Budget briefing: Why Javid had to go

I think there are sound reasons why Sajid Javid had to go, not least of which was the damage he could potentially cause to the UK economy by allying himself with the Remainer doomsters and gloomsters at the Treasury. Allow me to explain -

You can see that ever since the Thatcher government in 1979 (which was elected, remember, because Labour had so screwed the economy) Britain has had a sort of tax-take comfort zone which is somewhere between 35% and 40% of GDP. In fact what I’ve labelled ‘taxes’ includes both interest payments and interest receipts and dividends – so the official term is ‘public sector current receipts’. Total spending is generally higher than current income – somewhere around the 40% mark.

Now to put some of the arguments within cabinet into perspective, 1% of GDP is about £22bn a year*. So before rebates and tax-collection adjustments,this is what we will save by leaving the EU. If we wanted to, say, increase total government expenditure from 39.3% of GDP to 42.5% of GDP (a fairly modest increase) this would give us an additional £70bn a year for investment. So even £100bn over 20 years – £5bn a year – for HS2 isn’t such a big thing.

Of course this additional borrowing means we have to pay interest – but rates at the moment are close to zero. And investment borrowing – to up the nation’s game, increase capacity, productivity and so on – also produces additional tax income and lower current expenditure on welfare. This why it’s particularly vital to invest in those parts of the UK that have been so long deprived of it, ever since the Callaghan Labour government started closing the pits and running down British industry in the 1970s.

Number 10 knows this. The Treasury doesn’t. And Sajid Javid went native. He had to go.

* Yes it is. This is from the EU’s own website from 2015 – I just had it on file – when the 1% figure was £20bn. After rebates and tax-offsets of course it comes down to £12/£13bn.