Clegg's tall tales won't boost growth
Fraser Nelson 9:15am
“The Deputy Prime Minister, Nick Clegg, will today announce proceeds from the
government growth fund which will protect or safeguard 200,000 jobs.” This sentence contains everything that’s wrong about this government’s schizophrenic approach to economic
recovery. Rather than cut taxes and let the economy grow, they increase tax — and then give people back a portion of the cash, expecting to be thanked as they do so. And, for good measure,
dropping in a spurious jobs number.
Nick Clegg was on the Today programme this morning, showcasing the phenomenon that retards so many economies: politicians seeking credit for giving one man’s money to another. He started off by announcing that he, Nick Clegg, had “created and overseen” the fund as if he was a Carnegie figure, doling out his millions to a grateful nation. Except to assemble this cash, he had to tax someone — now or (through debt) in the future. You can bet the Treasury doesn’t have figures for how many jobs are forfeited by extra spending, or debt (as far as I’m aware, only The Spectator has ever commissioned such an analysis — here).
The tragedy is that his analysis of the problem was correct. Under Labour, he said, “in large parts of the country, which for far too long were over-reliant on handouts from Whitehall, so job-creation was down to decision-makers in Whitehall rather than to communities themselves.” So, to remedy this, he’s giving out, erm, a big handout from Whitehall. He’s deciding which projects to allocate money to.
No wonder that so much confusion surrounds the government’s growth strategy. The government is sending out conflicting messages all the time. Osborne talks about tax cuts, while delivering tax increases. It says “there is no money left” while doubling the international aid budget. Clegg talks about the problem of the Man in Whitehall trying to direct regional economies, before going on to direct regional economies. In Vince Cable we have a Business Secretary who seems to regard his job as complaining about businesses. He is perhaps the only business secretary who disparages capitalism as a system which “takes no prisoners”.
No government can ‘create’ jobs. The best it can do is move jobs, from the private to the public sector. Or, via debt, from the future into the present. Its massive schemes are conducted with hardly any proper cost-benefit analysis. The UK government will soon be spending more on debt interest than education, defending the realm, transport, etc. How much will that retard future growth? How will it stymie Britain’s potential for recovery? You won’t find any government analysis into the longer-term employment effects of borrowing money. Far better to announce cash now, and make out that the money arrived down on a moonbeam. If you ask too many questions, you end up with answers like the Tullet Preborn report (pdf).
The most sensible, workable policy for growth I’ve seen is Adrian Beecroft report, leaked to the Telegraph last week, on deregulating British business. Luke Johnson, a writer who actually runs companies and creates jobs, wrote a persuasive piece about this in the FT on Saturday. The Beecroft proposals should be the acid test about whether this coalition government is serious about growth, and capable of producing policies to help it. Many (myself included) argue that we need to repatriate control over labour markets (or, in Clegg’s parlance, a “unilateral raid on Brussels' powers”) to deregulate and create more jobs. And yet, it’s by no means sure that this eminently sensible policy will make it through the coalition.
I leave CoffeeHousers with a thought: if the government can't even deregulate where we do have power to do so, what makes us think it would do so much better if it manages to get powers back from
Brussels? The real obstacles, I fear, may be far closer to home.
P.S. It was Clegg today, but could have been anyone announcing that X million of borrowed cash will create Y new jobs. This is the same delusion that is currently sinking the
Eurozone. Someone has to earn the money. Until that problem is confronted, we’ll get nowhere.



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Peter From Maidstone
October 31st, 2011 9:39am Report this commentAre there any guarantees that these jobs will be preserved for British people? Or will they simply be taken up by migrant workers? Indeed will we see a further input of 200,000 workers to fill these safeguarded jobs?
This Government cannot say that this will not happen. Indeed it is more than likely to happen.
Mike P
October 31st, 2011 9:41am Report this commentClegg trotted out the usual hyperbolic claim that three million jobs depend on our continued EU membership. Predictably this highly questionable assertion went completely unchallenged by Jim Naughtie. As Naughtie must know that a) we have a large trade imbalance with the EU and they would by mad to raise tariffs against us and b) they could not anyway, as 95% of our trade is under international agreements, this was a disgraceful performance, and one paid for by us, as well.
SimonH
October 31st, 2011 9:43am Report this commentSo Clegg's spent my £23,000 corporation tax payment. I would have much preffered to reinvest it in my buisiness!
Sally Chatterjee
October 31st, 2011 9:47am Report this commentIf he was a Liberal Clegg would be boasting about how many "non-jobs" he has culled from central and local government. Instead he is patronising us.
It's reminiscent of Gordon Brown. Clegg thinks he can create jobs. Money is never spent, it is "invested". And there's always a nice round number, not 192,451 jobs but 200,000.
Rhoda Klapp
October 31st, 2011 9:53am Report this commentFraser, writing some good stuff lately. Have you been let off the leash?
BEF
October 31st, 2011 9:58am Report this commentI fail to see how you can write a piece like this and yet hold the view that belonging to the EU is good for the national interest. The EU is full of unelected clones of Clegg and we will never be able to repatriate powers of any signficance.
Your final thought is a transparent, hopefully not disingenuous, attempt to sweep the main argument off the table by offering the counsel of despair that leaving the EU won't help because we can't even get our own house in order. The fact is that by remaining in the EU we have no chance of getting it in order, by leaving we would create a chance.
And will someone please tell Clegg that create has an e in it. That verbal tic he has of saying crate instead of create is almost as annoying as Blair's fake glottal stop.
TomTom
October 31st, 2011 10:05am Report this commentDid they really pledge £1000,000,000 to help the 1,000,000 young people unemployed find new opportunities at £19.23/week ?
Yet 12 TIMES as much is spent on foreign aid. Clearly Clegg is expressing his contempt for the public.....
Magnolia
October 31st, 2011 10:20am Report this commentA good critique.
Mr Clegg also said "My own view is that the EU is absolutely essential" and "3million jobs are dependent on EU markets".
He wants continuous reform of the EU by being at "the centre of the argument and not on the periphery".
But surely he's talking about the EU itself here and not the 'argument'?
He is deliberately using the 'argument' word to confuse us about his message of accepting all of the EU by being in it's 'centre'.
Does withdrawal from the EU cost 3million jobs?
How many jobs could be 'supported' by tax cuts using the money that we currently spend on the EU?
How many jobs could be created by having more free and open trade agreements with the rest of the world?
Mr Clegg also said that "our history of our country shows that we always do best if we are an open trading economy" and we "must not betray our own history by being isolationist".
He is confusing the desirability of general free trade and using it to push for a system of restricting trade by arguing that it means that we should be staying within a very defined and limited system of the EU trading block.
In short he uses free trade as an argument for restricted trade with the EU and he uses the argument for reform as a metaphor for staying in the EU without any change.
Mr Clegg might be confused or he might be trying to say one thing while really meaning another.
Vulture
October 31st, 2011 10:21am Report this commentAll three leading Lib Dems in the Govt - Clegg, Huhne and Cable, are economic cretins.
Shame that the only one who wasn't - Laws - had to leave because he was exposed as a crook.
strapworld
October 31st, 2011 10:28am Report this commentPerhaps people would benefit from reading Trevor Kavanagh's article this morning. The article and the accompanying cartoon are a compelling warning to David Cameron.
Clegg is never asked, especially this morning by the europhile BBC, when talking about the EU, 'Are you in receipt of an EU pension"? and 'Has your wife recently changed her job to one in which the EU is a prominent factor'? and the important one 'Do you not think you should be declaring an interest in the EU'?
WHEN will any journalist ask those questions?
David Cockerham
October 31st, 2011 10:28am Report this comment"...growth fund which will protect OR safeguard 200,000 jobs.” What is the difference between "protect" and "safeguard"? None at all - it's just another meaningless word uttered by Nick Clegg not for its meaning but for its pleasing tone, just like his utterly ludicrous suggestion that our priority should be to "lead" in the EU not leave it. Either he seriously believes that their is a cat-in-hell's chance of our leading in the EU from outside the eurozone while it heads for fiscal union - in which case God help us all for our Deputy Prime Minister is as thick as several short planks; or he believes we should join the eurozone and aim to lead the EU from inside it - in which case God help us all because our Deputy Prime Minister is .....; or he doesn't really know what the hell he believes - which is the likeliest and possibly scariest explanation of all.
strapworld
October 31st, 2011 10:29am Report this commentMagnolia, 10.20am ends an excellent post by asking "Mr Clegg might be confused or he might be trying to say one thing while really meaning another."
He is a Liberal Democrat!!
Jayu
October 31st, 2011 10:33am Report this comment@SimonH
Had it ever occurred to you that your £23000 may have gone some way to contribute towards the in work benefits the government has to pay, if not your workers then some other employer's, because they are not paid a living wage?
There are those like Fraser, who want to see a worsening of worker's conditions and pay. Who wilfully ignore the cost to the welfare budget. Or may be that is their next argument, 'there should be no in work benefits'.
Magnolia
October 31st, 2011 10:51am Report this comment@strapworld
You are absolutely right that Mr Clegg should have to declare his interests in this matter in the same way that any District Councillor would have to if they were financially or socially involved with a planning applicant when making their planning decision.
I suspect that some of Mr Clegg's confusion is unconscious and comes from his family and marital history.
According to Wikipedia, his mother was Dutch and his paternal grandmother was of Russian decent and he is married to a Spaniard.
This cosmopolitan background and upbringing, as well as Mr Clegg's pre MP employment, will all shape his intuitive feelings about our (ie. his) sense of identity.
He cannot have the same sense of instinctive patriotism and ideas about nationhood that someone whose antecedents were all from the same country would have.
He cannot help who he is but we should recognise that it is part of what makes him what he is.
Put simply, if Mr Clegg turns his back on the EU then he is turning his back on himself and that's enough to make anyone look sad or say silly things.
FvH
October 31st, 2011 10:53am Report this commentFraser - I wouldn't disagree with your basic premise that Clegg is engaged in cynical headline grabbing (and I'd also agree that tax cuts would stimulate some domestic demand) BUT isn't it depressing that nobody anywhere seriously imagines that the UK could significantly increase its export performance (and specifically its manufacturing output as a % of GDP)
The sad reality is that we are a declining post-industrial power and we had all better get used to it
Nicholas
October 31st, 2011 10:55am Report this commentSad day for Britain when this "liberal" slithered in to government with his mates Huhne the Green Evangelist and Cable the Communist.
Dennis Churchill
October 31st, 2011 10:57am Report this commentTaxes create a deadweight loss but what do you expect from a socialist government?
I am still waiting for one of these fearless interviewers to ask Clegg what would happen to his EU pension if he started to advocate the UK leaving the EU and does he think people might think that would influence his views.
Also nothing about the £30 odd billion a year trade deficit we run with the rest of the EU---that is a lot of jobs.
Publius
October 31st, 2011 11:13am Report this commentStrapworld writes:
"Clegg is never asked, especially this morning by the europhile BBC, when talking about the EU, 'Are you in receipt of an EU pension"? and 'Has your wife recently changed her job to one in which the EU is a prominent factor'? and the important one 'Do you not think you should be declaring an interest in the EU'?
WHEN will any journalist ask those questions?"
Thank you strapworld. This must be asked again and again and again.
If any other Minister were receieving conditional payments from a 3rd party - the condition being that he must promote the interests of the payer, then he'd be out on his ear.
John Stepson
October 31st, 2011 11:19am Report this commentI was in Derby at the weekend. The two major employers there are Rolls-Royce and Toyota. Both have received substantial amounts of taxpayers' money (from Conservative Governments, as I recall). Both have generated large sums in taxes to the UK Exchequer, and created prosperity throughout the region.
Yet the collective wisdom here is that Governments should simply deregulate, cut taxes and wash its hands of involvement in industry. I'm not convinced.
steve
October 31st, 2011 11:51am Report this commentThink i will have to read the spectator more offten by far the most honest piece of journalism i have read in some time
normanc
October 31st, 2011 11:57am Report this commentSo, government is going to subsidise 200k jobs @ £5k a job.
Three cheers for Clegg? Hip hip hooray?
Turning off our critical faculties let's naively accept this at face value for the moment.
What happens in a years time when this billion quid runs out? Doubtless the big spenders will tell us that the economy will have recovered and all these jobs will now be safeguarded. I put it that any that are would have been safeguarded anyway and the rest we're simply kicking the can down the road (that's one tough can - must be made of Adamantium) and in a years time we'll have x thousand unsustainable jobs requiring more government intervention.
If only Dave knew what Nick was getting up to, eh? He'd soon put a stop to this, it's a pity that Dave is kept in the dark and that all this waste and inefficiency is allowed to go on.
Minnie Ovens
October 31st, 2011 11:58am Report this commentA good article, Mr Nelson.
maringa
October 31st, 2011 11:59am Report this commentre Magnolia at 10:51
I am not convinced that Mr Clegg's nationalities excuse or explain his views on the EU. I have a Dutch father, an English mother and was born in Portugal. At various times in my life I have had British, Dutch, and Portugese nationality and I have worked in England, The Netherlands and Portugal. Despite (or perhaps because of) my pan-European background, I have absolutely no trouble considering myself to be English and being an unashamed Eurosceptic. I believe that actually knowing something about other European countires makes me more rather than less inclined to be Euro-sceptic as I understand how different even apparently similar countries like the English and Dutch are, how proud of their own individual nation's history they are, and how important a citizen's view of history is to his sense of nationhood and place.
Simon Stephenson.
October 31st, 2011 12:05pm Report this commentI'm finding it hard to work out which is the more unhelpful view of how the relationship between politicians and public should be:-
1. The modern, "progressive", Statist idea that in addition to discouraging the bad part of people, political authority is also an essential element of sparking off and directing the good in people. This is based on the fallacy that because there's an argument that society needs an authority to protect it from bad individuals, it also needs this authority to be proactive in organising people so that they do "good" things.
or
2. The laissez-faire approach starting to be championed by Fraser and many on these pages, that clawing back the interference of authority in seeking to promote good behaviour is inseparable from also clawing back on authority's responsibility to protect society in general from bad behaviour. There's an extremely dubious predicate to this line of argument - that in order for society in general to do well we have to allow the movers and shakers to behave badly, and anti-socially.
What I think we need to recognise is that there is a much better solution than either of these, but that this requires us to accept both the genius and the devil that is in all of us. It also requires us to accept that individuals can accumulate wealth without creating any of it, and that a great deal of modern money-making happens through this route. We need to recognise that the process of wealth ownership is corruptable, and that the last 20 years has seen an acceleration of this process of corruption, to the detriment of the parallel process of new wealth-creation.
Seeking to get the best out of society is certainly an enigma, but it's one that certainly won't be solved by assuming things about people that aren't true.
oldtimer
October 31st, 2011 12:31pm Report this commentSo long as the country is led by donkeys what do you expect?
On the declaration of interests, I notice that Mr Clegg is not obliged to declare his interest in his EU pension entitlements in the HoC register of interests. These, as I understand them, are conditional on him remaining supportive, and not critical, of the EU. Whenever he speaks up for the EU, should he not declare this interest? Apart from the national media drawing attention to this parallel, and potentially conflicting, interest should not an MP make the same point when Mr Clegg next speaks on EU matters in the HoC?
Sir Everard Digby
October 31st, 2011 12:52pm Report this commentIf all politicians did was talk, I could handle that;sadly they keep trying to do things and not one of them has the slightest clue how to deliver anything. No problem though,as they can always pretend they did.
Blair,Brown,Milliband,Cameron,Clegg,Osborne -all lived or are living in a fantasy world; the more they talk,the more they spend,the better things will get.
The reality is somewhat different.
daniel maris
October 31st, 2011 12:59pm Report this comment"No government can ‘create’ jobs."
I've never heard such nonsense in all my life. Why is the job of a soldier any less valuable than that of a lathe operator?
If you mean that a public sector job necessarily, involves taxation, well again that is completely wrong. All around the world there are profitable state enterprises that make no call on the taxpayer. Plenty of those are in the Far East.
The state can be an enabler and a player as well as a freeloader.
Hexhamgeezer
October 31st, 2011 1:29pm Report this commentGovt intervention seems somewhat different Up North than Eurobot Clegg wants to portray.
Companies are getting EU money (i.e ours) to relocate to the East.
Carbon taxes are encouraging high energy users (like smelters and chemical plants) to close or relocate to countries where producing carbon is just fine.
Winkers
Hexhamgeezer
October 31st, 2011 1:46pm Report this commentGood idea putting a screenshot from Hellraiser up seeing as it's Halloween
Boyders
October 31st, 2011 2:48pm Report this commentThank you. A brilliant critique of the current wrong thinking.
Several small businesses in our locality have had their overdrafts called in by RBS. The result is that they have had to close, with the loss of livelihoods for many people.
The result is more benefit payments. No further tax revenues from the businesses or their employees.
How much easier would it be if they were given lower tax rates to help them through a difficult time.
Cut taxes, increase your tax revenue.
The banks are wilfully losing customers because they are scared of default and would prefer to close down their customers whilst they still have assets.
Cut taxes please, before it is too late.
michael
October 31st, 2011 3:15pm Report this commentRobbing Peter to pay Paul in an age of redistribution is the way of it: Except that the cost of the transaction dumbfounds Peter and makes Paul feel even more indisposed towards those who really cop the extra.
Which in turn puts upward pressure on ever increasing rewards for those now flocking to champion Paul. Having milked Peter to the point of pointlessness, the re-distributors start accounting receipts with all the guile of the most skilful prestidigitator.
Budgets obliterated, bankruptcy upon them,
Finally the finality begotten from the force of financial common sense?
.... Yea right
- merely "A solvency issue".
The Liberal elite have such vision.
Vettekulla
October 31st, 2011 3:20pm Report this commentCameron's government appears to be morphing into a Brown administration.
BenM
October 31st, 2011 3:35pm Report this comment"No government can create jobs".
But you were just whining about the ones they did create in deprived areas!
Make your mind up.
Oh, and Western democratic government is reposnible for creation - and destruction too just look at Osborne's growing failure - of millions of jobs.
Stop being so ideologically blinkered.
porkbelly
October 31st, 2011 3:44pm Report this commentIt is obvious that Clegg, rather than tugging the Conservative leadership unwillingly towards European-style statism is actually creating the political space for Cameron to express his inner Rompuy. Without the excuse of the coalition Dave would have a much harder time of it with his own party.
London Calling
October 31st, 2011 4:17pm Report this commentThe Problem with Clegg is “He’s deciding which projects to allocate money to.”
He’s so EU…The Bisto kid...
Robert Johnson
October 31st, 2011 4:20pm Report this commentWhen he's "crated" these jobs where's he gonna send 'em? Surely communication is part of his job? Clegg can't speak English adequately and Cameron thinks Britain "invented DNA". What a pair of public school morons. Still, no bar to getting on, eh?
TrevorsDen
October 31st, 2011 5:05pm Report this commentGrowth is not going to cut the structural deficit.
We had growth under Brown and we increased the debt, ie we still ran deficits.
thats because spending was too high.
The gov had a choice to cut the deficit by all spending cuts - it chose for a variety of reasons to split this 80-20 cuts to tax rises.
Cutting taxes now will not cut the structural deficit - it will just raise the structural deficit.
Growth is slow because our economy was shellacked by Brown and the rest of the world is also in depression.
The money is a sticking plaster but the govt has to show it knows and cares where the first aid box is.
TGF UKIP
October 31st, 2011 7:01pm Report this commentStrapworld 10.28 am, thanks for the reference, an excellent piece by the never less than excellent Trevor Kavanagh. Just a pity he's there and not here.
I share your view on the Clegg EU pension and suspect there may well be other EU benefits he collects. I'm afraid though I suspect that along with sexual pecadilloes, this will be a subject viewed as being too personal and delicate to be raised by any of those of his fellow villagers who masquerade as journalists.
The other puzzle though is why it has not been raised by any of the Magnificent 81, especially when if the boot was on the other foot, LibDem backbenchers would be all over it.
As it will embarrass Heath2 as well as Clegg, perhaps Nadine will take the opportunity and get some of her own back and raise the matter at PMQs.
Which brings me to Rhoda at 9.53. I wouldn't raise your hopes too much Rhoda, our lad may have improved but is still a long way short of really facing up to how much of a mess the Tories are in and who got them there. Who knows, though, if the improvement continues he may yet get to become as objective and as trenchant as his namesake used to be at the NoW.
Incidentally, Fraser, now you're taking the brothers' other shilling, does that mean that the prospects of a Sunday Sun any time soon have evaporated?
Simon Stephenson.
October 31st, 2011 8:00pm Report this commentTGF UKIP : 7.01pm
Presumably by "the never less than excellent Trevor Kavanagh" you mean the same Trevor Kavanagh who in 2001 wrote this piece of fawning praise for Gordon Brown, during the period when The Sun calculated it would sell more papers by acting as propagandists for Labour than it would by assessing them and their policies on their merits?
http://www.thesun.co.uk/sol/homepage/news/143178/Thank-Gord-for-Brown.html
Although the piece isn't identified as being written by Kavanagh, I can assure you that it was so identified when I first included it in a comment to this post in 2009:-
http://www.spectator.co.uk/essays/all/5317216/the-new-politics-of-decline.thtml
Cynic
October 31st, 2011 8:38pm Report this commentLeaving aside the question whether the government can create real, as opposed to non-, jobs, where is the money coming from to provide "the government growth fund which will protect or safeguard 200,000 jobs"? I suggest we start with our tribute to the EU (which has just awarded itself an eye-watering near 6% increase in contributions).
Heartless P.
October 31st, 2011 8:58pm Report this commentRather than cut taxes and let the economy grow, they increase tax — and then give people back a portion of the cash, expecting to be thanked as they do so.
Taken straight from the Brown Book of Barmy Business I presume?
TomTom
November 1st, 2011 3:08am Report this comment"whether the government can create real, as opposed to non-, jobs,"
It did create the largest industrial company ICI by protective legislation against IG Farben in 1926 but it was Hanson and The City that dismembered it/
It did ORDER Rolls-Royce to enter the aero engine business in WWI when Renault and Mercedes were leaders.
It did pay for the Rolls-Royce factory in Crewe in 1936 when Chamberlain started investing in Shadow Factories
Verity
November 6th, 2011 2:42pm Report this commentGod, he's ghastly. I'm tempted to say he's worse than Cameron, but they're pretty much a pair of clones.
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