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If only the Tories understood how free market economics works

‘I don’t think I’m quite as Austrian as you are,’ a Tory minister said to me the other day. And I knew then that the party is doomed. It wasn’t what he said so much as the way that he said it: in the fond, amused, each-to-his-own tone you might use to dismiss a friend’s enthusiasm for Morris dancing or Napoleonic re-enactment or dogging… But personally, I think free market economics (of the Austrian or any other classical liberal school) is far too important to be left to wonks, think-tankers and out-there right-wing commentators. So did Margaret Thatcher. ‘Hayek’s powerful Road to Serfdom left a permanent mark on my own

The best way to learn about socialism is to experience it

I think it’s fair to say that Theresa May did not have a cracking conference, but the sympathy vote might even help her. I certainly felt sorry for the Prime Minister, and instinctively don’t like the nasty playground teasing from the Men of Twitter. (She does have diabetes, too, which can’t help.) But she has to go nonetheless, not because she’s unlucky but because she has a tin ear; why else would she choose to raise such issues as racial discrimination in mental health, sores that can’t be healed but which invariably paint the Tories as the ‘Nasty Party’ – a Ratnerism she coined. Ditto with tuition fees. As for

Capping energy prices will leave us all worse off

We have a couple of hundred years of economic history to tell us that some things are just a really, really bad idea. Printing loads of money, for example. State control of industries. Punitive taxes. Subsidies. But of all the really terrible polices a government can put in place, the very worst of all is price controls. The trouble is, that also seems to be the most popular idea in British politics right now. Last week, Labour announced what amounts to price controls on credit cards, with a cap on the interest rate that can be charged. It is already in favour of controls on rents. Today, Theresa May stepped

If the Tories won’t champion business and enterprise, who will?

The well-known saying goes, ‘there is nothing to fear but fear itself’. This certainly should be the mantra of Brexit. Disruptive as it might be, Brexit should be the reset button for an enterprise economy, a bright new future of growth and entrepreneurialism, open and free markets – in effect a ‘New Model Economy’ – but few are making the case for this. Certainly, the government isn’t. When I became director general of the British Chambers of Commerce over six years ago, one of my first media interviews led me to say that I thought there was no political party in the UK that truly represented business. By that I

Big business struggles to make friends at Labour’s conference

Big business is back with a vengeance at this year’s Labour conference. Twelve months ago, in the wake of Jeremy Corbyn’s re-election as Labour leader, the party’s gathering was largely shunned by corporate firms. The likes of Google – who had exhibited in 2015 – stayed well away. But in the wake of the party’s relative success at the general election – and with no sign of Corbyn going away any time soon – the companies are back. Google are among those exhibiting at the conference. Microsoft are here, too. And so are BP. But it seems like their efforts might have been in vain. While delegates crowded around stalls

Matthew Lynn

We need a free market in credit cards – just like everything else

There are some commercial decisions that are intrinsically difficult to defend. The plot of the last Captain America film, for example. Ryanair’s charges for bags that are slightly too big. The price of the new iPhone, and just about anything done by the lovable folks over at Foxtons. Credit cards changes come very close to that category. Almost but not quite. In fact, if the Labour party gets its way, and imposes controls on them, we may find that out to our cost. In what will probably be the first of a whole week of populist measures, the shadow chancellor John McDonnell today announced that, if in office, he would

The Uber ban is a pitiful howl against a changing economy

Eight days. That’s how long you have left to enjoy Uber if you live in the capital. Transport for London, a body that should really replace ‘for’ with ‘against’, says it will not renew Uber’s operating licence when it expires on September 30.  It’s a victory for the cabbie lobby, which cannot match the private hire app on price or convenience. How much easier to hector government into shutting down the competition. It’s a win, too, for fans of over-regulation, who have been out to get Uber for some time now. They are aficionados of rigidity and Uber was frustratingly fluid, its business model less susceptible to the impositions dreamed

The political nature of statistics

Sir David Norgrove, the chairman of the UK Statistics Authority (UKSA), is an honourable man. When he publicly rebuked Boris Johnson for his use of the famous £350 million figure about our weekly EU contribution, I am sure he was statistically, not party-politically motivated. But two points occur. The first is that Sir David was, arguably, mistaken. He thinks Boris said that, after Brexit, Britain would have £350 million a week more to spend. He didn’t. He said ‘we will take back control of roughly £350 million a week’. This is correct. So long as we are in the EU, that £350 million a week is out of our control,

Why is the UK’s supposedly impartial statistics watchdog joining the Boris-bashing?

Okay, it’s a rainy Sunday, but surely the new chief of the UK Statistics Authority has better things to do than send angry tweets to the Foreign Secretary? Alas not. Today Sir David Norgrove, the newish chairman of the UK Statistics Agency, tweeted out a letter declaring himself ‘surprised and disappointed’ that BoJo has ‘chosen to repeat the figure of £350 million per week, in connection with the amount that might be available for extra public spending when we leave the European Union’. He says that this ‘confuses gross and net contributions…. It is a clear misuse of official statistics’. Sir David Norgrove writes to Foreign Secretary about use of

Martin Vander Weyer

London is still the world’s pre-eminent financial centre – for now

Should we place faith in a survey, conducted in June but published this week, that says London is still the world’s pre-eminent financial centre? Yes, in the sense that no one challenges that long-standing claim as of today; no, in the sense that complacency would be a huge mistake while every financial firm operating in the City, the West End and Canary Wharf is busy making contingency plans for a bad Brexit outcome. The gist of the six-monthly Z/Yen ‘Global Financial Centres Index’ — which assesses 92 cities around the world, taking account of everything from telecoms infrastructure to homicide rates — is that London has held its own at

The Bank of England can’t remain in its ‘Brexit’ parallel universe forever

House prices are in freefall. Unemployment is rising relentlessly. The pound is plunging on the markets, and companies are re-locating to Paris and Frankfurt in droves. In the parallel universe Mark Carney increasingly seems to live in, that is a pretty accurate description of the British economy. In this universe, however, the picture is very different. The economy is doing just fine – and that is making it increasingly hard to understand why interest rates are being held at ‘emergency’ levels to cope with the ‘catastrophe’ of leaving the European Union. At a meeting of the Monetary Policy Committee yesterday, the Bank left rates on hold at 0.25 percent, while

John Lewis doesn’t have a Brexit problem. It has a Waitrose problem

It used to be the weather that served as the catch-all excuse for poorly performing businesses – it is too cold or too hot for people to go shopping. How convenient, now we have grown a little tired with that one, that Brexit has come along to serve the same purpose. Speaking on the Today programme this morning, John Lewis chairman Sir Charlie Mayfield was asked to explain a 53 per cent fall in profits for the first half of the year. To be fair to him he didn’t initially mention Brexit at all but when the inevitable question came from Today’s business correspondent he said: ‘We should be under

Tories grow increasingly nervous about the Budget

So long, public sector pay cap. After months of speculation – and some public Cabinet feuding – over the seven-year pay freeze, No 10 today announced that the government would be adopting a more ‘flexible’ approach from now on. Police and prison officers will be the first to receive a pay rise with more sectors expected to get a pay increase as it’s rolled out across the board. This concession from the government just months after Philip Hammond argued on Marr that public sector workers get a 10pc ‘premium’ over their private sector counterparts shows that the shift in public mood proved more powerful than any argument for it. The difficult

Ten years after the banking crisis, the unfairness still stings

Arguably it was Robert Peston’s breathless reporting of trouble at Northern Rock on the evening of 13 September 2007 that kicked off the crisis. The next morning, depositors were queuing round the block and the drama that would almost bring down the global banking system a year later had begun. Looking back after a decade, we can be grateful for the bailout interventions that shored it all up at the moment of cataclysm — but we can also observe the lingering and deep unfairnesses of the longer-term recovery. Ultra-low interest rates that will not rise above inflation anytime soon mean blameless savers face continuing negative returns on cash deposits; yet

Ten years after the banking crisis began, the unfairness of its aftermath still stings

Arguably it was Robert Peston’s breathless reporting of trouble at Northern Rock on the evening of 13 September 2007 that kicked off the crisis. The next morning, depositors were queuing round the block and the drama that would almost bring down the global banking system a year later had begun. Looking back after a decade, we can be grateful for the bailout interventions that shored it all up at the moment of cataclysm — but we can also observe the lingering and deep unfairnesses of the longer-term recovery. Ultra-low interest rates that will not rise above inflation anytime soon mean blameless savers face continuing negative returns on cash deposits; yet

Ross Clark

Wealthier by degree

It is not a great advert for university when the universities minister says he is not especially bothered whether his own children go or not. ‘The days of degree or bust are long gone,’ Jo Johnson told the Sunday Times recently. ‘There are alternative ways into the workforce these days. Absolutely I would say to my own kids to consider them.’ But hasn’t he got it the wrong way round? Is it not the case that a degree is more essential now than ever? That the chances of getting a good job without one have greatly diminished since a generation ago, when East End barrow boys went straight into the

Footballers deserve their pay – can the same be said of university vice chancellors?

Louise Richardson, Vice Chancellor of the University of Oxford, is, according to the university’s website, a political scientist whose research ‘specialises in international security with a particular emphasis on terrorist movements’. Next time she tries to defend her £350,000 salary I suggest she corners someone from the economics department for advice. I don’t think, at her current state of understanding, she would get very far in a PhD on relative pay in the fields of business, entertainment and academia. I am sure Ms Richardson works very hard and her work is all terribly worthy but, alas, in a capitalist system that is not, and has never been, how financial rewards

Labour MP: I’ve found the magic money tree

For once, theres’s no vacancy in the shadow cabinet but when one inevitably comes up, Mr S would like to put forward his pick for promotion: Jared O’Mara. The Labour MP popped up on Channel 4 News last night to criticise the Tories for their spending on benefits. Inevitably, the dilemma of how it would be paid for came up. While that question might have troubled some, O’Mara had an answer: Britain has ‘loads of money’ to spend, he insisted. The Labour MP’s insight didn’t stop there though, as he also revealed where the much talked-about ‘magic money tree’ is: ‘If you want to know where this magic money tree

Britain should pay a Brexit bill – but only on one condition

Fifty billion? Seventy-five? In its wilder moments, the FT might even splash on a hundred billion pounds as the minimum cost of our exit from the European Union. As the negotiations over our departure reach perhaps the thorniest issue of all, the final bill will have to be settled. But what should it be? If the hardliners on both side would calm down for a moment, then the answer should be very simple. We should agree to cover the cost of the disruption our departure creates, but only in return for a fair deal on trade. It is probably a mystery to most people why we have to pay anything

Quantitative easing has made houses hopelessly unaffordable

Financial crises tend to see asset prices collapsing, making housing more affordable. But it’s been different this time because the authorities in the UK, and elsewhere, countered the crisis with low interest rates and quantitative easing. By slashing the cost of borrowing and flooding the system with liquidity, these policies set out to – and succeeded in – inflating asset prices. So we have seen the UK stock market and housing market rising at roughly the same amount in the last ten years. Taken together with weak wage growth, the result is that housing in the UK (as in many other countries) has become less affordable. So what has been