The spring statement might not be the hero-to-zero moment Rishi Sunak expects

Vince Cable was warning about excessive consumer debt years before anyone else tumbled to the problem. In November 2003 he challenged the then-chancellor Gordon Brown about “the brutal truth” that “the growth of the British economy is sustained by consumer spending pinned against record levels of personal debt, which is secured, if at all, against house prices that the Bank of England describes as well above equilibrium level”.

As a result he gained “economic guru” status, though this has been frequently challenged. Owl, certainly, would be critical of the central role he played in introducing Local Enterprise Partnerships.

Here is his view tomorrow’s (Wednesday) Spring Statement:

Vince Cable www.independent.co.uk

Most politicians encounter a hero-to-zero moment (I speak from experience). I suspect Rishi Sunak may be bracing himself for one now, as he approaches Wednesday’s spring statement. But he should not lose hope.

Even before the Russians invaded Ukraine, the outlook was uncomfortable: 5 per cent consumer inflation; a big rise in the energy price cap; a rise in National Insurance to pay for spending on the NHS and care. The latest YouGov survey of 6,000 households shows consumer confidence to be at its lowest level since records began over a decade ago.

The war makes that outlook even worse. There is much uncertainty about how much further punitive measures against Russia may go but supply disruptions and sanctions amount to a big global tax on oil and gas, cereals, fertilisers and several key metals. The effect will be to aggravate “stagflation”: pushing up costs and prices while simultaneously depressing demand.

The geo-political earthquake in Ukraine will generate an economic tsunami, sweeping away comforts and orthodoxies with which we have become familiar in recent decades. We don’t yet know the height of the waves, but we know they are on their way.

The era of low interest rates is first to go. Central Banks, including our Bank of England, are getting alarmed about inflation and moving to higher rates, which further depresses consumer demand and investment. Despite rate rises, some forecasters believe the UK could hit 10 per cent inflation by the end of the year and be in recession.

Given chronic uncertainty, and his very public commitment not to undermine the public finances, there is a strong temptation for Mr Sunak to do as little as possible. But then he runs the risk of doing too little, too late, since tax and spend measures operate with a time lag. The tax tap takes a long time to run hot; the spending tap takes a long time to shut off. He is also in a stronger position to be generous than he might appear, with government borrowing running £25billion below expected levels.

The Chancellor will make a lot of the rising interest cost of servicing government debt as a justification for not doing more to cut taxes or increase spending. That would however be a poor excuse. Only about a fifth of government debt is linked to inflation, and the costs of new borrowing are negative in real terms. The level of government debt to GDP is expected to be shown in the budget statement as falling and is not high in historical terms, against the background of war and pandemic.

Sunak’s guilty secret is that higher inflation will actually help the Treasury in budgetary terms. Income tax is set to rise because tax thresholds are being eroded in value by rising prices: so-called “fiscal drag”. And public spending is squeezed in real terms because departmental spending has been fixed in cash terms over several years. Inflation tax is a big earner.

For that reason, I would expect the Chancellor to make some crowd-pleasing gestures after all. There are strong but competing demands to ease the pain of the current “cost of living crisis”. The best option is to concentrate resources on low-income households who are the main sufferers from high domestic energy and food costs. The most obvious step would be to increase universal credit (and pensions) beyond the 3.1 per cent uplift currently planned. The OECD has urged its members, including Britain, to use their “fiscal firepower” to protect the poorest in society, helping them pay their bills for essentials.

A more politically-popular measure with Conservative MPs would be to cut fuel duty. In remote and rural areas without public transport, there is a real issue. But a policy which provides the biggest help to motorists with gas-guzzlers flies in the face of environmental commitments. The same could be said of a cut in the 5 per cent VAT rate on energy – though it would directly help fuel-poor households with gas and electricity bills.

Meanwhile, although an across-the-board cut in VAT tends to benefit big spenders most, it has both political and economic appeal. Taking VAT temporarily down to 17.5 per cent would be simultaneously disinflationary (slowing the rate of inflation) and reflationary (stimulating spending), offsetting stagflation directly.

The Chancellor will also be expected to boost defence spending and ease the pain of energy intensive industries. And, although he is not relenting on his ill-advised increase in National Insurance rates, he could soften the impact on low earners by lifting the NIC threshold (perhaps with a simultaneous increase in the “cap” at which higher earners stop making NI contributions).

Finally, there are some tax increases which would be popular – not least taxing windfall profits from North Sea oil, despite the risk of suppressing investment in increased production and domestic energy security.

By combining tax hikes on the corporate bogeymen with some spending on a hard-pressed public, Mr Sunak may not hold on to his “hero” status, but he could prove he has some way to go before reaching zero.

Sir Vince Cable’s podcast, Cable Comments with Vince Cable, is available here

Plymouth replaces one Conservative Leader for another

Plymouth changes its Leader ahead of the May when one third of the seats come up for election.

Currently neither of the major parties have overall control.

Richard Bingley replaces Nick Kelly as new council leader

Carl Eve www.plymouthherald.co.uk

Plymouth City Council has elected Cllr Richard Bingley as its new leader after Cllr Nick Kelly lost a vote of no confidence. Cllr Kelly, a Conservative for the Compton ward, had been leader of the council since the Conservative group won the largest number of seats in the May 2021 elections.

But his position became less secure after several resignations and suspensions, meaning the Tories had the same number of councillors as the Labour group. Cllr Kelly’s annual budget included a 1.74 per cent council tax increase, but he failed to get it approved after Labour brought an amendment to freeze council tax for the next financial year – other than the one pre cent ring-fenced for adult social care.

Labour launched a vote of no confidence in his leadership, which has now passed with 29 votes for, one absention, and 23 against. Speaking after the vote, he offered his thanks to people including Lord Mayor Terri Beer and other council staff, and described it as an “honour and a privilege” to become leader.

Cllr Bingley and Cllr Vivien Pengelly [both Conservatives – Owl] were proposed as new leaders and in a vote Cllr Bingley won 26 votes, Cllr Pengelly won 12, and there were 15 abstentions. Cllr Bingley is a Conservative and represents the Southway Ward on Plymouth City Council. He is currently chair of Brexit, Infrastructure and Legislative Change. In April last year, just before elections, he was described by his party.

Who is new leader Cllr Richard Bingley?

They said: “Richard is an education and training director, living and working in Plymouth. In Southway, he recognises the urgent need to improve the basics, as the ward’s roads are in disrepair, fly-tipping hotspots are left neglected, green space and play areas are becoming less well maintained.

“Richard has leadership experience – in the government, higher education and security sectors and will use these skills to proactively promote Southway as a place to live, work and invest. Richard will offer a strong voice for all residents living across Tamerton, Southway, Widewell and Belliver.” He also has a number of business interests.

His register of interest lists the following: UK Global Cyber Academy LTD, City Security & Resilience Networks LTD, Saveourstatues.org.uk, Security Consultants Handbook – book sales, and ad hoc consultancy work.

Related to this work, earlier this month he wrote an article for the Express website saying that the Kremlin is trying to control people using social media. You can read it here. In November 2021 he reacted angrily at a debate over speed limits on the A38, adding: “None of us want to see fatalities on the A38 or any other road so to pretend otherwise is distasteful.

The worst debate that we have had since I have been elected to this place.”

What was Susan Davy’s, Pennon Chief Executive, bonus in 2020/21?

In yesterday’s post “Sewage: you should take personal responsibility”, Radio Exe claimed that Susan Davy received a bonus of more than £370,000, on top of her £475,000 base salary.

As previously reported by Owl, The Times quoted a substantially higher bonus figure of £1.2 million:

Water bosses’ pay and bonuses in 2020-21 from www.thetimes.co.uk 

• Susan Davy, chief executive of Pennon, the parent company of South West Water, was paid £1.7 million, including £1.2 million in bonuses

• Steve Mogford, the chief executive of United Utilities, was paid £2.9 million, including £2 million in bonuses.

• Liv Garfield, the chief executive of Severn Trent Water, was paid £2.8 million, including £1.9 million in bonuses

• Sarah Bentley, the chief executive of Thames Water, was paid £1.2 million, including a £273,000 bonus.

• Ian McAulay, the chief executive of Southern Water, was paid £1 million, including £550,000 in bonuses.

Water quality: a Correspondent takes “Responsibility”

From a correspondent:

A South West Water story about “taking personal responsibility ” …

Suddenly, after many years in my home with clean water, dirty black marks on shower head and toilet rim and little, black “worm like things” coming out of all basin taps.  Ugh!  Reported to SWW.

South West Water say it is “biofilm” – a completely harmless interaction of substances inside water pipe and my job to keep it at bay – bleach, etc.  They even sent me a leaflet telling me what to do, which I did, but it didn’t stop.

Refused to accept this and, after pressure my tap water was tested.  Same response from SWW – clear, harmless “biofilm” and my responsibility.

Pointed out an area just behind my home (miles from a water course and on top of a hill) covered in pondweed and always wet and suggested there might be a leak – no response.

I found a university which specialised in biofilm research – yes, it is kind-of harmless ON ITS OWN BUT known to attract bugs and bacteria – including e coli and other nasties.  Remember, I was told I could brush my teeth in this stuff …

A few weeks later, without warning, a repair team turned up and did a “running” repair to the water main (ie water not turned off so no-one needed to be informed).

Since then:

no black stuff in water or toilet

showerhead clean

no “worms”

water pressure has improved enormously

pondweed outside drying up and being replaced by grass and normal weeds

Yep, I took MY responsibility … 

New rent-a-beach hut scheme at Budleigh

This summer, you can rent a beach hut at Budleigh Salterton. 

Adam Manning www.exmouthjournal.co.uk 

Running from April 1, until October 23, the new scheme by East Devon District Council includes five large huts and seven small ones. The new huts were put in place last week, replacing the broken structures from last season. 

EDDC Budleigh and Raleigh ward Councillor Paul Jarvis said: “This can only be a step forward in sharing our wonderful resources. Both locals and visitors can both enjoy the use of the huts, giving them all a truly unique Budleigh experience.”

Cllr for Budleigh, Tom Wright, added: “It will be wonderful to be able to offer these bright new beach huts. After two dreadful years an omen of things to come.”

A small beach hut for a day will cost £35 and £110 for the week. A large hut for the day will cost £40 and £120 for a week.

To hire a hut or make inquiries about availability, contact Budleigh Information Centre on 01395 445275 , email info@visitbudleigh.com or use the booking inquiry form on www.lovebudleigh.co.uk  or www.visitbudleigh.com

Teignmouth Hospital set to close

“Torbay and South Devon NHS Foundation Trust is committed to continuing to engage with local people on both the development of the planned new health and wellbeing centre and the future of Teignmouth Community Hospital.”

“Committed to continuing to engage” this buzz phrase says it all – Owl

Ollie Heptinstall www.devonlive.com 

The first purpose-built NHS hospital looks set to close after a review dismissed concerns about consultation over the plans. An independent panel found the NHS consulted ‘adequately’ with councillors over the future of Teignmouth Hospital.

The community hospital on Mill Lane was the first to be built by the NHS in 1954 but is planned to close, with services moving to Dawlish Hospital and a new £8 million health centre in Teignmouth town centre. Doubts about the hospital’s future were first raised in 2014, and campaigners have argued against the closure decision made by NHS Devon. They say community hospital beds are “desperately needed,” and a petition titled ‘Hands Off Teignmouth Hospital’ has been supported by more than 1,000 people.

Last March, the county council’s health and care scrutiny committee reconsidered the NHS Devon Clinical Commissioning Group’s plans and decided they were unhappy with the lack of consultation over the future of the site. After referring the issue to the health secretary, it was announced in November that Sajid Javid had agreed to the request and plans to close the hospital would be reviewed by a panel of independent experts – the IRP.

The panel has now ruled that the CCG’s consultation with the committee was “adequate,” paving the way for the closure to go ahead. But it did warn there are “lessons to be learned for both parties, particularly around engagement with scrutiny committee members to resolve issues and agree reasonable timescales for discussion before a final decision on a proposal is made.”

The CCG said during its consultation process that the hospital site would be “likely to be sold to generate funds for reinvestment in the NHS”. But it has since told the panel that any decisions are for owner Torbay and South Devon NHS Foundation Trust to make.

Despite complaints from the committee, the panel’s report ruled: “…the future of Teignmouth Community Hospital under the proposal has been in plain sight for everyone and open for discussion with the NHS since 2018.”

However, it went on to say: “With hindsight, and given the sensitivities around this, the panel feels that the CCG perhaps could have been more explicit in its communication with the public about how they would be involved in determining the hospital’s future, should the proposal be implemented. In this regard, for example, the public consultation document was a missed opportunity.”

The NHS must also “engage the local community and interested parties, such as the local authority, in a programme to determine the future” of the site, it added, drawing on the example of nearby Dartmouth where the former cottage hospital could be taken over by the community.

Despite concerns about 12 rehabilitation beds not reopening, especially during Covid to help with capacity, the view of the experts was that: “…opening beds at Teignmouth Community Hospital is not a viable option to consider for providing additional COVID-19 capacity in the future.”

The report also concluded that the plans would not disadvantage groups with protected characteristics but agreed there are “still some legitimate concerns” around public transport and called for a group of stakeholders to work on the issues. In addition, it recommends the NHS “keeps its scenario planning and risk analysis of bed and workforce capacity under close review” following the pandemic, and that mental health services are included in the care model for the Health and Wellbeing Centre in Teignmouth.

Responding to the findings in a statement, MP Anne Marie Morris said the decision “is not one I welcome.” She added: “I remain very concerned that this decision is not in the best interests of Teignmouth residents given the lack of evidence that, following Covid, our local health system will have the capacity it needs, and lack of any evidence as to the adequacy of home-based care which it is argued satisfactorily replaces it.”

Ms Morris went on to say the panel had made “a number of helpful recommendations to ensure the community is fully involved in the future of the Teignmouth Hospital site. “For me that has to mean full consideration is given to options of including the site in some form in the ongoing provision of care in the Teignmouth community,” she added

Although there can be a judicial review of the process undertaken by the panel in the High Court, Ms Morris said it is “eye-wateringly costly and without a good case to show that the IRP process was flawed, could not succeed.” In the report, the panel says it “acknowledges the CCG’s evidence on reducing hospital admissions and that the integrated care model is able to care for around four times as many patients at home when compared to caring for patients on a ward at Teignmouth Community Hospital.”

Ms Morris added: “My priority now must be not only to ensure the recommendations proposed are taken up but to hold the CCG to account for what it says it can and will deliver to the residents of Teignmouth and I will be asking Healthwatch and Devon County Council to undertake full scrutiny of the quality and adequacy of home-based care.”

She commended the “tireless determination of the local Teignmouth community, the League of Friends of Teignmouth Hospital and the many other groups who have lobbied hard in our fight to save the hospital and ensure the provision of excellent healthcare in Teignmouth and more widely in Teignbridge.

“I would also praise Devon County Council’s health and care scrutiny committee for calling this in to the Secretary of State and recognising the deficiencies in the process. I have little doubt but that they will work with the Teignmouth community and the NHS to ensure these recommendations are implemented in full.”

In response to the findings, Dr David Greenwell, clinical representative for the southern locality on the governing body of NHS Devon CCG, said: “We are pleased that the Independent Reconfiguration Panel found that the CCG has fulfilled its responsibilities and we accept the additional recommendations made by the panel.

“The IRP noted that the CCG has carried out extensive engagement and consultation since 2013, and found that the future of Teignmouth Community Hospital under the proposal had been in plain sight for everyone and open for discussion with the NHS since 2018.

“We believe this is the right outcome for the future of health and care services in Teignmouth and Dawlish and we will now continue our focus on investing in a new health and wellbeing centre in the heart of the town.

“Torbay and South Devon NHS Foundation Trust is committed to continuing to engage with local people on both the development of the planned new health and wellbeing centre and the future of Teignmouth Community Hospital.”