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Economy 2020

UKIP will soon be electing a new leader. Will it be someone with a vision to take the party forward with practical policies for the electorate in addition to ensuring a clean break from the EU? Already we have seen the Head of the Bank of England reducing interest rates instead of raising them.

We have already seen the result of this action that the pound has fallen again on international markets making imports of food, fuel, ready made goods and manufacturing materials more expensive. This in turn will make the final price of products we manufacture in the UK more expensive for foreigners to buy and hence defeat the object of increasing exports.

Growth was expected to be as much as 3% prior to the vote but has now been downgraded to 2% by those with a fairly opaque crystal ball who are not experts in the future but mere fortune tellers. This has given the new Chancellor of the Exchequer a ‘get out of jail free’ card by claiming the vote to leave has made it now impossible to clear the deficit by 2020.

According to my calculations the Tory Government never had ‘a hope in hell’ of achieving that anyway. One reason is that the Baby Boom generation are still working their way through the system and will be increasing the pensioners by 5% per annum until about 2020 after which the increase will slow. Don’t blame us for that though, please blame our parents who after the Second World War did an awful lot of breeding for about 10 years.

Another major reason that the economy is in trouble is because of the ramping up of public expenditure by Alistair Darling during the financial crash of 2007-2008. What this meant was that an extra £120b was poured into healthcare and welfare and that became the new expenditure on those departments.

Since then any attempt to reign back either has resulted in howls of protest by everyone. Of course the extra poured into the NHS only resulted in a minor improvement in services with the rest of the money going into recruiting more administrative staff to expand internal empires.

To my knowledge despite continual claims of Tory cuts to health the budget has increased by at least as much as inflation each year since 2010. Indeed the NHS is swallowing up an ever-increasing proportion of government income to the detriment of all other departments. From 1997 to 2002 it received 15% of Gross National Income (GNI). Then from 2003 to 2008 around 18% of GNI and since then 21% of GNI.

The NHS managers never have reigned back on their expenditure and keep increasing it beyond inflation so each year more and more Trusts run up ever increasing debts then leave the government no choice but to pay up. All the while the top managers increase their salaries and bonuses and have the revolving door scheme for getting golden handshake payouts then being re-employed.

So whether we wish it or not, pensions and healthcare consume about half the GNI and when welfare is added in there is now 66% of GNI used up already. Another thing we can’t get around is interest on the ever-increasing total debt, which by 2020 will require 11% of GNI to service it.

AntonyNailer

So when I read that candidates for leadership of UKIP are going to increase our armed forces and spend more on the NHS and massively increase our border forces and build fishery protection vessels, I begin to get the impression that they live in the same parallel universe as the other UK political parties.

Facing the facts

The hard truth is that pensions will peak and then the increase will slow but gold plated civil service pensions are unaffordable and must be trimmed. The private sector pensions were attacked by Gordon Brown by hiving off £5b per annum in premium tax. This has been continued by Alistair Darling and George Osborne so the resulting annuities are a disgrace.

The NHS is being eaten alive by the cancer of bureaucratic empires and overpaid managers and needs to be trimmed back to clinical and medical staff as the majority of employees. Being essentially untouchable by any of the major political parties it has become the gravy train for non-productive executives. In my opinion its income should be fixed at 18% of the previous years GNI. Let them start living within their budgets. Trusts that fail to do so should be stripped of the management team without bonus and no coming back to employment elsewhere within the NHS.

Welfare continues to require pruning but would require someone that can do so as fairly as possible, like Iain Duncan Smith. The single combined benefit that the government is working towards may well get this down and keep it there unless of course Labour ever gets back into power.

Apart from these major outgoings the government needs to keep itself small and not let departmental budgets increase year on year. Then hopefully increased trade with the rest of the world will increase our GDP and GNI proportionately and gradually reduce the deficit.

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About Antony Nailer (104 Articles)
Antony Nailer is a Design Engineer & Author, qualified with an HNC in Electronics and BA in Physics & Mathematics. He was on the UKIP Approved Candidates List for the 2015 General Election but is now a lapsed Member.

7 Comments on Economy 2020

  1. Dear Stuart & Rhys, thank you for your extensive comments to the article. I am pleased that it has hit a nerve with yourselves and hopefully the other readers. Creating these articles is an excellent way of organising thoughts and focusing on issues. I will now proceed to write an article about Pensions and another about the NHS because tackling these issues is clearly the route to solving the deficit problem.

    • Thank you.
      I would appreciate if you were able to provide some very approximate figures as to what income to the Exchequer might accrue from 5% tariffs on goods imported from the EU ?
      Could this be seen as a substantial additional source of revenue for the Exchequer ?
      And what about limiting public sector salaries to an absolute maximum of #99,000 p.a. ?
      Is there any way of knowing approx. how much that would save ?
      Are you in touch with whoever is UKIP’s shadow Chancellor ?

      • Rhys. The issue of terms of trade in relation to Brexit is worst-case we just walk away and World Trade Organisation rules apply, which is about 2% in/out tariff. To apply a trade tariff above this level will likely start a trade war from which no-one benefits. So this would be a bad move and likely to reduce income to the exchequer.

        The figures for our exports to the EU are actually worse than reported because sales to non EU countries often pass via Amsterdam and are counted as import to the EU. The reality is that we think like an island and they think like a continent. So they more readily buy from each other with whom they share borders.

        On the issue of public sector salaries I have often thought that there should be a single pay structure across the whole of public sector workers. The question then is:- Do you pay more to the head of a hospital trust or to the Prime minister?
        The Prime Minister only makes policy statements but is responsible for nothing really, whereas heads of hospital trusts quite often act irresponsibly with their budgets and departmental salaries.

        Presently it seems that there is no limit to how much public sector bosses can pay themselves, even though in effect through the government we foot the bill. In the private sector a similar thing is happening and shareholders are now bringing pressure to bear at AGMs on bosses who pay themselves huge salaries as basic plus huge bonuses as well, and totally unrelated to performance.

        As far as I know there is no UKIP Shadow Chancellor. At one time Tim Congdon was UKIP Finance Spokesman and also stood as leadership challenger against Nigel Farage but recently has gone to ground.

        • Anthony

          I am not seeking to argue in favour of 4 / 5 % tariffs : but those are the numbers I have consistently seen quoted as being applicable if we just walk away from the EU without attempting to negotiate ‘ access to the single market ‘.
          If it’s only 2% then I can’t see that changing anyone’s purchasing decisions much – but it would still be, would it not, a ‘bonus’ source of income to the Treasury ?
          I have no economics training but I don’t understand why all commentators say how complicated it is to leave……The Chancellor thinks it will take six years of negotiations minimum…………… WHY ?

          Why can we not just LEAVE, eg by Christmas, accepting that WTO tariff barriers will apply ( at least until we negotiate something more nuanced in our mutual favour ) ?
          To me, even if there is some downside to a 2% tariff ( or even 4% ) there is a huge benefit in terms of ‘getting on with it’ , abolishing the #12 billion membership fee for 2017 ; abolishing Freedom of Movement; regaining our exclusive fishing rights in our territorial seas; regaining freedom to support British agriculture ( and fisheries ) in a way best suited to Britain – and so on and on………..
          But maybe there are downsides which naïfs like myself do not comprehend ??

          • Antony Nailer // August 25, 2016 at 2:09 pm //

            Rhys. The problem with the tariff is that we buy a lot more from them than they buy from us. Any additional tariff added to the price of UK goods would make them less competitive within Europe so they would buy less from us. Applying tariffs to goods we purchase from them including cars, food, and wine makes those goods significantly dearer for our consumers. This in turn causes a demand for increase in wages and an inflationary cycle is triggered.

            Regarding leaving the EU. To put off triggering Brexit is very dangerous because it gives too much time for the remain camp to try and delay or stop it. It also frustrates the majority of the electorate who just want out. It also puts our trading with the EU into uncertainty and there is a protracted period when under EU rules we are not allowed to do trade deals with anyone else. It also means we have to carry on paying our membership contribution and still have no control over immigration. To approach it as Theresa May has done and that is to set up a Brexit unit with industrialists, financiers, lawyers and so on is a very expensive exercise and one which it will be in their interest to protract as long as possible so they can gorge in the trough. It also in effect gives the EU immense power to dictate terms when really they should have no power over us at all.

            By far the best route for Brexit is a clean break an assumption of WTO rules. As has been said before, the Irish, Germans, French,Italians and the Spanish would be banging on our doors within 24 hours for free trade arrangements.

            We could also sign up to free trade agreements swiftly with as many countries as wish it.

            Regarding fishing, we should immediately on Brexit declare 12 mile territorial limit around the UK. The next problem of course is to police these with fishery protection vessels. According to my ‘back of a fag packet’ calculation a 12 mile limit would give a required fishery protection zone of around 24,000 sq miles. Assuming a ship could do 24 knots, it could in effect patrol a circle of ocean of 450 sq miles area and get to an offending vessel 12 miles away within half an hour. To do justice to fishery protection then we would need 24,000 / 450 = 53 protection vessels. We presently have 3!

            Hopefully Theresa May will be aware that in 2020 there is to be a General Election and if we are not out or well on the way then the Tories as well as Labour will take a hammering BUT only if there is a credible alternative party.

  2. Just a quick comment – I think you are spot on in focusing on debt. Debt at the national level is the single factor above all else that removes the possibility of real sovereignty. The network of international indebtedness is what obliges nations to co-operate against their own interests in anything from adventurist warmongering to UN- or G20-prompted economic and political cartels and mafia-style bullying. At the local level we try to encourage members of our ‘communities’ to become ‘stake-holders’, ie compliant collaborators in civil oppression against their own interests – how? By promoting their personal indebtedness – by ensuring they have absolutely no prospect of rising above a hand-out of ‘benefits’ chains, or higher up the ladder, of acquiring any significant disposable income (‘disposable’ meaning money over which they have the choice as to how they spend it) during their working lives; we reduce interest-rates to effectively zero so there is no possibility of earning money from capital for anyone who does not wish to enter the markets.

    Debt is a tyrant at all levels, and is the major tool of oppressive forces in the world today. To rid ourselves of debt is the most radical possible proposal for a political party to make. It is the foundation of national independence and choice, and our policies should hinge on it and proceed from it. Even our adherence to our own national, cultural framework of law, jurisprudence and legislation is prejudiced without financial self-sufficiency. So thank you for highlighting this, Mr Nailer.

  3. This seems very persuasive to me.
    Should you not be UKIP’s Shadow Chancellor ?

    I would hope that the objective reality is not as bleak as portrayed, but certainly any Candidate for Leader who is proposing additional expenditure on whatever favoured Department or Project needs to respond specifically to the question ‘ how would you pay for this ? ‘.

    On the subject of inflated salaries on the management side in NHS and elsewhere in the public sector ( remember how Councils used to function perfectly well with ‘Town Clerks’ as the top official ? Then somehow we got Chief Executives on telephone number salaries…….)
    Would there be any downside in terms of quality of work done if there were to be a general policy ( which could be part of UKIP’s manifesto ) that, at least for the duration of a Parliament NO publicly salaried official could be paid more than #99,000 per annum ( including all expenses ) ?

    The Establishment will say this is mad – cannot work – the BBC will go dark if all the people on a quarter of a million have to scrape by on 4 x the national average wage – but they said much the same about BREXIT.

    By the way, for the avoidance of doubt, this would apply also to MPs. As it would apply only after the next election it is hardly unfair as candidates of whatever party can make their own decision as to whether they are prepared to make that ‘sacrifice’ in order to become an MP if elected.

    After all, such a sum is still riches beyond the dreams of avarice for the vast majority of the public scraping by on the average wage or below.
    And it is a policy which is easily understood.
    I suppose it cannot be brought into effect in respect of current employees who have contracts (until these expire ) but it could be a declaration of principle for the future.

    It seems to me that there would be a parallel for UKIP with the argument deployed in 2014 – that our candidates were the only ones seeking to get themselves dismissed from the EU gravy train.
    It would be an excellent debating point at local Hustings for local MP candidates : ## will you, the Conservative / Liberal / Labour candidate agree to match UKIP’s pledge : that if elected you will take no more from the public purse than the maximum of #99 thousand ( including – this is important – expenses ) ? ##

    On the subject of the welfare bill : my belief is that where this all goes wrong in Britain is that young people become entitled to welfare payments / council flats and all the rest the day they leave school.
    This engenders a totally wrong attitude to the balance of rights and responsibilities, and is why we have ended up with multiple generations of people in the same household who have never, or hardly ever, worked.
    If you have been used to a few pounds pocket money a week suddenly getting #50 a week for lying in bed seems miraculous.

    I would like to see some version of ‘ No benefits / public housing / tax credits / etc. until you have contributed an absolute minimum of five years ( ? ten ? ) in National Insurance Contributions. ( This might also have some slight deterrent effect on immigration but that would not be its main purpose .)
    Also, child tax credit limited to first two children.
    The last thing we need is more people on our massively overcrowded island. Individuals having huge numbers of children on benefit constitutes a real scandal, with demoralising effects on those who try to contribute to, as well as take from, society.

    Maybe Mr Nailer could do some rough calcs. as to how much the above would save from the national budget ( thought most of the measures are actually meant as symbolic, as much as anything else.)
    PS: If, as is mooted, a ‘Hard Brexit ‘ would involve 4 or 5 % tariff barriers levied on UK exports to EU and also on EU imports to the UK – is that in fact an unalloyed malign consequence ? I am thinking would it not encourage people to buy, eg UK manufactured cars; and at the same time be a substantial source of revenue for the Exchequer ?
    In terms of UK exports to the EU surely the devaluation of the Pound more than compensates for the possible 5% levy ?
    Jus’ Wondrin’……..

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