Aug
2022
Beginning to See the Light: Never mind the bollocks here comes Liz
DIY Investor
18 August 2022
‘And I can see there’s something wrong with you
But what do you expect me to do?’
For the avoidance of doubt the title and song lyrics were picked to offend. Truss, is just the sort of prissy, wannabe middle-class person we loved to shock in 1976-77.
However, with less than three weeks to go before voting closes, a survey by Opinium for the Observer of 570 Conservative members shows her leading the race to be PM 61% to 39%.
The results clearly showed that those polled were prefer to retain Johnson (63%), only 22% want Truss, with just 19% preferring Sunak.
Demographically Truss is 40-points ahead with the over-65s, but trails Sunak by 8-points among the under-50s.
Sunak seems to be viewed as the most competent candidates; 22% say he would better at managing the economy, whilst 10% viewed him as the most competent or intelligent, whereas Liz is popular for all wrong reasons:
- 14% of her support was based on a dislike of Sunak .
- 14% see her as being more honest and trustworthy.
- 10% liked the fact she had remained loyal to Johnson
My favourite is the 2% who cited race or ethnicity as a reason for supporting Truss and not Sunak.
Truss will be a disaster. She likes to be on the winning side, which, in the Tory party, is the Brexit right, and their belief in the own self-righteousness. Whilst they might be all-conquering they represent a deranged sub-set of a party increasingly out-of-step with the electorate.
The ‘what’ in her economic policy is achieving 2.5% growth p.a.. The ‘how’ is a reiteration of the right-wing playbook; anti-Europe, tax cuts, regulations are shackling business, and a weak political class, deep state and obeisance to technocrats that has made us quasi-socialist.
‘those polled were prefer to retain Johnson (63%), only 22% want Truss, with just 19% preferring Sunak’
Her cornerstone policy is a commitment to cut taxes ‘now.’
This, we are told ad nauseum, will ‘unshackle business from burdensome regulation’ supported by ‘supply-side reform‘. In addition, Truss will ‘scrap all EU-derived laws by 2023‘ and ‘work with industry leaders to regulate for British businesses and consumers’. She will ‘create low-tax, low-regulation investment zones’.
Even the Bank of England doesn’t escape as she plans to review their mandate so that it is better at managing inflation.
Blah, blah, blah. This is baseless dogma and prejudice, lacking any of the pragmatism required in a crisis. Its small government when the state should be leading. Rules and regulations need to be nimble and able to adjust, not minimised.
We needs a robust energy policy, functioning public health, water and farming systems able to support business and civil society, to overcome the climate breakdown, fractured energy markets and threats to food supplies.
There appears to be no place for last December’s levelling up white paper, which highlighted the role of city regions as engines for growth, which are much needed as our exports continue to stagnate. Where we do excel is exporting services; the UK is the second largest player in sectors as diverse as finance and the creative industries. Post-Brexit we are locked out of Europe, our largest market.
Her proposal to revoke the NIC increase that was imposed to fund an enlarged public health and social care capacity will save households on the lowest incomes an average of just 76p a month. But it would leave the UK’s richest households better off by £93 a month.
Truss also proposes stop of the planned corporation tax rise will, she tells us, spur growth. The only evidence we have contradicts this; successive Tory chancellors have cut UK corporation tax from 26% in 2010 to 19%. Despite this private business investment is still the lowest of any G7 country.
Investment is made based on the confidence that it will prove worthwhile. Brexit has cut business off from its biggest market. We are ruled by right-wing ideologists, it hardly surprising that there is little long-term confidence.
Brexit has been devastating for many SMEs, run by people that were the lifeblood of Conservatism, now they are its victims. Many of these firms spin-out from our 100 top universities, my own business is funding one of them.Truss, with her belligerent language and a parliamentary bill over the Northern Ireland protocol likely to lead to a trade war, will only will only exacerbate their problems
Unsurprisingly, many of these businesses are deserting a Tory party that has deserted them. These businesses are runs by entrepreneurs that vote Labour, Lib Dem and Green, who hate Brexit, and about issues, such as the UK being kicked out of the EU’s Horizon programme
Now that we are no longer part of the free trade zone, regulation and equalisation are our way through the ‘backdoor’. Instead, we are going our own way; E.G., the government insists that the chemical industry abandon its £500m-a year membership of the EU chemical regulatory system, which allows it to export to 27 EU countries and become tied to a £2bn UK-only programme, which allows it to trade in one country.
Truss’s supply-side reforms include removing the last remnants of employment protection in what is already the least regulated labour market in the OECD. We will restart fracking, and scrap green incentives. Evidence shows that her proposed low-tax/low-regulation zones create no new business, it simply moves from A to B.
In essence Truss is just another populist, a Johnson tribute act reciting right-wing mantras as a short-cut to No.10. Whereas Johnson’s post-election party was cut short by Covid, Truss will inherit a different but equally impenetrable equation.
‘a Johnson tribute act reciting right-wing mantras as a short-cut to No.10’
{The Bank of England forecasts that monthly take-home pay for the average worker will be £2,054 next year / the annual cost of energy is predicted to be £4,200} Solve for X
Last week I predicted that the cost-of-living crisis would lead to civil disobedience; the first sign of this is ‘Don’t Pay UK’, an anonymous group of activists.
Their campaign, launched in June, has reached ‘millions of people‘ and the support received so far ‘demonstrates the anger and frustration at a broken energy system that needs to be drastically transformed for the interests of people. In just a few weeks, over 100,000 of us from across the country have come together to say we will refuse to be pushed into fuel poverty and we no longer want to pay for the profits of the energy companies.’
Don’t Pay UK said it would only take action if one million people signed up to the mass non-payment of energy bills by 1 October and the government failed to ‘adequately address the crisis‘.
Last week, Boris Johnson, the chancellor, Nadhim Zahawi, and business secretary, Kwasi Kwarteng, met with energy company bosses to discuss the situation. Whilst Johnson appealed to the electricity companies to help ease the cost of living pressures, he said that any ‘significant fiscal decisions’ will be decided by his successor next month.
Unfortunately, time waits for no one, and, as Gordon Brown stated last week, neither does this crisis.
Wishful Liz is often disparaging about other politicians, including former leaders, but she might do well to discover a grain of humility and listen to them
As Brown points out, ‘There were two great lessons I learned right at the start of the last great economic crisis in 2008: never to be behind the curve but be ahead of events; and to get to the root of the problem.’
He makes his point on timing well, by pointing out that ‘the energy cap has to be suspended before 26 August, the date on which an approximately 80% increase in our energy bills is expected to be announced. The Department for Work and Pensions computers, which adjust universal credit and legacy benefits, have to be reprogrammed in the next few days if help is to be given to all who need it when prices rise on 1 October.’
Put simply, the timeline means that action is required now not when the Tory’s have finished contemplating their navel
As this column, and most other commentators continue to stress, tax cuts are not the solution to tacking inflation, in fact they are likely to increase it. What we should be doing is dealing with the soaring costs of fuel and food, the cause of perhaps 50% of our current inflation. If we achieve that we would reduce the inflationary spiral.
Brown makes three relevant assertions;
- The right to a warm home is a human right,
- We should do most for those who have least,
- No energy retailer should be allowed to additionally profit from the crisis.
Whilst an anathema to Truss and her band of ardent ‘Britain knows best cronies’, we could learn from France and Spain, both of whom work with businesses to cut consumption, and have imposed their own cap on energy prices, based on affordability rather than wholesale gas price.
Also, we have been slow to explore other international suppliers, such as Qatar, which has been snapped up by mainland Europe.
The impact of this supply-side inflation was highlighted this week when The Office for National Statistics that the real value of workers’ pay packets dropped by 3% – the fastest decline since comparable records began in 2001 – after taking account of its preferred measure of inflation
‘the real value of workers’ pay packets dropped by 3% – the fastest decline since comparable records began in 2001’
One of the issues the energy crisis highlights is that we have privatised assets that form the basis of life today; heating, lighting, water, etc..
Putting assets such as water into private ownership changed the polarity of the business from a public service to one responsible to shareholders. Shareholders, and management demand rewards, in meeting these expectations the water companies have failed to invest in infrastructure. As I wrote last week, shareholders have been paid £72bn in dividends, payments partly funded by borrowings of £56bn, and prices rises of C. 40%.
This underinvestment has caused crumbling infrastructure which is as much to blame as the hot weather; it is estimated that up to 20% of our water is lost to leaks.
Their environmental contribution is terrible; Thames Water was fined £20m in 2017 for tipping 1.4bn litres of raw sewage into rivers, in 2010 the firm was found to have illegally discharged untreated sewage for 735 days.
Little meaningful action forthcoming, the water watchdog is relatively toothless. The Environment Agency has said that water company bosses responsible for the worst pollution should be jailed, but that won’t happen.
In February, the regulator Ofwat said Britain’s privatised water companies should link executive pay to performance. A few months later Thames Water awarded their CEO, Sarah Bentley, £700,000 as part of a £3m ‘golden hello’ pay package. In June, Anglian Water announced that it would be paying a £92m dividend to its owners.
Truss promises a post-Brexit blitz on regulation means that the worst could be yet to come. The privatised companies have natural monopolies and run rings around the regulator, allowing them to overcharge customers, and load-up the balance sheet with debt to enrich their shareholders.
Privatisation is broken: the railways don’t fit into conventional capitalism, there are plans to nationalise parts of the electricity grid to help meet climate goals, and the Treasury has been forced to pick up the tab as gas suppliers collapsed.
As a result our infrastructure is under-financed and broken, the last thing we need is grabbing capitalist snouts in the trough, benefit the few at the expense of the majority.
Given that Brexit was about British exceptionalism, and being world leading, if find it ironic that most of our utilities firms are overseas owned.
At least 71% of shares in England’s nine privatised water companies are owned by overseas organisations including the super-rich, banks, hedge funds, foreign governments, and businesses based in tax havens. (1)
Of the Big 6 energy companies, only British Gas remains under British ownership. EDF is predominantly owned by the French government, German company E.ON Energie AG own E.On and Npower, and Scottish Power is owned by Spanish based Iberdrola. (2)
We finish with wishful Liz (if only we could!) who was caught en flagrante reiterating her thoughts on the great British worker:
‘I once wrote a book about this which got mischaracterised – British workers produce less per hour than … and that’s a combination of kind of skill and application.’
‘If you look at productivity, it’s very, very different in London from the rest of the country. But basically … this has been a historical fact for decades. Essentially it’s partly a mindset and attitude thing, I think. It’s working culture, basically. If you go to China it’s quite different, I can assure you.’
‘There’s a fundamental issue of British working culture. Essentially, if we’re going to be a richer country and a more prosperous country, that needs to change. But I don’t think people are that keen to change that.’
‘There’s a slight thing in Britain about wanting the easy answers. That’s my reflection on the election and what’s gone before it, and the referendum – we say it’s all Europe that’s causing these huge problems … it’s all these migrants causing these problems. But actually what needs to happen is more … more graft. It’s not a popular message.’
I have highlighted the last sentence for obvious reasons; is this an admission from an ardent Brexiter that Europe and immigration aren’t the cause of our economic and productivity issues?
Oh dear!
‘I’m a lazy sod…
That’s what we say you’re
I’m a lazy sod…
I’m so lazy
I can’t even be bothered’
Notes:
A pretty gloomy state of union assessment from Philip this week; it’s difficult to read it and not conclude that, like bathers at beaches around the country, we are deep in the shit.
There’s virtually no cause for optimism, and Philip’s is a warts and summary; I was recently asked why we still had a ‘Brexit’ column. This is why.
So what prompted this:
This week we face up to the seeming inevitability of Truss being our next PM.
The polls say so, even if many of those polled would prefer Johnson. They might be onto something there.
She appeals to the old, Sunak to the young and those bothered about competence. The latter not being an issue for the old, either they assume it or just don’t care?
I suspect they don’t care, so long as she is anti-Europe, cutting taxes, shrinking the state, and serving their narrow interests, what’s not to like?
Her plans are simply rubbish, we look at each, and each is nothing more than hope and mantras.
I was interested by Gordon Brown’s suggestions, although obviously, like many others, she will just dismiss him. A little more humility might go a long way.
The summer’s crises to trains, energy, and water only serve to highlight the failings of privatisation, which can be summed-up as asset-strippers, loading businesses with debt to satiate the greed of a few.
The fact that the majority are overseas owned does amuse me…Brexit anyone!
Ahhh, then there is Brexit. If wishful Liz is to be taken at her word it isn’t Europe and immigration that’s the problem it’s the British worker…..lazy bastards.
As I say in the title it’s all bollocks.
Musically, I set-out to offend her as only the Sex Pistols can do to the faux, pretentious middle-classes. We start with “Problems” of which we have many, and end with ”Seventeen”, in tribute to the great British worker.
@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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