Thev Fed, the European Central Bank and the Bank of England made the same mistake last year. They each went on printing new money and buying up state debt  to keep interest rates too low through 2021 when recovery was well underway. As a result  they each triggered a 10% inflation against a target of 2%. It was not mainly the Ukraine war and energy prices that caused the inflation. Their  inflations were well set in before the war. The  world’s second and third largest economies, Japan and China, kept inflation below 3% despite importing lots of dear energy because they did not create excess money and credit.

The three bad Banks have now decided to do the opposite and tighten money, sell some of the bonds they bought and jack up interest rates. This is now spooking the markets, who fear they intend  to bring on a recession. Bonds fall in price to adjust them to the higher interest rates the Banks want, and shares fall in anticipation of a slump. All too often in last cycles these Central Banks have loosened near a peak to stoke the inflation more and tightened into a trough to make the recession  worse. Unlike the asian Banks the three big Western Central Banks fly blind, refusing to  monitor and target money and credit. If they did they would have seen excess last year and would see too little this year. yesterday was another bad day for share and bond markets in all three central bank areas.

There is a clear danger the Bank of England will lean too hard against government attempts to ease the squeeze and will engineer the recession they are forecasting. I believe their latest estimate that inflation will fall away rapidly next year so they can now pause their tough actions. Pressing on with selling bonds they have bought would be damaging at a time of a large external shock from energy prices. As this is a joint policy with the Chancellor they would be well advised to agree to delay it until recession is vanquished.

The debate about tax has been very slanted to socialist views this century. I agree that taxation should be progressive, with rich paying more and the poor receiving net transfers from the state. I do not agree with accompanying rhetoric that taxes can only be cut for the poor and should always be on the rise for the rich.

I have long argued that the way to get more tax revenue from the very rich is to set lower rates of tax. Armed with tax lawyers and accountants and able to change places to live and invest, the very rich have freedoms and opportunities the rest of us do not enjoy. To keep a good share of very rich investing here, creating jobs here, spending plenty of money here requires setting internationally competitive rates of business and personal taxes.

Today I want to add the argument that I favour cuts in tax rates for people on above average incomes who typically have a single well paid job or substantial savings but who unlike the very rich are permanent U.K. residents and taxpayers who do not find legal ways round current taxes. We need to make it easier for risk takers, small business entrepreneurs, people who go through long training and education to qualify for better paid jobs to aspire and to benefit from the risks and sacrifices they made. If you want an aspiration society you need to make effort and hard work worthwhile. Many of my constituents are on two or three times average incomes in the U.K. but they are not rich. We should not be trying to squeeze more tax out of them as a matter of principle as if they need to be punished for succeeding.

If we grow the economy more we will generate more tax revenue to improve public services.Growth needs to be in incomes per head, not GDP growth from increasing the number of people living in the country. Sometimes less is more, less is better. This is true of taxes.

Today the new Health Secretary will seek to focus the NHS on a new alphabet. A is for ambulance use, B is for backlogs or waiting lists, C is for transfers to care and recovery homes and D is for doctors and dentists. I wish her well in getting ambulance waiting times down , treatment waiting lists down, transfers from hospitals up and numbers of medical professionals up.

None of this can be done without learning from the mistakes of the last two years. Huge sums have been thrown at the NHS but the  non covid services have suffered, with unhappy staff and too many patients in an ever growing queue. So where has all the money gone and why didn’t it buy success? Just throwing more at it will not solve the problems.

Let me begin by repeating that I like many am grateful for the hard work and risks run by the teams that responded to covid before medical science knew which medicines helped and before there was a vaccine.
Unfortunately the senior management refused to use the Nightingale capacity to create covid specialist hospitals. That meant many non covid wards in general hospitals were unable to work fully, leading to many other untreated conditions. Money spent on the Nightingales was written off. Large sums were also spent on taking over the capacity of private hospitals to do non covid work, only for that capacity to be too little used.

The NHS then spent a fortune on a Test and trace scheme of very variable quality which some people gamed to carry on their normal lives. This spending  has now rightly been wound down.

The management needs to share its manpower plan and detailed budget with Ministers and Parliament. Ministers who take the blame need to be more engaged with the use of all the cash.

I have received the letter below from the Secretary of State for Business, Energy and Industrial Strategy outlining support for businesses, charities & public sector organisations (such as schools and hospitals) against rising energy prices. Further information can be found on the following weblink: Energy Prices Support Package

Please note that this weblink is regarding support for non-domestic customers only. I will publish the link to updated support for households once it becomes available:

Dear Members,

ENERGY PRICES SUPPORT PACKAGE

Following the Prime Minister’s announcement on 8 September, the Government is today publishing further details of the support we are offering to people and businesses in the face of soaring energy prices. This package of unprecedented assistance for the whole UK provides the certainty families and business owners need to help them manage their energy bills.

Details of the Energy Price Guarantee for domestic consumers and the Energy Bill Relief Scheme for business and non-domestic properties are available on gov.uk. The Chancellor of the Exchequer will set out more details of the costs of the Government’s support as part of his fiscal statement on 23 September.

We have designed the schemes to be simple for energy consumers. Families and eligible businesses do not have to take action or apply for support, energy suppliers will automatically apply the appropriate reduction via their energy bill. Households will receive an equivalent level of financial support wherever they are in the UK. The same is true for businesses across the UK too.

The Energy Price Guarantee for Great Britain will ensure that a typical household pays an average £2,500 a year for their energy, from 1 October 2022 for the next two years. On average usage, a household will save £1,000 a year. This is in addition to the already announced £400 Energy Bills Support Scheme for households across the UK. The most vulnerable UK households will also continue to receive £1,200 of support. For consumers in England, Scotland and Wales who pay for their energy through a monthly, quarterly or other regular bill, the Energy Price Guarantee will be applied when their bill is calculated. The Guarantee limits the amount the bill payer can be charged per unit of gas or electricity, so the exact bill amount will continue to be influenced by how much energy is used.

The Energy Bill Relief Scheme will provide protections for all businesses, voluntary sector and public sector organisations in Great Britain which face excessively high energy bills over the winter period, whether they are on existing fixed price contracts agreed on or after 1 April 2022, signing new fixed price contracts, variable or deemed tariffs or flexible purchase contracts To administer support, the Government has set a Supported Wholesale Price – expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter – which is a discounted price per unit of gas and electricity.. Suppliers will pass the reduction in the wholesale price through to their customers.

The Energy Bill Relief Scheme will run initially for 6 months covering energy use from 1 October 2022 until 31 March 2023. We will publish a review of the scheme after 3 months. This review will consider how best to offer further support to customers who are the most vulnerable to energy price increases. These are likely to be those who are least able to adjust, for example by reducing energy usage or increasing energy efficiency.

As the Prime Minister said on 8 September, the Government is bringing forward emergency legislation to underpin the delivery of our support package. We will introduce a Bill immediately after Parliamentary Recess. It will include measures for the GB Energy Price Guarantee for domestic consumers and Energy Bill Relief Scheme for businesses and non-domestic properties so all of GB receives equivalent support; and enable the delivery of comparable schemes in Northern Ireland. It will provide powers to enable low carbon generators to move onto fixed prices to end the situation where electricity prices are set by the marginal price of gas ensuring consumers pay a fair price for their energy.

With every good wish,

Jacob Rees Mogg