The latest IMF forecasts show the UK economy going from being the fastest growing economy last year to be the slowest of the advanced countries next year. The IMF is more pessimistic than the OBR/Treasury  for 2023 and is more likely to be right. The OBR/Treasury model usually underestimates the impact of permissive monetary and fiscal policies on the upside, as it did last year, and is too optimistic about the resilience of the economy to tight money and tax hikes on the downside. Last year I predicted a much lower deficit and higher tax revenues than the official estimates at the time of the budget and was pleased to see that happier outturn come to pass.

The IMF says the UK economy will be slowed from 7.5% in 2021 to just 1.2% in 2023. That should be no surprise to anyone watching policy developments. Last year the Bank went on printing extra money all year, long after it should have stopped. This year it will be printing none. It is in danger of hiking rates too high to contract things more. Last year the Treasury planned  for a lax budget deficit. This year it is trying to get a lower one through large tax rises. This will sandbag growth which in turn reduces buoyancy of revenue. The OBR model still does  not capture the full sensitivity of tax revenue to growth rates. Both these policy tightenings come on top of the large hit to real incomes being administered by energy and food price inflation. The high inflation is both the result of past laxity in money growth and the global supply hits to the world economy.

The collapse of the GFK Consumer confidence index to minus 38 should be a final warning to the Treasury. This takes it down to a level lower than it hit in 2020 over lockdown, lower than during the Exchange Rate Mechanism recession and almost as low as the great recession and banking crash of 2009.

One of my critics wants clarity about my forecasts. I am always clear about them. I do not have a model of the economy myself, but study the official models and offer adjustments to their results as they are flawed in ways I have described. Just as last year I forecast a lower deficit and more tax revenue, for  2023 I forecast a lower growth rate for GDP and a worse situation on revenues and deficit than the OBR figures. I urge the government to abate its large tax rises which are the main reason the IMF figures put the UK in bottom place next year. The other main advanced economies have the same pressures from  higher inflation as us, and the US, Canada and some others  will have a substantial monetary tightening to contend with but do not have the big tax rises. The European countries need tighter money to curb their inflation and may get it later this year.

We all need roads. Many need to drive to work, drive to take children to school, drive for the weekly food shop and drive to leisure and social events. In most U.K. communities car use is required by the geography and the transport system.Only in large cities are there mass transit systems with frequent services.

Those who claim to be greener because they have found safe cycle routes for school or work, or do have good trains or are close enough to work and shops to walk there still need roads like the rest of us. They need the diesel lorries to restock the shops, they need the on line delivery driver, the plumber and the builder to get to their  homes by van . They would need an emergency vehicle to arrive if bad fortune struck them. The environmentalists that go by bus need good bus sized roads to have their way.

All but our main motorways and trunk roads are local Council monopolies, provided free to all users on the back of national and local taxation, supplemented in some places by user and environmental levies. Local elections are a good time to engage with Councillors and candidates about what they are going to do to make the roads safer and easier to use, and to bust congestion and delay which disfigures many of them.

As I travel around the country I come across many Councils  that are out to get the vehicles off their local roads. They spend all too much money on narrowing usable roadspace, worsening flows at junctions and crowding too many different instructions and restrictions into too little road. In future pieces  I will look at how Councils could  help make our journeys easier and safer, and how they could back more use of alternatives without worsening vehicle use of their roads.

There is renewed interest amongst Conservative MPs in value for money and controlling public spending. We have just lived through an extraordinary two years when public budgets were increased hugely to combat the virus, find a vaccine, set up a nationwide free test and trace system , boost benefits, pay furlough  incomes , subsidise businesses facing impaired trading and offer finance to business in difficulties from banned or restricted trading.

The first part of controlling spending is reversing all of these special  measures as the  economy  has now returned to its pre pandemic levels. This is largely done though the NHS budget needs to be fully adjusted to ensure enough of the expanded budget that remains goes to non covid work and to waiting  list reduction. As answers to my various questions have shown the NHS needs to do more to have a good manpower plan going forward, to recruit the extra  medical staff it needs to handle demand. It may need more beds just as I and others strove to get to handle the first covid wave  through the Nightingales.  It needs to reduce overhead and concentrate resources on the medical services at its core. Much of the task of raising productivity in the public sector, raising service quality and improving value for money needs to come from this crucial service which absorbs 40 % of the state budget.

The government should urgently review overseas aid to eliminate payments to countries supporting Russia and countries with space,nuclear weapons or other large armaments programmes.

The costs of providing initial  housing and other public provision for refugees should be charged to the overseas aid budget. The number of economic migrants should be controlled to allow a reduction in spending on additional social housing.

The government must work with the railway to make substantial reductions to the current very high level of subsidy. The Secretary of State is right to try to promote more use of the railway. The  U.K. will need to be realistic about ticket prices after his initial bargain promotions. It may be that more freight use of the railway is the quickest win for revenue and beneficial environmental impact, reducing road congestion.

The Cabinet Office Minister Jacob Rees Mogg is right to seek a slimmed civil service. Ending much new external recruitment , promoting from within and eliminating  posts would save substantial sums and boost productivity.

I have received the enclosed letter from the Minister of State for Care and Mental Health at the Department of Health and Social Care:

Dear Sir John,

Thank you for your correspondence about funding for children’s and young people’s mental health services.

I can assure your constituents that funding for children’s and young people’s mental health services is a priority for this Government.

On 27 March 2021, we published our Mental Health Recovery Action Plan, backed by a funding increase of £500million, to ensure that we have the right support in place over the coming year. This includes £79million to significantly expand children’s mental health services and allow for a faster increase in the coverage of mental health support teams in schools and colleges. This is in addition to our commitment through the NHS Long Term Plan to invest at least £2.3billion more a year in mental health services by 2023/24, so that 345,000 more children and young people can access specialist NHS-funded mental health care.

To address the impact of COVID-19 on children’s and young people’s mental health, NHS England and NHS Improvement announced an extra £40million of funding. This includes £10million to provide extra beds at units providing care for young people with the most complex needs, including eating disorders, and £1.5million to ensure that there are additional facilities for children under 13.

To further support children’s and young people’s mental health, the Department for Education announced £17million of mental health funding for schools and colleges to help them recover from the challenges of the pandemic. Funding worth £9.5million will be offered for up to 7,800 schools and colleges to train a senior mental health lead from their staff in the current academic year; this is part of the Government’s commitment to offer this training to all state schools and colleges by 2025.

We have also launched the £7million Wellbeing for Education Recovery programme, which provides free expert training, support and resources for staff dealing with children and young people who are experiencing additional pressures from the last year, including trauma, anxiety, or grief. This builds on the success of the £8million Wellbeing for Education Return, which has been used by more than 90 per cent of councils since its launch last summer.

I hope this reply is helpful.

GILLIAN KEEGAN

One of the principal misunderstandings of the Treasury is embodied in their comment  in the Spring Statement that “The Bank of England is responsible for controlling inflation”. It is a  very worrying mistake. The public thinks the government is in overall charge of the economy including the need to control inflation. The main policy the Bank has pursued in recent years which has triggered the inflation is the policy of printing loads of pounds and buying up government debt with them to keep the interest rates very low. This policy has to be approved by the Chancellor of the Exchequer himself on advice from Treasury officials. The Treasury is part of the  wider government which controls around 40% of the economy through public spending. Government gets to set the prices, charges and taxes to pay for most healthcare, education, policing, defence and a range of other services. How it does this will have a direct impact on inflation.

The Treasury needs to see the 2% inflation target as a serious requirement binding on itself as well as the Bank. It needs to work in conjunction with the Bank to achieve it. The Treasury should have objected to the scale of quantitative easing being proposed last year when it went on for too long. It was a good response in 2020 to counter some of the damage of  lockdown.  It now needs to avoid increasing taxes at exactly the point where the Bank is tightening money and where the gas and oil markets are imposing a huge levy on consumers which is akin to a big tax rise. The economy will go from fast and inflationary growth to slowdown as a result of these important changes of direction. There is no need to overdo applying the brakes after a period of speeding.

The Treasury still promotes the idea that the Bank – and the OBR – are independent and that this guarantees good outcomes. As we can see, they are currently allowing or producing a bad outcome on inflation, which is way higher than their forecasts of a year ago. If they are independent and responsible then we should be asking why the big mistakes?  It is also a mistake that they are independent. The Bank requires  support in the form of a Treasury guarantee of its bloated balance sheet and needs Treasury approval for its main  money policy instruments. The OBR works just for the Treasury and clearly has a series of privileged conversations with Treasury officials before Budget leaving scope for each  to influence the other as they work on their parallel documents to be published simultaneously.