So why is UK growth so sluggish?

Well, that is a whole matter of debate, but what I can say is this: Birmingham is no longer quite the industrial hub it once was.

The problem is this: A lot of our industrial output, like cars particularly (but not exclusively) Nissan (capacity 340,00 cars per year), Honda (250,000 per year) and Toyota (137,000 per year) are reliant on parts made in Japan. UK manufacturers have also been affected as they are also reliant upon Japanese imports which have been cut short by the tsunami. In short, 0.2% growth is fantastic under the circumstances.

Now lets get back to the phrase "under the circumstances". It's actually quite important. Making cars in the UK is quite cheap particularly if you only have to deal with one union but making components here is less so when you have to deal with the tax office who want you to write off plant long after you have had to scrap it because it is cost-efficient. This is something for which the whining Ed Balls was responsible when he was telling Gordon what to do, but it was also the case before Labour got into power in 1997.

The boss of Nissan UK thinks he wants to buy more parts in the UK. Good. Get that past the Treasury and we are in a win win situation.

Meanwhile, Japan is recovering from the tsunami and so will our production. Growth next quarter will be 0.6 to 0.9% of GDP which will make Ed Balls look a bit silly.

That said, looking at tax rules on plant would seriously help in growth without being too costly.

The BBC has this.

Labour promises 100,000 new teachers?

I heard this on a BBC Radio 4 on Friday, but could find no written information on it, but today the Daily Telegraph steps in.

In its article it suggest that Labour and in particular, Gordon Brown will try and spend his way back to number 10.

So, what about 100,000 new teachers? What will they do? Well apparently they are a part of a child's right to learn. So if they are not getting on well enough in English or Maths they get one to one tuition.

What will 100,000 teachers cost?

Well, if they cost £20,000 each a year that's £2 billion. If, as is likely they cost £30,000 a year (take into account paying them, employers national insurance, desk space and admin fees and that is a conservative estimate) then that makes £3 billion a year.

Where is this money supposed to come from? £3 billion, in terms of the amounts that has been thrown away by New labour over the years may seem like small beer, but it is still £3 billion that would need to be borrowed or printed by the Bank of England.

However, I personally doubt the veracity of the claim or its ability to achieve anything useful. For a start it looks like they are going to claim it is a right, which means only switched on parents will claim it, and those will have more successful children, and so the cost will be less.

Then again the idea is not wrong in itself. Had it been carefully proposed a number of years ago you could make a great tax saving case for it, but only if it was not a right of the pupil, but the duty of the state. (How are we going to work that out?)

Prisons are full to bursting with the thick, mentally ill and unemployable. If you could treat the failed education system, then surely that would reduce the cost of the prison estate and hey presto the scheme would over time pay for itself. However as we are talking about New Labour education, A level history students appear not to know what a despotic tyranny is, so it is somewhat doubtful what 1,000,000 new teachers would be able to achieve.

The Sun has not received Tom Watson´s writ!

Tom Watson, the rather unpleasant minister who sits with Gordon Brown in number 10, also known as ¨two dinners¨ has been rumoured to have put pressure on the BBC, and possibly others, lest they try to link him to Derek Draper and Damian McBride´s part in smeargate.

You can read Iain Dale here and Guido here on that.

Apparently the Sun has not had the word from Tom Watson´s lawyers (no doubt paid for by us) and have run this piece.

Good hit from the Sun.

I may have earlier led readers to believe that Gordon Brown apologised for the email smear campaign. It turns out he hasn´t at all. See Iain Dale here.

Gordon Brown tries to spin his way out of this mess

I hear that Gordon Brown is to write a personal apology to all those smeared in Damian McBride´s emails. Good.

He is however trying to spin his way out of this mess by saying that he will have the code of conduct under which SpAds (special advisers) operate tightened. Whoopy do. They are tight enough already and McBride broke them. The promise is clearly an attempt to divert attention away from the smearing ways of Number 10.

For those of you who thought Tony Blair´s spin operation was bad, they have never been a match for Gordon Brown´s. His henchmen have been dealing with his rivals by smear tactics for years.

The BBC has this.

Were Derek Draper and Damian McBride lying?

Daft question I know, but Nadine Dorris has been on the BBC and GMTV pointing out that the smears against her have been put to her by national newspapers. The implication is that they have already spread, possibly from either Derek Draper or Damian McBride. If so their position that those emails never saw the light of day is a lie.

The other curious thing is the way that people who normally support Labour do actually blame the malevolent Gordon Brown. See Jackie Ashley in the Guardian here talking about Gordon Brown´s vicious side.

The laughable thing is hearing Alan Johnson saying it was not Gordon Brown´s fault. Yeah right. Gordon Brown´s right hand man is doing dirty things for his master, and Gordon not only did not know (not particularly credible) but did not create the atmosphere in which this happened. Clearly Jackie must think that is as much rubbish as I do.

Guido has this, the BBC has this.

Damian McBride resigns

His ungracious resignation statement is here.

Curiously he blames Guido for putting these stories into the public domain, and that he and Derek Draper never would have done so.

Thing is, though, no one believes that, partly because some of these stories did get out, before Guido revealed McBride´s fingerprints all over them.

What you can be certain of though, is that the News of the World has some damming stuff to run with tomorrow or else he would not have gone.

Good riddance to bad rubbish.

Guido has this, this and this, Iain Dale has this, this and this.

The BBC has this.

Derek Draper, a demented man from a demented party!

Thus far, I have not commented on Derek Draper, and frankly the man is not worth spit, so I don´t know why I am now.

I listened to his comments on the Daily politics with Guido, (See the crown blogspot here) and he clearly does not get the Internet at all, in any way shape many or form.

The man is a pratt.

If you listen to the ¨round 1¨ of the interview you will here Guido challenging Derek ¨plonker¨ Draper over his funding and links to the Labour party. Of Labourlists funding,he said it was transparent, and a list of donors was published annually, and no he did not get funds from the Labour party. When pressed he did say he had union money, but insisted that people could look at the published list published annually... except of course that Labourlist has not been around for long enough to publish such a list yet.

So in the same sort of spinning that has it that Derek has a qualification in psychology from Berkeley* he then attacked Guido for his funding. As Guido had no money, where did he get the money to set up his blog, he must be in someones pocket!

Well, this just shows how ignorant Derek is. Guido´s blog, and indeed Iain Dale´s and mine cost nothing to set up. Not a penny other than my time. You see, the problem is that Derek just does not get the Internet at all.

*That assumes he has any qualifications at all in anything. If Derek Draper seeks to do work for you perhaps you should ask to see the qualifications he claims to have, and then go and check with the institution the paper claims issued them. He certainly did not study at Berkeley campus of the University of California. Guido has this.

Ken Clarke on inheritance tax

Apparently Ken Clarke has said, on national TV that perhaps raising the inheritance tax limit to £1,000,000 may not now be the priority it was because Labour have so trashed the public finances.

Fair comment, I say. I agree. I suspect a lot of people may have said the thing. The only problem is that Ken Clarke is in the shadow cabinet so should not have said it. It leaves the way open for attacks from Labour, and surprise surprise that is what has happened. It also has to be said that he need have said nothing now, after all it is not his brief.

Mind you I am amused that Lord Mandelson has piped up claiming that ¨the Tories are confused on tax¨.

Not something you could accuse Labour of, they know exactly what they want to do on tax, hence the 10p tax fiasco, which is to tax everyone until the pips squeak and the economy is bust.

The BBC has this.

The "do nothing" Conservatives!

Every time some one from the government pops up on TV or Radio, they compare their "action" to the "do nothing" Conservatives. This is of course a plain lie, and from time to time they are getting picked up on it, as well as pieces to camera by the likes of Nick Robinson pointing out what the Conservatives would do.

For example:

Bank recapitalisation, David Cameron suggested it first.

A "golden Hello" for employers who take on anyone who has been unemployed for a while. (As Guido points out here, they were slagging that policy off last month).

A government backed loan guarantee scheme for small businesses.

There are more, but what is interesting about the above three examples of what a Conservative government would do is that they have subsequently become government policy.

So the accusation of "do nothing" is just plain ridiculous. That said James Purnell did get hot under the collar on yesterday's Today program when it was pointed out that the latest government scheme was one nicked wholesale from the Conservative party. He blustered that despite this, the Conservatives were "do nothing" because they (that is us, the Conservative party) would fund these schemes in other ways other than borrowing like there is no tomorrow.

However, I would rather have a "do nothing" government than one which went around doing the wrong things.

Imagine for example your house is on fire. Everyone is thankfully out, but you need the fire put out. Someone turns up who claims to be from the fire brigade and starts taking ten pound notes from you and throwing them on the fire to put it out.

Would you rather do that than nothing? After all, if you just let the fire burn out then you will at least have some money to rebuild if you have not thrown it all on the fire.

The problem we have of course is one of failure to diagnose the problem and then deal with it rather than deal with problems we have not got.

This causes problems as well. Taking as an example a car (at least an old fashioned one) if it will not start but does turn over then generally either you have no spark or a fuel problem. If you have no fuel getting through and start looking to see if you have a spark that's fine. If on the other hand you do have lots of fuel getting through and keep turning the engine over you just flood it, and then it will not start at all for ages. You need to diagnose the problem, or else you will make it worse.

What is curious about the current economic climate is that there is broad agreement on what the problem is, which is the credit crunch, as in the lack of availability of money. It mystifies me that as a result people want to reduce the cost of borrowing money, which is not a big problem, when in fact it will make the real problem worse, which is the lack of money. If you were not prepared to lend at say 4%, why would asking you to lend at 1.5% make you more amenable? The answer is that it will not.

Had interest rates been higher earlier to stave off the housing boom, and/or reduced earlier to stave off the credit crunch all would be well, the credit crunch may well not have happened, and confidence would abound. Alas we are where we are now, and it would help if people dealt with the problems that we do have not try and avoid driving into the ditch we are already in.

The BBC has this.

Labour's Big Inheritance Tax Con!

It is not just me who has spotted this.

The "tax break" such as it is applies only to married couples or civil partnerships.

The situation is this, if you die without a will, the estate gets divied up, so much to the spouse, up to £125,000 if I remember correctly and then so much to children etc.

If the value of the estate is high, then there is an inheritance tax bill.

However, most people in this position take out a will, and if the intent is to pass it to the spouse that is tax free.

So there is no tax giveaway in any practical sense at all.

Fraser Nelson has this on the Spectator Coffee House Blog, linking to this more technical explanation by KPMG here.

Hat tip to ChrisD on politicalbetting.com for the link.

Inheritance taxes cut for couples?

Apparently one of the chancellors wheezes in the pre budget report to announce a doubling of the inheritance tax threshold for couples,

Does he mean married couples who pay no inheritance tax when one spouse dies?

Wow.

How generous!

Unless of course he means couples who are neither married or in a civil partnership.

The BBC has this.

Spin is dead! Long Live Spin!

I have to say I was impressed with Gordon "bottler" Brown's promise to end spin when he came to power, and more crucially to announce to parliament before the press.

I thought it was brave.

And a hostage to fortune...

Because I knew he just could not keep to it.

And so it has come to pass. We had the Iraq announcement last week roundly rebuffed and derided in the media as it was both during another party's conference, and not to parliament as he had explicitly promised.

Well today we expect the Pre Budget Report. Well, we do now, it was going to be next week, but an election was going to be announced just afterwards, so it had to be brought forward, but Brown bottled it so could have moved it back but I digress.

This will of course be announced to parliament first, except of course that several papers have had some form of advance notice.

We have this in the FT, this in the Guardian on closing loopholes for private equity, and surprise surprise, a tax on non doms! (No I am not surprised either) whilst the Telegraph had this on Saturday about what may be in the small print on council tax going up lots to cover yet more spending on the NHS, despite the fact that Labour seem to have wasted much of what they have spent already.

There was of course a time when a Chancellor would have to resign if this sort of detail of a budget or report were leaked before hand, but not apparently in the spin free era of spin free spinning New Labour.

Gordon Brown trying to spin that he is not a spinner?

I have not been able to catch Gordon Brown's press conference, but have read Iain Dale here, Dizzy thinks here, and Guido here.

I have to laugh at the way Gordon is somehow trying to insist that he is not a spinner!

The fact is he has been caught out, and that is that!

So why are civil servants doing political work?

Well, you will no doubt have heard that George Osbourne has announced to planned tax cuts, by raising the threshold for the tax on death, otherwise known as inheritance tax to £1 million, whilst also eliminating stamp duty for first time buyers for houses up to £250,000.

These adjustments will cost around £3.5 billion, or 0.7% of the total size of the state. In terms of ordinary people, think of taking home say £20,000 in which case we are talking about a budget change of £140.

Now this is to be funded by changing the rules for non domiciled tax payers. These are people who mostly live here but are resident abroad for tax purposes. They have to go through quite a few hoops to get that status, so presumably it makes sense to do so.

The Conservative party will levy a fee for this status of £25,000 per year. We estimate that there are of the order of 150,000 such people, and if all paid that would raise £3.75 billion. You can read more, and indeed watch the speech here.

Labour has of course launched into attack mode on this. Benedict Brogan has been getting some interesting government press releases. Apparently civil servants at the treasury have been digging up the numbers to trash the Conservative claims:

What strikes me though is the scale of the Labour spin operation tonight, which is designed to turn a "Tories promise you tax cut" story into a "Tories rocked by funding row" tale. I have in my inbox a press release from the Labour Party Press Office, in which Alistair Darling, the Chancellor of the Exchequer, claims: "Today George Osborne made a £3.5 billion tax commitment. Treasury analysis shows it is impossible for him to raise the money he needs to pay for this commitment from his proposals on residence and domicile. Initial costings by the Treasury show that George Osborne's proposal would raise a maximum of £650m, leaving George Osborne at least £2.9 billion short. So George Osborne cannot afford the promises he is making. He cannot afford to cut inheritance tax."

Benedict Brogan wants to know what civil servants are doing working on party work, and so do I.

The other thing of note is this:

The treasury have claimed to have no figures on how much non domiciled people earn abroad, yet when it becomes a political issue, within hours they claim they do.

Is this really the end of spin in government?