"ajid Javid’s life story is, by now, pretty well-known. The son of an immigrant bus driver, he scraped into sixth-form college then, after Exeter University, had a successful career as a banker. His time in finance persuaded him that there has been a big shift in global debt markets — one that he says will keep interest rates at rock-bottom for ten years or more.
So any investment likely to boost economic growth by a half-decent amount will be worthwhile, because the cost of borrowing is next to nothing. This is his ‘new era’. ‘Look at the demographic change going on across the world: people living longer, baby boomers getting older, retiring with a lot of assets compared to the previous generation,’ he says. ‘Investors are saying to government, in effect: “I’ve got loads of money for you that I want you to invest. And I don’t mind if you return me less than I’ve given you because that’s still a good return for me compared to everything else.”’
He says that if the interest rate charged is less than the rate of inflation this is — in real terms — a negative interest rate (or, in the jargon of government borrowing, ‘yield’). So the government is, in effect, being paid to borrow. ‘The Treasury didn’t even have models that could compute negative yields because they’d never thought this would happen,’ he says. ‘It just shows you how they weren’t set up for this. And I would be constantly challenging, saying: “Well, hold on. This is not right, I can knock up a spreadsheet in five minutes and work out a lot of it for myself!” But now I have the privilege of being in charge of the Treasury, we’ve already started making changes to models. To allow for what is, I think, a unique situation in terms of government investment.’
He now plans £100 billion spending over five years, on projects most likely to generate returns: he sees this as a basic business calculation. Universities, further education colleges, roads, railways: if it’s likely to develop a real-terms (i.e. above inflation) return to the taxpayer then it can go in the shopping basket. ‘We’ve already said that we will invest in the Manchester to Leeds connection. What we’re missing in infrastructure transport connections in our country is that everything’s well connected to London, but not cross-country.’ Then, telecoms. ‘Fibre-optic investment is another good example, with the 20 per cent roughly that the market won’t do, because it’s uneconomic for the market itself. We can invest a lot more quickly early on in connecting that 20 per cent.’" - Interview with Fraser Nelson
That is the government I like. Not career or union idiots, someone who has worked in the REAL WORLD