Beginning to See the Light: Just Passing Through 

 

‘I don’t want charity, just half a chance 

And it’s all up to you, yes it’s all up to you’ 

 
There is something about the Sunak government that makes it  feel temporary. A seat-warmer for Boris Johnson, who said that now wasn’t the right time for him to return as PM. 

Many scoffed at this saying he hadn’t been able to gather the necessary support, however, speaking to the BBC, Sir Graham Brady, the chair of the Conservative party’s 1922 Committee, said two candidates had reached the threshold, and ‘one of them decided not to then submit his nomination‘. 

Johnson dropped out of the race, claiming he had the nominations needed to make it on to the ballot paper but could not unite the party, as his efforts to ‘reach out’ to his rivals (Sunak and Mordaunt) to work together in the national interest had not been successful 

In a statement, he said there was a ‘very good chance‘ he could have been back in No 10 by the end of the week if he had stood. 

Johnson can afford to play a long-game. This will allow time for ‘partygate’ to go away. The economy isn’t going to improve anytime soon, allowing him the luxury of sitting out the crisis until 2024. The Tory’s love a winner, and they still see him that way. 

The intervening two-years of austerity will see growth tumble, and an increase in poverty and inequality.  The expected tax increases will not play well with party members who favour spending cuts. Increased taxes were the reason they favoured Truss over Sunak.   

A perfect scenario for a leader in-waiting 
 

‘two-years of austerity will see growth tumble, and an increase in poverty and inequality’

 
The biggest losers from austerity will the poorest and most vulnerable in society. The services they depend on will continue to deteriorate, and their disposable income will continue to be eroded by inflation.  

There may not be much left to cut, instead people are suggesting that the Treasury will try to restrict public sector pay increases to 2% in the next financial year. Which would represent big bite real value pay cuts for police officers, teachers and health workers. 

 ‘They won’t get away with that. They just won’t,’ said one former Tory cabinet minister. Public sector unions are already balloting their members for strikes over the winter. Staff shortages continue to increase. The most recent official statistics report that the NHS in England is short of more than 46,000 nurses, I.E., <90% of posts are filled. The effects of strikes on the health service, where more than 7 million are already on English waiting lists, would be utterly atrocious.  

Don’t be fooled by statements that the NHS is ‘protected,’ and other departments will take the hits. The health services current budget plus ‘efficiency savings’ doesn’t cover inflation and pay, so its backlog will not fall. The CEO of NHS England, Amanda Pritchard, says it’s in a worse state than in the early days of Covid. 

It will be interesting to see who wins a battle between Tory politicians and nurses. The obvious winner should be the nurses. However, I expect the right-wing press will turn on them, running lots of granny dying in an ambulance because of nurses picketing stories, and before you it know they will be public enemy #1. 

Elsewhere the data is equally calamitous. 

Real school spending per pupil and teachers’ pay will still be below 2010 levels by the next election. 

The social care sector has 160,000 staff vacancies, primarily because people are unwilling to work so hard for so little. 

The phantom ‘wage-price-spiral’ seems to exist only in the minds of the  government and Bank of England. Rising unemployment will drive people into jobs on pay that’s below subsistence levels, or zero-hour contracts. 

On the back of this mess it is risible to claim that the Tory’s are the party of financial stability and competence.  
 

‘Rising unemployment will drive people into jobs on pay that’s below subsistence levels, or zero-hour contracts’

 
We are the only G7 country with a smaller economy than at the start of 2020. Twelve years of Tory governments has seen living standards for the ‘have nots’ collapse, whilst rises in share and property values have inflated the assets of the ‘haves’. Top pay has soared, while, for the majority, wages have stagnated. 

Tory claims that the need for austerity are driven by market events is absurd. Yes, the City rebelled against Trussomics, but austerity is just as foolish in its own way. Markets want to see competence and ideas, not ideology. 

Instead we have scaremongering from the PM and Chancellor, with incendiary statements claiming that the UK is going bust. Rising interest rates doesn’t stop the UK borrowing, it just means it costs more. In addition, there are numerous other ways to raise money as was highlighted in both ‘Same Dog, Different Fleas‘, and ‘The Death Throes of a Dying Government’. 

In ‘The Death Throes of a Dying Government‘ I talked about J M Keynes thesis,’the paradox of thrift’, which stated that austerity prolonged and deepened the Great Depression. Whilst it might be counter-intuitive he believed it was necessary to spend your way out of a recession. 

Last week the shadow chancellor, Rachel Reeves, promised just that; a ‘real plan for growth means we can thrive – not just lurch from Tory crisis to crisis’. Included was a green prosperity plan for investment in renewables, and insulation. 

The Labour leader, Keir Starmer, is trying to position his party in the centre ground, and avoid repeating the mistake made by Corbyn, and becoming an easy target for the Tories. Whilst this might help Labour woo the City and businesspeople, this approach is causing concern on his backbenches and more widely, with the Greens calling Labour ‘timid‘ on wealth. 

Richard Burgon, the Labour MP for Leeds East, said: ‘While living standards are plummeting for most people, it’s been boom time for the super-rich, whose wealth has soared to record highs in recent years. Whoever is in government over the next few years will have to decide whether to cut services and hike taxes on ordinary people or to instead tax the wealth of the very richest.’  
 

‘While living standards are plummeting for most people, it’s been boom time for the super-rich’

 
A tax on wealth would be in-line with the Billionaire Minimum Income Tax (BMIT) President Biden proposed in March. 

This column has long argued that tax increases per se are not the answer. Instead we need to ensure that everyone pays their fair share,. Their proposed BMIT legislation requires the wealthiest Americans to pay at least 20% on all income. Currently, billionaires pay an average of only 8.2% of their income, according to the White House.   

The tax will apply only to the top one-hundredth of one percent (0.01%) of American households worth over $100 million. Over half of the revenue will come from households worth more than $1 billion. Over 10-yrs they estimate it will reduce the budget deficit by $360 billion 

The ranks of the global ‘ultra-high net worth’ individuals, defines as those with assets > $50m, increased by 46,000 last year to a record 218,200 as rich people benefited from ‘almost an explosion of wealth’ during the recovery from the pandemic,. (1) 

The increase in wealth has not been distributed fairly. The richest 1% of the global population increased their share of all the world’s wealth for a second year running to 46%, up from 44% in 2020. (1) 

Last month a coalition of 40 charities and campaign groups called for change, saying Britain’s tax system was broken and the richest needed to pay more. Tax Justice UK claims up to £37bn could be raised by introducing a string of wealth taxes, including equalising capital gains tax with income tax and introducing a 1% tax on assets over £10m. 

Dr Phil White, a member of Patriotic Millionaires, a group of super-rich people calling for the introduction of a permanent wealth tax on the richest in society, said: ‘It seems to us that political parties are taking an awfully long time to catch up with what many millionaires and the general public want when it comes to taxes on wealth. Sixty-nine per cent of the UK public support a wealth tax of 1% on over £10m and only 7% oppose it.’ 

In ‘The Death Throes of a Dying Government‘ I mentioned a focus group convened by UK More in Common for the Guardian, which questioned a number of people in the red wall seat of Sedgefield in Co. Durham. 

The simple summary of which was that voters there see Sunak / Tories as the better option. Quotes included: 

‘He does seem competent and seems to have the ability to move the [Conservative] party forward.’ 

‘Rishi is a money-oriented guy. You’d want someone who knows how to retain money and has the platform to change things without having an overbearing personality.’  

Starmer fared badly: ‘[Starmer] brings nothing new to politics. He’s a professional politician.’ Another said he preferred Starmer’s deputy, Angela Rayner, and believed she would be biding her time before she would once again try to run for Labour leader before the next general election 

I find their comments disappointing; voting Tory has done nothing for them. Levelling-up has never materialised, we have had 3-yrs of chaos, the worst economic crisis in 50-years and they still see the Tory’s as competent?  

An Opinium poll in yesterday’s Observer shows Labour and the Tories almost neck and neck when voters were asked which is more competent to run the economy. Given the mess we are in this does offer some encouragement to the Tories but I wonder how the public will be feeling after a rough winter during which disposable incomes will be squashed even harder. 
 

‘I wonder how the public will be feeling after a rough winter during which disposable incomes will be squashed even harder’

 
What Labour must avoid is getting dragged into a ‘so what would you do?’ trap, which could let the Tories off. ‘This is not our black hole,’ says one senior Labour frontbencher. ‘It’s the Tories’ black hole and they must be made to own it.’ 

At the heart of this mess is Brexit. The Tories can’t admit it but nothing has improved, and much, if not all, has gotten worse. 

On Friday, Mark Carney, former Bank of England governor, observed that Brexit was a factor behind rising higher interest rates He also pointed out that the UK economy has shrunk relative to similar European states. 

Even the post-Brexit devaluation of Sterling hasn’t helped. We have no new trade deals to replace what was lost leaving the free-trade area. Exports, which should benefit as they are cheaper, have fallen, while a devalued currency means we are importing inflation. 

The real driver for Brexit was immigration. Ending free movement of labour was the base requirement of ‘taking back control’ of the borders. The labour shortages this has caused have negatively impacted businesses and therefore growth. This, of course, is dismissed by Brexiters as ‘remoaners’, who are pro-Brussels. 

Immigration has become an increasing issue for Tory right-wingers who are bordering on racist, as their obsession with border control, results in them vilifying refugees for daring to seek asylum in the UK.  
 
I will talk more about racism and immigration later in the week. 

Behind all this is sanctuary not for the refugees but for the Tory’s. They can take sanctuary in the immigration problem to cover up their inability to govern. Refugees might be the victims, but the Tories are the victims victims. 
 

‘We did somethin’ we both know it 

We don’t talk too much about it’ 

 
Notes: 

1. Credit Suisse.

 
The first installment in a double-header from Philip this week; I was fortunate enough to meet him for refreshments yesterday, and we agreed that for a political commentator, the past few years have been rich pickings.

I also met his old sparring partner Mark, who may be adding his own unique perspective on proceedings; watch this space.

We discussed our deep admiration for Sir (sic) Gavin Williamson, who was so frustrated at not being invited to HMQ’s funeral that he loosed off a series of profane texts on the spur of the moment; er, over a period of a month.

The bullying little twerp was also under such duress, doing a job that we’d all really rather he didn’t, that he invited one underling to ‘jump out of a window’ and said that he’d ‘slit the throat of another’. 

Inevitably, by the time I got home, he’d become a ‘distraction’ are retreated to the back-benches. But Rishi, mate, what were you thinking? ‘Minister without what?’ ‘The milk of human kindness?’ ‘Integrity?’

You brought back Ubergruppenfuhrer Braverman an hour and a half after she handed over every last state secret she could find; you did a spot of Hokey Cokey about going to COP27, then thought it would be a good idea to bring back the twisted little fireplace salesman. I suspect if you don’t start to show better judgement, your tenure at No10 will be shorter than your trousers.

So what was Philip thinking?

Sunak seems accident prone. His cabinet appointments such as Braverman and Williamson, smell of desperate attempts to unify a divided party, and favours for favours.

Both are incompetent, as are most of the cabinet. Unfortunately these two can add unpleasant to their list of achievements. Braverman is the more likely of the two to survive. He needs her to keep the right on-side and her attitude towards immigration will come in handy for distracting the racists from the cost-of-living crisis.

Basically, Sunak was a compromise. They really wanted Johnson, but he was too wily. Sit out two-yrs, watch the economy collapse, earn loads of dollars, and then ride back to save their electoral chances.

Whilst everything around is collapsing, Labour don’t seem to have really convinced people that they are a viable alternative. Starmer is trying to avoid being Corbyn, but is in danger of becoming a light-blue Tory. What can save him is a wealth tax, it’s long overdue, and politically wont lose him votes, but it should gain him lots.

We finish with Brexit, and inevitably immigration. The two are twins. Brexit was about nationalism, flag-waving, Land of Hope and Glory. Basically, a core of rather nasty regressives, and brilliant marketing that convinced those not happy with their lot in life that it was Brussels’ fault.

Lyrically, we start with Wah and “Come Back”, I hope he won’t because I think he can win it for the Tory’s. We finish with Tom Petty’s “Refugee”. Enjoy!

Later this week we will look at immigration, racism, and the US. Not very nice!

 
@coldwarsteve
 

 
 

Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

 

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