Great news. The Bank of England has reviewed its money policy over lockdown and the period 2020 to 2022. It has concluded it worked well against a very difficult background. It thinks it can repeat its successful Quantitative easing operations in the future. Meanwhile  it’s best to sell lots of bonds and lose lots of money. They think

1.The big inflation had nothing to do with the creation of £450 bn to buy bonds at very high prices and the suppression of interest rates. It was the Ukraine war that gave us inflation. It is irrelevant that Japan, Switzerland and China who all import a lot of energy did not have the same high inflation.

They think

2 It is crucial that the Monetary Policy Committee does not consider the quantity of money. It is right to ignore it and not to monitor it or report on it.

They think

3. The big sell off in government bonds under Liz Truss had  nothing  to do with the Bank’s decision to sell £80 bn of bonds or with the decision to increase interest rates .

They think

4.The current recession is necessary to  complete  the task of bringing inflation down. Later this year it will be necessary to  lower rates  to provide stimulus to get some growth back, but there is no need to hurry.

So there we have it. A Bank whose main task is to keep inflation to 2% is blameless when it goes  to 11%. A money policy committee is right to ignore money and believe they can print as much as they like without causing inflation. A Bank can sell lots of bonds at huge losses and send the bill to the taxpayer but that has no bearing on recession or government finances. April 1 is a great day to remind people of these findings.

The nationalised water industry had  a bad record, putting sewage into rivers and the sea. It spent too little on expanding pipe capacity and on replacing old and damaged pipes, as the costs fell on taxpayers. Water lost out in many a public spending battle under Labour, Conservative and Coalition governments  pre 1989. The UK had sewage strewn beaches in the last century as well as dirty rivers.

Privatisation freed the industry to raise new capital, shares and debt. The Regulator limited the amount the companies could spend on new investment and imposed price controls on what they could charge.Progress remained fairly slow in renewing and expanding the system, though more was spent than under nationalisation. Substantial sums were freed through the sale of new shares and extra long term loans. The rapid escalation in inward migration under Labour from 1997, and the further large increase this Parliament added to the need for more capacity.

Thames Water is 51% owned by the Ontario Municipal Pension Fund and the UK Universities Pension Fund. Other minority shareholders make up the mix.

The Company has undertaken substantial investment in recent years, stepping it up to £1.77bn in 2022-23 alone. It has not paid any share dividends to its external shareholder owners since 2017, ploughing back as much money into investment as possible. It has also taken out large borrowings to finance new pipes. Debt now adds up to £14 bn.

Thames provided a breakdown of how it spends each pound of receipts in 2022. 46 p is spent on new infrastructure. 19 p is spent on operational costs and 15 p on employees.7 p is spent on energy, 5 p is paid in tax and 8 p is paid to lenders as interest on the debts.

Labour has said it does not recommend  nationalising  it. The government have no plans to nationalise it. It would be difficult to increase investment spend as people want  were it nationalised given the extra strain that would impose on state budgets.Whether nationalised or privatised the decision is the same. Should Thames be allowed to put up its prices more to speed up and increase its investment or not? I will look at the available options for Thames in a future blog.

There are several strong arguments against the nationalised model for providing commercial services  like phones,water,electricity and gas as we used to suffer.

1. These services never had sufficient priority in public spending to access sufficient capital to modernise and expand.

2. As monopolies not facing daily competitive pressure they put up prices too much and tolerated poor service.

3. As monopolies they often made bad decisions about investment that then  cursed the whole service. BT for example when under state control spent a lot on rolling out outmoded electro mechanical switching when the US was well advanced with superior electronic. The UK’s supply industry was unable to sell the Uk spec products for export as they were out of date. The electricity industry stuck with new coal power stations , only opting for cleaner cheaper more fuel efficient gas after privatisation.

4. These businesses were overmanned with low productivity. This led to getting rid of staff and charging too much.

5. The losses on nationalised industries exposed to international competition like steel and coal were huge. The railways also ran up huge losses.Taxpayers had to pick up the bills.

When making the case against nationalisation I was able to demonstrate nationalised industries were bad for customers, charging too much, bad for taxpayers, costing too much, and bad for employees, getting rid of so many.

There is no evidence that devolving power to regional governments in the Uk foster more economic growth.Indeed there is evidence the opposite is true. SNO Scotland and Labour Wales have grown less than England. The NHS in Scotland and Wales both cost more per head but perform less well than NHS England.

There is no reason why an additional layer of government with more officials would make somewhere more prosperous. Regional governments want to impose more and different regulations than the national government. Both the Welsh and Scottish governments wanted longer and tougher lockdowns for covid to add to the damage lockdown policies did.

The regional governments become campaign platforms for their First Ministers and ruling parties who use their position to criticise and undermine national policies. They lobby for more money and get more spend per head than England. They then prove more public spending does not lead to faster growth or better economic performance.

Many Councils in England use their positions similarly. Politicians like Kahn use their platforms to try to undermine the national government. They pursue their own vendettas against van and car drivers, damaging local businesses and shopping centres. They claim be short of money yet they spend a fortune on wrecking the roads. Many buy up portfolios of commercial property and renewable power generation , risking  taxpayers money. Some lurch to bankruptcy as a result.

The Opposition parties who want more of all this will level down any more successful place they win, whilst failing to tackle poverty, lack of successful business and run down urban centres elsewhere.

I usually agree with the electorate whose opinions reflected  in issue polls are often more sensible than the views of government and opposition parties.

I agree with current polls that reveal a deep dissatisfaction with the NHS. I do not agree that the answer is more money. If only it were that simple. If more money on its own would fix it we would have fixed it this decade.

Spending on health has shot up from 2019. At £180 bn this year, it is £56 bn or 45% higher than in 2019. It is true prices and wages have gone up. Adjusting for this the NHS is receiving more than 20% extra. That is a much bigger rise than the Brexit savings on the side of the bus. They and tax rises have all been absorbed into the NHS budget.

The NHS will each year need some extra  money.We want nurses and doctors to be well paid and the NHS to be able to afford new medicines as they become available. It would help reduce the strains on the service if there was a large reduction in legal migration, as recent years  have brought in plenty more patients.

It is also true that in recent years there has been a big increase in non medical staff numbers and an expansion of senior grades of management. There has been a big drop in output per person implying the extra management has made the lives of those doing the medical work more difficult and bureaucratic.

More money should only be committed to achieve better outcomes for patients. We need better management, probably with fewer managers.

I am bringing out a short book updating my work on green policy. Titled “The $275 trillion Green Revolution. Will consumers buy it? “it is published by Bite sized books and available on Amazon here: https://www.amazon.co.uk/275-Trillion-Green-Revolution-Consumers/dp/1738558428/ref=sr_1_1?crid=3RC5ABLGBLE5Q&dib=eyJ2IjoiMSJ9.MhlzOxY1chcW2WlWoSkhZD5sZpuILHQfDW061MBLpTkaRxrfT2uc_njXk5hxfh8ai4JjHGzAJ_uz66TOSHcJOlUqxMql0zDVfrQpZfOW0RIr3pMYf54GpLnqgwli7y4Jm3Mm4WCOZCk14IANoeqqc3FAixqnCvz5swKzl6H_gBHsCnNzUUGWlJT_Uwaolg2d2iJCjeaLteCcfFtmZjaZsK0dbb3BCHZjEmrrnOE8vXg.JtAVgfOd9pzJKfUEX_Av8HjAV4WOiBbKUkHX4O8kkEc&dib_tag=se&keywords=John+redwood&qid=1712055538&sprefix=john+redwood%2Caps%2C121&sr=8-1

It looks at two main problems  with this top down movement led  by an international Treaty based elite and by most national governments. It asks how will this all be paid for. It sets out how consumers currently do not buy into the products the governments want them to adopt, from battery cars to heat pumps and from smart meters to non meat diets. It takes the Mc Kinsey global forecast of expenditure needed for transition in the period 2021 to 2050.

This site normally sets out government policy and provides proposals to change or improve it. I run just two articles explaining aspects of Labour policy and some of you complain. Yet at the same time some write in to tell me they will not vote Conservative even if that means a Labour government .They should at least be willing to think about and discuss Labour policy as current polls say Labour can win the election. It is also worth thinking about  how the official opposition would like the government to change things as they can try to get rebel Conservatives to help them.

There is now a substantial and I urge growing gap between Labour and Conservative over the road to net zero. Conservatives now recognise the  need for more gas generated electricity for the time being to keep the lights on. Labour wants to close all those stations by 2030 and depend on renewables. How would they keep the lights on when the wind does not blow and the sun does not shine? Conservatives want to get more of our own oil and gas out of the North Sea. Labour want to ban all new oil and gas development at home and import instead. More home energy means more well paid jobs and more tax revenue at home.

The government has said it sees it needs to be realistic about net zero. That means letting people buy petrol cars and gas boilers  for longer. It means waiting until much more nuclear power is available, still a decade away at best.It means taking synthetic fuels and hydrogen more seriously as possible runners. Believing you can get to net zero on power generation by 2030 and rely on more windfarms cannot work.

The government need to amend their lecturing taxing and subsidising in favour of various car and heating systems that are not  as green or as good as some Ministers seem to think.

Labour’s plans to phase out all gas and coal power stations by 2030 requires the UK to accelerate its build of wind farms, solar panels, nuclear power, and battery storage. It would also require a big expansion of the grid. They propose a nationalised industry to do much of this work as it would require huge subsidies and managed prices for the power. Claire Coutinho is right to highlight the huge cost of some £116 bn of trying to do this and to question the feasibility and wisdom.

It is of course totally unrealistic. Nuclear power will be considerably lower  by 2030 following the closures of existing power stations. It is not possible to decide now to put in extra nuclear power stations and have them producing power by 2030. Putting more and more windfarms in as they plan does not solve the problem of keeping the lights on on a windless day. Saying they can put in sufficient storage is more easily stated than delivered. Relying on big batteries would require a colossal programme of building them. Finding enough pump storage locations would not be likely. There is also the small matter of the grid which would need major enhancement against a background of long and complex planning procedures and many local communities wishing to protect their landscape or divert power lines from settlements and important buildings.

We need more affordable and reliable power. Balancing price and security of supply against environmental objectives is a crucial part of success in energy policy. Labour just goes for the environmental without a thought about keeping the lights on, helping business  be competitive and controlling people’s power bills. Combined cycle gas power still represents some of the cheapest and most reliable power, which is why our system needs what it has and needs some more for the transitional period,whilst nuclear, synthetic fuel, hydrogen and renewables become more affordable and practical propositions for more of our demand.

I will spare you a party political response to the Reeves Mais lecture. Various journalists have described its vacuity, verbosity and timidity. I want to set out the big issues that directly affect UK growth, productivity, jobs and incomes that she ignored or knows nothing about.

1 The big role of the Bank of England in creating the instability in inflation  and output she condemns. A Bank which buys up £845 bn of bonds to keep money too loose is bound to cause inflation. When it then goes on to hike rates and to sell £130 bn of bonds at big losses it is likely to sabotage growth. She supports this wayward conduct.

2. She rightly criticises poor UK productivity. She fails to reveal the collapse of public sector productivity since 2019 or to show UK private sector factories have competitive productivity. Not a single proposal for turning round public sector productivity.

3. The labour market is talked about with no mention of large scale migration. Will she join me in wanting to ban work permits for migrants to fill low wage vacancies? Will she back government plans to cut legal migration by 300,000 and demand they go further?

4. She sees green investment and jobs as central. How much would her accelerated net zero policies cost? How would she avoid creating many new jobs in China that has cornered the market in big batteries, turbines and solar panels? How would she keep the lights on? Is she going to make us all go electric?

Politicians of all parties have this century been in a hurry to shed responsibilities for anything difficult. There has been a rush to create more arms length bodies from government and to transfer more powers and money to the many quangos we already had. The politicians thought that this would remove them from responsibility for outcomes, and  would improve outcomes. Neither of these ideas came true.

The Bank of England is responsible for monetary policy and inflation. It has a prime aim of keeping inflation to 2%. It let it go to 11% by debauching the currency but most politicians declined to criticise or comment. The government got blamed for the inflation, and the government joined the Bank in  blaming  the Ukraine war.

NHS England with its high paid CEO and large Board and top management team is responsible for running the NHS, for recruiting, grading, rostering  and paying all the many staff. A series of strikes hit the NHS. The executives denied all responsibility for staff relations, pay and grading and said the dispute was a matter between Ministers and the Unions. It is difficult for Ministers to resolve the disputes when they cannot hire, promote, regrade, alter shift patterns or reward anyone in the NHS as all that is controlled by senior executives.Whatever goes wrong in the NHS the senior executives  always blame a lack of money, however much extra  the government provides. The government gives large sums to get the waiting lists down only to see them go up.

The arms length Post Office is regulated and monitored by UK Government Investments. They approved senior management, paid them large salaries and bonuses and just watched as they lost a stunning £1400 million as well as sending many innocent staff to prison for fraud and wrong accounting  they did not carry out. Ministers intervened to try to get criminal charges quashed and compensation paid, only to find the Post Office was still holding back in many cases.

The Rail Regulator, HS 2  and the nationalised Network Rail run by well paid senior executives have presided over a big loss of passenger numbers and revenue, and  have racked up huge losses for taxpayers .Parts of HS 2 have had to be cancelled owing to the absurdly large overruns on cost and timetable. Ministers are blamed for the results.

This could be a very long list. Many cases would reinforce the obvious points of these first three. High pay is a  reward for poor outcomes. No-one makes the senior managers responsible. Opposition parties have no interest in criticising the managers or holding them to account before they go so wrong, but delight in blaming the government when they do. Government is too cautious about intervening, fearing the Opposition would complain if they did. Both sides mouth the doctrine of independence, with the Opposition contradicting it often in the same interview by blaming Ministers for failures.  So overpaid managers get away with disaster after disaster and the taxpayer ends up with a huge bill.

Parliament and Ministers need to go back to accepting responsibility. They need to monitor, influence and if necessary change these top managers before disaster strikes. If someone wants private sector levels of CEO pay to run  the railways or the Post office they should expect private sector levels of surveillance and should expect no bonus or the sack if they make big errors. Ministers need to institute regular review meetings and proper reporting to them as shareholders or leading stakeholders in these bodies, so they see problems as they develop and require fixes before they get out of hand. Those few of us who warned of the likely inflation or sided with the sub post masters were ignored.