Reform and the Conservatives .

Here is your chance to comment on how you would like Reform, its MP s and the PAC to proceed from here.

 

The government is keen to put prices up. It has hiked rail fares by double inflation, and Council tax. They have allowed large double figure percentage rises in water bills. They have pushed up energy prices three times since taking office, now an increase of over 15%.

They have increased the costs of employing people considerably with National Insurance rises in April. Businesses that can will pass  those cost rises onto customers.

If the Bank of England does not accommodate these rises with a looser money policy then the public sector rises will leave  too little spending power for other items and demand will drop. Businesses will find they cannot pass on all the cost rises and will have to employ fewer people  and reduce other costs.

 

President Trump likes tariffs. Most economists and commentators dislike them. The so called international rules based order included the World Trade Organisation aiming to reduce tariffs. The WTO however allowed emerging economies and China to play by different rules to the advanced countries. The WTO let countries impose high tariffs and use high subsidies for food and agriculture.

President Trump has a range of aims for tariffs.

His idea of reciprocal tariffs is a device to get tariffs down . Why not make countries imposing tariffs against your exports pay the same tariff on their exports? It might persuade them to agree to getting rid of the tariff.

His penal tariffs on Mexico and Canada are designed to get them to stop the flow of harmful drugs and illegal migrants over their borders with the USA. They may well get them to tighten their borders.

There is the aim to use tariffs to onshore more investment in industrial capacity. It is a change of emphasis from President Biden’s expensive subsidies which distorted trade and may  well help onshore .

There is the aim of collecting more tax revenue. That is true, but its net effects may be less than the gross amount of additional tariff money if the policy reduces the growth rate or results in higher domestic prices squeezing real incomes.

Most commentary ignores the fact that the EU is a customs union with tariffs on 73 % of product lines that it imports. It imposes especially high tariffs on food and agriculture where the US is a leading   exporter.

Free trade is a good idea, but the WTO has never delivered it. The favourable terms for China has created huge Chinese trade surpluses.

I have longed argued against many UK net zero policies on two main grounds. In their own terms they are mad, as they increase world CO 2 forcing us to import and getting us to heat  homes and drive cars using electricity generated from gas. I have shown how you cannot make people buy battery cars and heat pumps and change their diets until the green companies can make products that perform better and are more affordable.

Let me add a third convincing argument. The UK cannot re arm and defend itself if it makes no steel, slashes its petrochemical industry , closes much of  its vehicle industry and imports most of its electronics. Modern wars consume huge quantities of ammunition, weapons, boats, planes and tanks. If you want to win such a war you need to build and protect factories to make big quantities of these necessities.

Some of you argue with the science, but these arguments should be easier to win with those who do see climate change as a threat. The UK is paying far too high a price to cut its 1% contribution to world CO 2 when the big producers, China, the USA, India and Russia keep increasing their output.The import model leaves  us unable to defend ourselves and adds to world CO 2.