The Chancellor set about spending with rare enthusiasm as she pandered  to her Labour MP audience. In a heavily party drenched presentation she played fairy godmother giving out public sector sweeties to as many named MP s, public sector trade unions and client groups as she could cram in . A bloated state was put on a fattening diet.

Every part of the public sector mentioned was praised for its employees and achievements. Every part had according to Reeves been starved of money by the previous governments which had put up public spending every year. Not once did she mention the productivity collapse, the staggering losses of the nationalised industries, the huge cost overruns of many public sector projects. This was fantasy economics.

We are asked to believe they will build nuclear power stations on time and to budget, yet we are not told what either the cost or the  timetable will be. We are asked to believe the newly nationalised railway  will run to time and not  send supplementary bills. We are told British steel is saved without being told how we replace the blast furnaces, square the Chinese owners and avoid all the US tariffs. We are asked to believe that re announcing tram and rail projects long in the pipeline will revive city centres and solve problems of urban decline.

There was no mention that longer term interest rates are way above Truss levels, that markets think the government is borrowing too much, or that the small increases in spend for the last two years look implausible under a spendthrift government wanting to be re elected. This Chancellor invented a black hole then set about digging a much bigger one.

PS The document issued after the speech promises 5% savings from efficiency improvements based on a £3 bn Transformation  Fund to spend more on computing. This does not even remove all the lost productivity since 2019. There are targets to reduce administrative costs without explaining how.

There is going to be no new golden nuclear age anytime soon in the UK. All but one of our present nuclear power stations close this decade as we impatiently await Hinckley C coming on stream to replace one third of the  lost capacity 2020-30.

The last government proposed building a second large station in Suffolk at Sizewell, and announced a competition to choose a builder for a series of smaller reactors.  Yesterday this government announced Rolls Royce will be the team leader and designer building these reactors. It was not a firm contract. There is no chosen location for the first one. There is £2.5 bn of public money over five years with no specified outputs listed in the announcements.

The Rolls Royce website says they want to gain safety and design approval for a 470 MW plant occupying a 5 acre site using pressure water technology. It will take an estimated 4 years from starting site work to the reactor generating power. Allowing further long periods to negotiate terms, get approvals  and set up fabrication it may be ten years before the first is running.

The government also announced £14.2 bn public spend on going ahead with Sizewell C. Again there is no contract, as they have not negotiated the private capital with co investors. They will not put a price  on it, but others say £40 bn. As the most recent guess for an SMR is £3 bn,  Sizewell is 13 times the price for under seven times the power. It does not look like great value. Past attempts to build one of these in France and the UK have gone way over budget and been much delayed. They say they  now know how to build them and will just copy one that is almost built. Sizewell will not be up and running before 2035.

The government tells us lots of new nuclear, more than we had before the  closures, is  essential. So how do we manage for the next ten years when nuclear almost disappears? We will need plenty of transitional gas stations for when the wind and the sun let us down.

Last night on GB News I set out again how I would cut Bank  of England losses on bonds.

The first thing to do is for the Chancellor to tell the Bank she will not pay for any more losses from selling bonds in the market. No other central bank does this. There is no stated good purpose for  the policy.The Chancellor’s permission was needed for the purchase, and the Treasury guarantees against loss.This gives her the right to order a stop to sales.

The second is to raise with the Bank the running losses where the  Bank spends far more on interest on commercial bank deposits than it receives in interest on the bonds which were bought at very high prices when interest rates were much lower. The ECB for example pays a lower rate of interest on its deposits than its lending rate . The Bank of England has the  same rate for lending and borrowing. The Bank could require a minimum level of reserve deposits by commercial banks at zero interest.

Some suggest paying nothing on any of the deposits. This has not been tried in recent years when these much larger deposits have built up. The ECB got  away with reducing the interest it pays. Markets might be more alarmed by the sudden withdrawal of all interest payments to banks. There could also be a knock on effect on bank lending and growth from the sudden sharp reduction in bank profits and cashflow. Better to proceed with more prudent  steps to carry markets with you.

I have been talking about huge Bank of England losses and the need to curb them for the last two years on this site. Now the Telegraph is reporting them as well, and Richard Tice has written to the Bank about them.The BBC when  I last  briefed them again about it told me no one reported it because they did not  understand it . Let’s have another go at explaining.

After the banking crash, briefly after Brexit and extensively after the pandemic out break the Bank created money to buy up £875 bn of government bonds. They paid high prices for them.

When bond prices rise the interest rate falls and vice versa. The Bank   bought the bonds to drive the prices up and the  interest rates down. If the government borrows £100 for a very long time at 1% it promises to pay  £1 a year interest on that £100 bond. If rates fall to o.5% the bond price rises to nearly £200 so the £1 of interest is now 0.5% of the value. If rates rise to 2% the £100 bond falls to nearly £50 so £1 of interest is 2% of value.

Now the Bank is sitting on big losses as it  has put interest rates up a lot and has  been selling bonds to drive their prices down. It is losing money three ways.

1. Selling depressed bonds in the market at big losses. There is no need to do this. The Bank could hold the bonds until they mature and repay at their original issue value. This is what other Central banks are doing.

2. Losing less on the bonds it holds to maturity. It is still losing on many of them which it bought above initial issue and repayment value

3 Paying more to commercial banks who deposit money with it than it gets on interest on the bonds it has bought with the money.

Tomorrow I will  explore how far the Bank could go in  reducing these losses.

We were told at the last election backing the net zero  electrical revolution would cut domestic bills by £300. In the first year of the new government they kept putting the managed price of power up. Now we are told by Mr Miliband  we all need solar panels on our roof to save £500 on our electricity bills.

He does not tell us in his bullish soundbite how much it will cost to put sufficient solar panels on our roof. He does not tell us how people can borrow the money to pay for the installation, or how much that borrowing will cost. He does not tell us what risks this entails, how long the solar panels would last or what maintenance they would need.

Meanwhile another ship is on fire with its cargo of battery cars said to be the cause. The Chinese look to the UK as a big potential buyer of their panels and electric vehicles. They out more coal fired power stations in to fuel their export industries as we close ours down.

These policies do great harm to the Uk whilst world  CO 2 continues to rise.

Listening to the new Labour MP for Hamilton you could be forgiven for thinking Labour had suddenly become popular. There was no understanding of why more than two thirds voting did not vote Labour. There was no curiosity about why 56% of voters did not  vote at all. Labour’s vote fell 30%, to stand at 14% of the electorate.

People are fed up with nasty snarling from Labour and SNP about those who dare to vote some other way. They should be seeking to understand why they are so unpopular . They need to wrestle with the failings of the Labour government in the UK  and  the SNP government in Scotland.

Why with all that extra government in Scotland is Scottish  growth still less  than England’s? Why with all that extra public spending does the Scottish NHS still have long waiting lists? Devolved government has not brought greater prosperity or better services to Scotland.More politicians and bureaucrats do not normally energise an economy.

Rachel Reeves claims fiscal responsibility but does the opposite, boosting spending and borrowing. With the agreement of all parties the covid lockdowns destroyed fiscal discipline and hugely expanded the public debt, making it more imperative we take great care now. Indeed the Opposition parties argued for even more spending and for a longer lockdown than the government supplied.

Correcting the public accounts today needs to start with cuts to wasteful and undesirable spending. I have long argued for a big reduction in Bank of England losses. £15bn off the annual cost would be relatively easy to achieve. I have argued for a smaller civil service, back to the levels of ten years ago, reducing overhead by more than a quarter through a ban on most recruitment for the Parliament. Natural wastage reduces costs by around 7-8% a year. I would delay the planned carbon capture and storage programme all the time our competitors are not imposing this additional cost on themselves.

I would continue the work of both recent governments with more policy changes to help and persuade more people into work. Many billions would be saved and extra tax collected . This would be assisted by a big reduction in legal migration and more effective controls to cut illegal migration. Inviting in so many low pay and no pay migrants results in large public spending costs on  hotels, subsidised homes, school places, NHS capacity and infrastructure demands.

Armed with a realistic annual reduction of at least £20 bn rising to £50bn over the Parliament the government would be free to cut some taxes that could stimulate growth and reduce borrowing levels. The current vicious circle is higher taxes, lower growth, bigger deficit, more cuts, market worries leading to higher interest charges. We need to move to a virtuous cycle, Lower tax rates, more revenue, less spending, less borrowing, lower interest costs. The 10 year borrowing cost is currently a costly 4.7%, well above the Conservative levels, thanks to borrowing and spending so much more.

With debt interest at over £100 bn we cannot afford irresponsibility.

Nationalisation of a monopoly is a bad idea. Nationalised rail cancelled lots of trains, delayed others, pushed up train fares a lot. Nationalised water imposed hose pipe bans and tipped raw sewage into rivers and the sea. Both industries cost taxpayers a lot. Neither got enough investment money as they had to bid for it against the NHS and other spending priorities.

What we need in both rail and water is competition. That brings costs down and puts service standards up.

On Monday evening Jacob Rees Mogg interviewed me about my latest book, What do boys want?  (available on Amazon)

It is part social history, part a personal recollection. I was persuaded to write it as I have much earlier memories of life as a baby and pre school small boy than many I have talked to. I was living in a land of giants, mountaineering to get on one of their chairs, trying to cling on to high up chair cushions to practice walking  on two legs.Racing around on all fours was faster and less scary.

I try to recall which boyish characteristics were innate and which reflected the very strong adult view of the time that boys and girls were different and were to be prepared for different roles  in life. We were living in the old fashioned Teresa May’s world of boys jobs  and girls jobs.

I lived in my own imaginary world when I had  learned some language and mastered picture books of how others and animals lived. My soft toy lion was my companion. My dinky cars were exciting as I dreamed of one day driving the real thing. I had a running disagreement with my mother who wished to make clothes and dress my bear as if it was a doll. I got skilled at hiding the clothes. I told her that as the  small bear was off white in colour  it must be a polar bear. I announced the dark cold cupboard under the stairs was the Arctic so he had to live there. My Mum was not amused.