Coffee House

Pickles struggles for an answer on growth

13 May 2012

1:56 PM

13 May 2012

1:56 PM

The government is desperate for economic growth but where can it find
it? This was the question posed to Eric Pickles on the Sunday Politics today, but sadly he was unable to provide much of an answer. The Communities and Local Government secretary gave a blustering
interview, where he reaffirmed William Hague’s view that
‘growth will come from government creating conditions for us to work a little bit harder.’ But when pushed by Andrew Neil on what this (slightly condescending) idea actually means,
Pickles jumped on the chance to blame Labour for the ‘something for nothing culture’.

Pickles did add that the government’s chosen sources of prosperity are business investment and, relatedly, the stripping back of regulation. But, in both cases, progress is stalling. In
November last year, the OBR forecast that business investment growth would stand at 7.7 per cent this year — but that figure has now been slashed to 0.7 per cent. And despite Pickles’ policy of scrapping two regulations for every one introduced, he admitted that
the government is limited by the demands of the European Union.
In the end, Pickles’ interview was a classic example of one of the coalition’s main problems right now: the gap between their rhetoric and their achievements on growth.

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Show comments
  • Guru McKenzie

    Pickles looked way out of his depth

    Politics at this level is not for over-promoted local councillors who are only being fronted up because they fill the Tory’s provincial quota

  • GixxerBoy

    The UK will not experience any growth while its economy is hidebound by ‘Climate Change’ directives. It places you at an insurmountable disadvantage to freer economies.

    Strong economic growth only ever happens with cheap, abundant energy. But you have ruined your economic competitiveness by swallowing the exaggerations of catastrophic anthropogenic global warming. The UK’s ‘energy policy’ is just a fantasy – ‘renewable energy’.

    Your only way to grow is if the UK could wake up to the lies, frauds and distortions of climate change alarmism. You’d need to abandon the senseless, counter-productive ‘wind farms’ and ‘solar power’ and get serious about energy. You sit on abundant reserves of coal that has been deliberately locked up by brainwashing over ‘global warming’. Shale gas, too.

    For heaven’s sake, do some reading about it. The tide is turning, as so much of the alarmist fearmongering is being overtaken by events. Check out the facts for yourselves and don’t rely on the activist propaganda fed by the ‘Environment’ and ‘Climate Change’ correspondents in the mainstream media: turkeys never vote for Christmas.

  • Paul Danon

    Mr P was dreadful, though I can’t think why Neil’s producer got him to ask the local government secretary questions that were actually for Dr Cable. Neil scored a very palpable hit by pointing out that most red tape came from Brussels.

  • michael

    What should have been said… Growth will come when WE are allowed to choose what to do with the fruits of OUR labours.

  • Cuse

    Pickles’ interview was awful. Eric looks tired and un-interested recently. On the local election results show he looked palpably bored.

    Excellent point about the gap between Coalition rhetoric and reality. The spin operation on both sides seems just to amount to outrageous hyperbole promoting drab policies which then get found out extraordinarily quickly.

    The Coalition looks increasingly finished, doesn’t it?

  • TomTom

    “What exactly did the Labour decade do for us?
    Was it a useful decade, or a wasted one?”

    Well Holly, as a diehard Tory, can you tell us which part of Gordon Brown’s economic policy the Tories objected to 1997-2006 ? Did they want TIGHTER regulation of Banks ? Did they want HIGHER Interest Rates ? Did they want a cap on Banker Bonuses ?

    Did they demand Credit Controls ?

  • Stuart Eels

    ah Eric Pickles, the classic example of today’s Tories, he has lived down to my expectations to the full along with call me Dave and the rest of the gang. They have been found out and don’t have a clue except for spin!

  • daniel maris

    A few more observations on an issue of substance, not gossip:

    1. What are the sources of growth?

    Technological advancement. Britain is greatly blessed with scientists and technologists .Perhaps we should be more active in getting them to stay here and link them in more with business.

    Bringing unused labour into operation. We don’t have a few hundred million underused peasants like China, but we do have a few million people on welfare who shouldn’t be.

    Entrepreneurship – finding new markets and new ways of doing things.

    Invest in infrastructure which makes you more productive. We can argue over where the investment should be directed.

    Manipulate your exchange rate if you are dependent on exports, as we are.

    2. Limiting mass immigration will improve our per capita growth prospects and reduce the welfare burden.

    3. If the government had any sense it would be prusuing the growth agenda now in all areas, including legislation. However, it seems more interested in picking arguments with the unions, shrinking the public sector, reforming the House of Lords and so on.

    4 Reducing welfare dependency is key to improving the productivity of our economy.

  • Holly ……

    The government could scrap all regulations, leave Europe, do whatever we ask them to do, but with a workforce unwilling to do anything they think beneath them, we are screwed!
    How long before the immigrant worker,(who is willing to move country, let alone an area to find work) gets tired of funding out of work Brits?
    Labour just love to push the idea of a ‘lost generation’,how we are staring at a’lost decade’ as if it is something in the future
    well have I got news for you….It was the previous decade that was lost.
    What exactly did the Labour decade do for us?
    Was it a useful decade, or a wasted one?

    The trick with Labour is they ALWAYS use the POLAR OPPOSITE of the truth.
    The MSM push Labour’s latest sound-bite and hey presto, we can all blame the current government.

    The next decade is ours for the making, but without any give from the Brits, we have no chance.

  • Dennis Churchill

    If the government was to get off our backs with massive levels of taxation and regulations then British workers and businesses would pull us out of this recession.
    While we are required to fund a massive wasteful state and unproductive politically correct Quangos there is no hope.
    daniel maris
    May 13th, 2012 8:04pm
    I agree there seems to be no planning around our projected population growth least of all for energy needs. It is per capita statistics that are meaningful in the situation we have been put in by open borders.

  • daniel maris

    On the subject of growth I’ll mention the fact that I always do (even though no other “expert” commentators ever see fit to mention this salient point):

    Per capita growth is not the same as total growth.

    If we import and additional 500,000 people net, our per capita position declines by about 0.5% (minimum I would say – owing to the need to produce more housing, transport and hospitals, the negative effect is probably magnified).

    We probably need 0.5%-1.00% growth just to tread water.

  • Don Benson

    How on earth can journalists or those who comment here look for a surge in growth, given the fact that the government seems only to have woken up to the need for it a matter of weeks ago? They’re still wiping the sleep from their eyes and as they start to focus they won’t relish what lies ahead.

    Once we’d had the ‘big bang’ it seemed interest in boring old industry was lost by politicians. For a while they were seduced by easy money and the ‘knowledge economy’: the developing nations could do all the industrial heavy lifting and we would rake off the profits by virtue of our wonderful deregulated financial services.

    Of course good financial services are necessary but, following the banking meltdown, politicians are coming to realise the need for a more balanced economy. But this will take years, even if our hearts and souls are dedicated to the job, and who’s taking bets that our politicians are ready for the long haul? For a start we need to shake off our outdated snobby attitude to engineering and factory production and ensure that rewards and esteem for the people involved compete far more favourably against those occupations which produce nothing but words, paper and promises.

  • Philip747

    The government is clearly in need of a few good ideas, and Eric Pickles is well placed to provide them.
    In his budget speech the Chancellor said “We also want investment from British pension funds in British infrastructure – and we’re now working with a dozen of the largest pension schemes specifically on that.”

    In the same speech he also said “The transfer of the £28 billion of assets from the Royal Mail pension fund to the Exchequer will free it from its crippling pension debts, ensure the pensions of hard-working staff are paid and help to bring in new private sector investment.
    Some would have been tempted to spend the windfall.
    I do not propose to spend it.
    Instead, I have used it to pay off debt.”
    Only in the Alice in Wonderland world of Whitehall financing could taking on an £8 billion deficit be classed as a “windfall”. I prefer the approach of Alan Duncan,who said “I fear the government is going to steal £22bn of pension assets, dump the liability as a mortgage on future generations and dress it up as the salvation of the Royal Mail.
    “Their plan to steal the pension assets to help reduce their borrowing figures while taking out a massive mortgage to cover Post Office pension liabilities for 50 years is nothing more than a massive accounting scam.” Of course he was only shadow business secretary at the time, and since then EU rules have meant that the Whole of Government Accounts include provision for unfunded pension liabilities. Selling off the pension scheme assets will increase the unfunded liabilities by exactly the same amount and achieve nothing. However reinvesting the proceeds in a “growth fund” could serve a very useful purpose. No doubt Boris Johnson could manage the application of the funds into housebuilding in the London area, generating employment, growth in GDP, and fulfilling political promises to provide such housing. The Manchester local government pension schemes have just agreed such an arrangement, with which no doubt Eric Pickles is extremely familiar.
    Come on David, put Boris and Eric in a darkened room with Mr Hammond, who appears able to do numbers, for half a day and you could have a workable scheme which might well prove to be a vote winner. £28 billion may seem to be a drop in the ocean but if the scheme works it could be extended, and doing nothing does not seem to be an option

  • Woody

    The media could start talking this country up for a change, instead of all this 24-hour negative stuff.
    Sometimes the government just has to get out of the way.
    It’s going to take time to pull this country round and I believe it will. Nobody has any patience these days, it’s all ‘what about me?’

  • Pierre Pierpont

    With the lack of investment by corporate UK, wouldn’t a better strategy be to introduce an “Investment Allowance” similar to what has produced results in the past in the UK and overseas? Business could be allowed, say, a 120% tax deduction for new specified investment in business related assets. Write offs for depreciation could be accelerated. in this way “government” could “encourage” investment and hopefully take the country out of the doldrums that it is facing for this year and many years to come. If borrowing is still going to keep creeping up over the next 4 or 5 years, we may as well have something to show for it.

  • Cynic

    And despite Pickles’ policy of scrapping two regulations for every one introduced, he admitted that the government is limited by the demands of the European Union.” Precisely! We are shackled to the corpse of a decapod that has its tentacles into every part of our lives. Cut taxes, make creating a business and hiring and firing staff easier, have a bonfire of all Labour’s useless “equality” legislation and ditch paternity leave.

  • Fergus Pickering

    It is not within a Government’s gift to get growth. What a Government CAN do is to stop spending. Governments shouldn’t think they are God Almighty. Their power is circumscribed. This one is better than some. That ought to be enough, since the alternative is more disaster from the old lags we had before.

  • TomTom

    Daniel Maris, I sense your frustration, but you offer no solution. Britain cannot grow faster than the world economy, it cannot grow as far as the world economy, because it does not make goods which are in demand – it imports them.

    Noone is going to build a factory in Britain to replace imports, look at Philip Green forgetting that it was M&S that propped up the British textile industry when Philip Green was sourcing abroad, now Courtaulds is gone, Sara Lee has packed in, and Desmonds in N Ireland has shifted its production overseas as has Berwin & Berwin.

    That is a basic industry, not high-wage, but the skillset is lost. Try to find a decent seamstress in any textile town today – the skills are lost and the FE Colleges have been turned over to remedial education for school-leavers – the only dress-making courses are for Asian women funded by EU grants.

    The systematic destruction of Britain is akin to the Morgenthau Plan and there is no quick fix – it needs 20 million fewer people and intensive structured disciplined schooling with fear of failure and hunger to motivate.

    It isn’t going to happen when schoolchildren swan around malls with £450 iPhones on leasing contracts and designer clothes. It is the notion that schoolchildren often live better than the unemployed that is truly surreal in Britain

    So, I put it to you that this political and economic system is at an end. It has run out of cheap labour, cheap oil, cheap credit – now it is exposed as a bloated, ignorant, lazy, technically-incompetent, functionally illiterate, but very wordy and arrogant population – and that is speaking of the political and economic ELITES – it gets worse as you move down to the Lumpenproletariat

  • Nickle

    Cutting taxes and reducing regulation are, in fact, conditions, and they are created by the will of the government.


    They can’t cut taxes, because they are spending so much. To start cutting taxes they need to cut government by 28%.

    Instead they have increased spending in real terms.

    It has tipped. They can’t get the government finances straight.

    Last year the debt went up by 150 bn (on the books) and another 350bn (off the books)

    500 bn increase when tax raises 550 bn.

  • Nickle

    Start by sacking Vince Cable.

    For a minister responsible for decreasing regulation to triumph the removal of restrictions on Belgium chocolates, he’s a pathetic dead weight has been.

    Combine that with his demotion for attempting to secretly break the Human Rights act and he as to be put out to grass.

  • drayner

    @and ill go to bed at noon.. Yes you are right. If the government takes its foot off the economies throat and lets it breathe that would be a start. It is throttling the patient.

  • drayner

    We aren’t going to be getting any “growth” any time soon. Not real growth anyway. There is a very slim chance that spunking some more borrowed money away on garbage like Labour did before they were twatted out of office might show up in the books as a bit of growth. Then it will fall away again once that money has gone.

    The fact is that the state is sucking away far too much of the money in the economy. The private sector is being screwed via high taxes and silly regulations being lumped on it. The banking system is in a dreadful state and isnt lending properly and is being told to hold on to massive sums of cash “just in case” it all goes tits up again. This is a perfect storm now and we havent even got into the guts of it yet. Politicians are struggling to come to terms with what has happened and is happening, they have no answers and certainly none of the UK ones are coming up with anything other than a sticking plaster for an arterial bleed.

  • and I’ll go to bed at noon


    I’m sure that felt very cathartic, but have a closer read of that quote. Cutting taxes and reducing regulation are, in fact, conditions, and they are created by the will of the government. Nothing he said excludes that approach or implies an authoritarian outlook.

  • Pot Head

    For majority of the Tory right it seems that deregulation is only about stuff they want deregulated not what’s necessarily best for the economy.

    For instance increased regulation on immigration and planing are both popular with Tories and both slow growth considerably.

  • Lola

    Growth will come from government creating the conditions for us to work a little bit harder” Oh, for God’s sake man! The first five words give the game away. He and Hague are still stuck in authoritarian mode, and continue to believe that ‘governments create growth’. They do no such thing you witless pair of buffoons. At best governments don’t frustrate growth, at worst they kill it stone dead. Government, and the wild excess of it and its costs, is the problem. It’s getting in the way (again) and taking money out of the real economy every day. The answer to getting more growth is therefore patently bloody obvious – cut gummint spending and slash taxes and reg-yew-layshun.

  • daniel maris

    How many times does the OBR have to get things spectactularly wrong before someone closes them down?

    As to how we get growth, I think firstly we need to get people off benefits and into productive work. But, essentially, that productive work cannot be in competition with the existing producers. It needs to be complementary productive work. So, for instance, if the new workers can attract more tourists to the UK, encourage people abroad to buy British products, help people in this country be aware of British alternatives to imported products, and get other benefit claimers back into productive work then that will all add to our overall productivity.