Ross Clark

Should we be bothered that Hinckley C nuclear power station has run even further over budget (the latest estimate is £35 billion, nearly twice that quoted when the project was given the go-ahead in 2016) and that its completion date has been put back yet further, to 2031? After all, the whole point of offering French energy giant EDF a guaranteed ‘strike price’ at the then juicy rate of £92.50 per megawatt-hour (at 2013 prices, rising with inflation) was supposed to be to transfer financial risk to EDF and its financial backers. 'It is important to say that British consumers won’t pay a penny, with the increased costs met entirely by shareholders,' EDF’s managing director of the Hinkley project state this morning.  What if EDF threatened to cut its losses and withdraw?

London mayor Sadiq Khan has just given us a foretaste of a Labour government by capitulating to the RMT and averting a tube strike at the last moment by, to borrow Nye Bevan’s phrase, stuffing the rail workers’ mouths with gold. That, at least, is Boris Johnson's assessment of the 11th-hour agreement to avert the walkouts. Johnson is right, except is it really much different from what has been going on for years under his and other Conservative governments? It wasn’t Labour which gave us train drivers on £65,000 a year – far more, in some cases, when you add on overtime. That puts some train drivers in the top five per cent of highest earners in population. Is there any other group of workers in Britain who do so little for so much money?

There will be people outraged by the latest initiative of HMRC: to demand that the likes of Airbnb, eBay, and Vinted furnish it with details of everything bought and sold on their online platforms. The taxman should keep his nose out of the sharing economy, many will say. People who sell their secondhand clothes, books, or who earn a little holiday money by letting their property to tourists while they are themselves away from home are doing the environment a favour, they will argue. HMRC should keep its nose out and go for the ‘real’ tax-dodgers in large corporations, who are taking advantage of our tax system by shunting profits to more favorable jurisdictions. I am all for pursuing big tax-dodgers but sorry, HMRC should not be turning a blind eye to the sharing economy.

Economic forecasts rarely survive far into the New Year. Just look at last year’s prophecy by the IMF that the UK economy would shrink by 0.6 per cent in 2023, which was already being revised by March. But we are only three days into 2024 and already the forecasts of falling house prices are beginning to look somewhat questionable. In November, the Office for Budgetary Responsibility (OBR) forecast that prices would slip by 4.7 per cent over the year. The Halifax followed that up by forecasting a 2 to 4 per cent slide. Yesterday, however, the Halifax became one of those banks which has started slashing fixed rates. A two year fix is suddenly down from 5.64 per cent to 4.

Finally it seems to be dawning on many Conservative MPs that abolishing – or seriously cutting – inheritance tax at the same time as jacking up income tax for millions of low earners is not a great way to tackle a strong Labour lead in the polls. Several backbenchers have written to the Prime Minister in response to reports that he is considering taking the axe to inheritance tax in the Budget on 6 March. They have suggested that the government should be cutting income tax instead, or at least raising the thresholds which have been frozen until 2028. At a time of elevated inflation, that is dragging millions more into income tax, and into the upper rates of income tax, by the year.

Are we going to end 2023 with a recession after all? The great non-arriving recession of 2023 has so far confounded the forecasts of the Bank of England (which forecast a shrinking economy throughout 2023), the IMF (which forecast growth of -0.6 per cent over the course of the year) and others, too. But could the statisticians now be riding to the rescue of the forecasters’ reputations? This morning the Office for National Statistics has revised its estimate that the economy flatlined in the third quarter of the year and now says it shrank by 0.1 per cent. It also revised downwards its estimate for the second quarter, from growth of 0.2 per cent to zero growth.

Anyone for more tax cuts in the spring budget? You might as well hand out free beer. For many Conservatives, tax cuts provide the last tiny chink of light before the door closes on their electoral prospects for good. This month’s government borrowing figures might just provide some encouragement, too. Net borrowing in November was £0.9 billion lower than it was in November 2022. The great bulge in the deficit which came with Covid seems finally to be subsiding. With inflation falling sharply, too, the outlook for the public finances begins to look a little brighter. The UK government has an unusually large slice of its debt in index-linked debt, meaning that a drop in inflation will instantly relieve some of the burden. But here lies the danger.