The Chancellor will doubtless now  blame the Iran war for the lamentable performance of the economy. So far she has blamed the inheritance, overlooking the facts that when she took over the Conservatives had restored growth to being the fastest growing G7 economy and had inflation back down to the 2% target after the wild swings of covid and too much Quantitative easing from the Bank.  She took inflation up to nearly double with large rises in  public sector costs and charges and she depressed output and pushed up unemployment with her taxes on jobs, farms, small business and business property.

Her current spin line is she has prepared the UK economy to withstand the shock of the Iran war, yet the OECD forecast says the UK will suffer the biggest downgrade in growth as it is very exposed. Of course it is. The government has a policy of getting us to import more energy,. more food, more high energy using manufactures through its mad  self harming pursuit of UK net zero. It also happens to boost world CO 2 at the same time!  Imported LNG in a damaged global market is bound to be scarcer and dearer than UK gas down a pipe from our own fields. Imported petrol is likely to be dearer than refined products from our own refiners, yet the government has allowed and created closures through penal taxation of 2 of our 6 refineries.

The government says it wants to tackle the big loss from the fall in public sector productivity but so far has not taken measures that will reverse that loss. It says it wants to control the benefits bill yet it keeps going up and the government invites in many more illegal migrants. It says it has an industrial policy, yet its carbon taxes and high energy prices policy undermines so many factories and plants. The government does not know what to do about the rash of closures in so many industries.

When the issues become too embarrassing it turns to open ended subsidies. It is paying £1.3m a day to keep the last two blast furnaces open, struggling as they do with age and sky high energy taxes and costs. It has had to offer a £100m short term grant  to get the recently closed bioethanol plant re opened to produce enough CO 2 for UK needs.It has helped pubs with rip off business rates but not a lot of other High Street businesses under financial pressures  to close.

So we still have a government rightly committed to faster growth following so many policies that produce the opposite. The Iran war will be used as an excuse, but many of us have been warning from before the war that the UK economy was not going to grow faster anyway.

If the Bank of England now keeps interest rates higher or even raises them that will increase the intensity of the downturn. A big external energy price rise is like imposing a big new tax on UK business and consumers. It is deflationary, after the obvious first round upwards impact on inflation. The last thing the Bank should do is  make it worse on the downside in an orgy of over compensating for its past disaster of printing too much money.

There was meant to be a debate on Thursday in the Lords on national security and civil preparedness for war. I put in to speak. It was cancelled as votes delayed the progress of business and the government decided to defer the debate.

As it is topical let me make some of the points here. Our country is not properly defended if we rely too heavily on imports for our food and civilian necessities, and for the raw materials, components and whole systems for weapons. The bitter  experiences of the last two big wars reminds us that our more modest reliance on imports then was a dangerous vulnerability leading  to atrocious losses of commercial shipping under fire from submarines and aircraft.

Our long years in the Common Agricultural Policy, stopped  us producing enough milk and butter by restricted quotas,  crippled our beef industry following disease, paid us to grub up our orchards and grabbed market share for imports in vegetables. Our industry now only delivers 62% of our food, compared to 78% in 1984 and higher in 1972.

In 1939 there was plenty of capacity to produce the steel and chemicals we needed for weapons. Factories were turned over to making planes, guns and ships as  we had the know how and skills.

Today there are just two steel  blast furnaces left. The government will probably close them after paying a fortune for losses in the meantime. The government’s refusal to get more of our own oil and gas out is helping a collapse in our petro chemical industry. 2 of our 6 refineries have closed under this government, an olefins plant, a bioethanol plant, a big fibreglass plant and others. Ineos has announced withdrawal from UK investment. Huntsman has threatened closure of its chemicals business.

Modern weapons systems also require plenty of computing power. The UK does not have the capacity to make more complex semi conductors, and the UK is very reliant on US technology in general.

Farming grants policy needs to be reoriented away from wilding and solar farms to rewarding and fostering more food production. There needs to be a big change of energy policy, and a removal of emissions trading and carbon tax schemes, to rebuild are high energy using and gas feedstock industries. We need to restore our abilities to feed ourselves, to supply our energy, and to have the ability to make a lot of weapons in a hurry if our islands come under threat again.

 

The Defence Secretary yesterday was unable to tell an interviewer  how many frigates he has in the Royal Navy. After embarrassing stumbles he said there are 17 frigates and destroyers combined. The Wikipedia answer is to list 7 named frigates and 6 destroyers.

You would  have thought he would know these figures as he should have been puzzling for the last month on how to find one destroyer for Cyprus and a destroyer or frigate to lead a NATO exercise. Surely he asked how many there were and asked why they could only free one when he needed two. You would expect  he had enough interest in his 13 main surface vessels plus the two aircraft carriers to have talked to officials long before about where they were and what they were doing.

I have  asked before how come only one of our fifteen main surface ships could put to sea, and that after a delay. I have had people respond defending the idea that most of the ships most of the time should be undergoing maintenance at home. I disagree. More must be available and more should be on missions flying the flag and offering reassurance to our allies and bases abroad by turning up.

This government has withdrawn the last mineseeker from the Middle East. It decommissioned a frigate stationed in Bahrain shortly before the Iran war. It failed to supervise the maintenance and deployment of ships , allowing too many to undergo leisurely repair. The Defence Secretary has failed comprehensively.

The UK gets far too little force for its substantial spend. The MOD whilst pressing for a bigger budget needs to get a lot sharper at buying equipment, and needs to sort out the excessive numbers of senior officers relative to the numbers of troops and sailors.

Not content with giving our sovereignty away to the EU in the reset and our money away to many foreign governments, EU students and migrants, the government is busily undermining our defences.

They want to give away the freehold of our important base at Diego Garcia to a non nuclear state friendly with China. This naval base is crucial to defending trade routes in the Middle East and Indian ocean.

They failed to defend our base in Cyprus leading to demands from Cyprus and the EU that we reconsider that base, crucial to our interests in the eastern Mediterranean and Middle East.

They have negotiated a Treaty with the EU giving them powers over the Gibraltar  border and airport, a crucial part of our air and naval base there.

They have watched as Ukraine has shown the importance of drones to modern warfare without putting in UK capacity to build and use drones in our own armed forces.

They have seen the growing potency of fast ballistic missiles in the Middle East without strengthening our home  defences against these. Why is there no plan and  no urgency to defend these islands against drone and missile attack?

When need arose to provide air defence cover for shipping  and bases in the Middle East they had no naval vessel available to do the job. Most of our frigates and destroyers were undergoing slow maintenance at the same time with no thought for the  need to have any of  our 13 frigates and destroyers available to defend us. Our two carriers also stayed at home. Why? What ‘s the point of a navy with plenty of admirals and no ships at sea?

Two recent wars show the need to rearm . Our Nato  commitments require us to rearm. Where is the defence plan? Where is the money? Where above all is the sovereign will even to defend our islands?

 

 

 

 

The Chancellor yesterday underwhelmed with her limited package of measures and he assurance she had plans for the cost of living too secret to reveal.

She announced action by the Competition authorities against price gouging. That will require proof that it is happening first.Tax and world prices are the main reasons oil and oil products are so dear.

She will fail to cut fuel duty, VAT or energy taxes. She did say she will look at removing some tariffs on food which could be helpful.

There was nothing on high interest rates, high spending or high borrowing.These could cause serious problems ahead.

There was one good idea, some cuts in tariffs on food from outside the EU. Why has she not thought through  which ones. When will she tell us and actually cut some food prices ?

 

The reason the Blair governments got re elected twice was they went lightly on the economy. They kept the much lower tax rates the Conservatives had adopted in the 1980s  and in their early years kept public spending under reasonable control in line with Conservative plans. It was only in the later years especially  under Brown they overspent, overborrowed and triggered a great banking crash.

It did not however prevent them undertaking serial constitutional harm. They gave large powers away to the EU and imported large swathes of EU regulation. They created the Welsh Assembly and the Scottish Parliament which contrary to their predictions gave a better platform to nationalist parties. Far from unlocking extra growth in these devolved areas Scotland’s growth fell behind England’s and Wales  made no breakthroughs.  It is true they secured majorities in referenda for these bodies so they will stay in place but that does not make them helpful economically in the way we were promised.  More government usually just means more costs and more bureaucracy. They spent a lot of time legislating to ban fox hunting against vocal rural opposition.

This government is even keener on constitutional change. They want to smuggle us back into the high charges and extra laws of the EU through their re set. They wish to give Chagos and Gibraltar away and want to block the Falklands getting out the oil that could transform its prospects. This is all against their Manifesto promises. They want to ban trail hunting. It tried to cancel local elections as part of a package to remodel Councils. It is planning to reorganise local government and create more elected mayoralties. They want to promote digital ID but are still trying to work out how it will differ from the system the government already offers and what it will be used for. They probably want to use digital ID to control our access to public services, just as they want to control our use of energy through smart meters. They are throwing lots of peers out of the House of Lords in a break with tradition. They seek to hound motorists off the roads with  road  closures, user  fees, fines and regulations. They want to abolish trial by jury for many cases undermining a crucial part of our history of personal rights and liberties.

They are also keen on more dying. They are going to legalise killing babies in the womb that could survive on their own. They want to allow assisted suicide. They want to ensure people do not keep packs of hounds.

On Monday, a week or more too late, the government will consider the high energy prices crisis and the bond market high mortgage rate crisis. They should decide to

1 Lift  the bans on new UK oil and gas production.

2.Encourage offshore and onshore gas exploration

3.Bank of England should end bond sales at a loss, which is helping push up interest rates

4. Cancel autumn fuel duty rise

5 Cut fuel duty all the time fuel prices are elevated and VAT receipts are up

6. Target help with fuel bills on low income households

7. Reinstate two child cap , reduce numbers of sick notes for life being issued and improve incentives  to work

8. Cut carbon tax and emissions trading to reduce the current  alarming rate of industrial closures

9. Stop Chagos give away and the expensive EU re set

10. Legislate to instruct UK courts to disallow asylum claims if someone enters UK illegally.

Yesterday the thirty year borrowing rate surged to 5.6%. Its one day spike worst level under Truss was just 4.8%, so Reeves has pushed it up by 17% on a rate she said had crashed the economy.

The ten year rate hit 4.6% compared to the 4.38% highest one day spike under Truss.

The latest borrowing figures showed another surge in last month’s borrowing. Debt interest charges are over £100 bn a year and growing. The debt is high and growing too fast.

The Chancellor needs to take urgent action to control spending. Forget giving billions to Mauritius over the years ahead. Veto all new charges to be imposed by the EU for re set. Tell the DWP to be firmer in evaluating new claims for benefits and to issue fewer sicknotes for life. Reinstate the two child cap. Raise the future pension age for state pension. Cut the absurdly high Bank of England, railway and steel losses.

The Chancellor now has a spendthrift reputation in the markets. The UK is being charged higher rates than most Advanced countries as a risk premium or extra levy because the government is not trusted to run the finances prudently. It is no good the Chancellor constantly claiming prudence and doing the opposite. The markets have formed a bad view and are making the UK pay a lot extra as a result.

The OBR does not provide discipline over the deficit as its control relates to the distant fifth year of its forecast. It is a rolling target so Year 5 never comes!

The government is misleading steel workers. The 2 blast  furnaces they saved from closure are costing taxpayers £1.3 m a day, an unacceptable rate of loss. The government’s net zero plans require shutting the blast furnaces and replacing with electric arc steel recycling. This intervention looks like a costly delay in closure, not a new policy to renovate and support these older blast furnaces for years to come. Far from saving the jobs, it looks as if they are  misleading the workers.

The new part of the policy announced on 18h March was tariffs and quotas on imports. The government that condemned Trump’s tariffs is now in full swing to protectionism. They do not spare a thought for the UK’s steel using industries that now face dearer steel, nor for end customers buying cars or new buildings who face yet another government directed increase in the cost of living.

Meanwhile they pile extra  taxes on our energy and on CO 2 generating businesses like steel. Taxpayers will be expected to pay billions in losses. We may  have to give the Chinese owners compensation for their bankrupt business because they failed to reach agreement with them when they first took over management of the Chinese owned works. We could well end up paying large redundancy bills when they fire the steelworkers they promised to support. The Chinese owners wanted  to close the works and would have been liable for the redundancies if they did so.

It is difficult to comprehend how the government can both promise to save the Blast furnace jobs and follow a policy which says Blast furnaces have to close to be replaced with more automated electric arc recycling plants.