inequality‘The wind howls through the empty block lookin’ for a home 
I run through the empty stone ’cause I’m all alone’ 

 
After the 4-day celebration for Her Maj’s Jubilee, this column looks at where the UK is, or more accurately, isn’t! 

I watched very little of the celebrations, but I did enjoy the wonderful sketch with Her Maj and Paddington. Two things struck me; Her Maj has a wicked sense of humour, and today Paddington would be an illegal immigrant. Rather than living with the Brown’s in Notting Hill, he would be relocated to Rwanda.   

The jubilee was a celebration of British exceptionalism. Her Maj exemplifies much of what is right about that; decent, honest, hardworking, a person that cares about her people. 

She is everything her government isn’t. The only exceptionalism they display is self- obsession. 

‘Partygate’, when compared to real issues such as stagflation, racism, climate change, etc. is trivial, however, it sums up everything that is wrong in this country. Our leader broke his own rules, not once but continually. He did it because he could, because they don’t apply to him, only to ‘little’ people. When caught he lied to everyone including parliament. When found guilty of one offence he continued being in denial, refusing to accept the requirement to resign. The Met Police investigation only proved that little people make suitable scapegoats, and that everyone isn’t equal before the law.  

Johnson’s government places itself above the country. Its members care only for themselves, retaining their seats, and being in government. The party knew Johnson wasn’t suited to the role, their only concern was his electability, suitability and competence don’t come into it. The country is their plaything.  

Sadly, this is perhaps only the end of their latest experiment. The first began in 1979, 2-years after the Silver Jubilee, when Thatcher came to power. Keynesian economics, and state intervention were replaced by monetarism, low taxes, and a small state. So powerful was this tsunami of change that later even New Labour embraced parts of it. 

Some 40-years on it is outdated. Ironically, we are back where we started the experiment with inflation in the UK at its highest level since then, due primarily to soaring energy costs. 

The chancellor, Rishi Sunak, has finally realised there is a crisis, announcing a £15bn ‘cost of living package’, partly funded by a one-off tax on energy companies. His party’s reaction to this, sums up their out-of-date Thatcherism with some describing it as ‘un-Tory’. Others have claimed that tax cuts are the answer to stimulate growth. Whilst that might be true, this is an emergency requiring actions for today not sometime in their rose-tinted future. 
 

‘Her Maj exemplifies much of what is right about that; decent, honest, hardworking, a person that cares about her people’

 
The Bank of England is equally out-of-touch, being guilty of misunderstanding the situation regarding jobs and employees. In the 1970s strong unions demanded inflation-busting pay rises for their members, today inflation is running far ahead of wage increases. Even with record low unemployment workers are still not able to negotiate better deals, making the Governor’s call for pay restraint look outdated.     

In addition, trade union membership has plummeted; coverage was still over 50% in 1982; today, it’s less than half that, and almost half of that again in the private sector.  

Whilst this isn’t a rerun of the 1970s and early 80s, todays crisis is a legacy of how that previous crisis was handled. 

The previous era was dominated by Keynesian thought but inflation made that redundant as was summarised in 1976 by Jim Callaghan at the Labour party conference: ‘We used to think that you could spend your way out of a recession, and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists.’  

In 1979, Britain’s ‘new’ right thinktanks saw inflation as being based on a failure to respect the ultimate value of money. They focused on rediscovering our respect for property, hard work, fiscal discipline and responsibility. 

Monetarism was based on targeting the amount of money in circulation then setting interest rates accordingly. In the early-80s British interest rates rose to record highs leading to the deepest recession since the 1930s. Inflation did eventually fall, but the cost was the demise of whole industrial regions, towns and cities. A knock-on effect of this was diminution in trade union membership which was as great as was latter anti-union legislation. 

Today, many political economists have come to view monetarism as a deliberate political project that sought to re-establish the supremacy of asset owners and financial elites who were the worst impacted by inflation. Once inflation was defeated the City and the housing market begin their dramatic ascent that, aside from the early 1990’s and the 2008 banking crisis, has continued ever since. 
 

‘a deliberate political project that sought to re-establish the supremacy of asset owners and financial elites who were the worst impacted by inflation’

 
This created illusory prosperity; we all feel rich when our assets are appreciating, but its paper wealth rather than actual wealth. The reason for this is that there isn’t any enterprise or risk-taking, simply capital chasing the highest returns possible, regardless of any broader social or economic benefit; it was ‘rentier capitalism’. Where risks were taken it was with someone else’s money, e.g., banks gambled with depositor’s money and when it went wrong they were deemed systemically important and too big to fail. 

Profits no longer relied on risk and reward. The too big to fail banks benefitted from government policy is a similar way to the UK retail energy market, where prices are effectively decided by Ofgem, meaning that the soaring profits of energy giants are the result of government policy.  

In a way this is the equivalent of insider trading, the market is manipulated so that only the size of the profits are uncertain. It’s no longer ‘capitalism’ as there is no risk or the need for productivity-enhancing investments which were capitalism’s hallmarks. The cost of living crisis is caused because we are largely trapped in our payment obligations, living at the behest of businesses that have no incentive to serve our interests. 

In reality, all that the current bout of inflation has done is to trigger a crisis that has been 10-years in the making.    

During the New Labour years, between 1997 and 2010, there was an emphasis on clamping down on ‘benefit cheats’. Despite this, policies such as tax credits reduced child poverty by at least 1-million.  

In 2010, New Labour was followed by the Tory government of David Cameron, and George Osborne. Their policy of austerity cut C. £37bn from benefits spending between 2010 and 2021. 

Austerity favoured those that didn’t need benefits over those that did. Cameron said: ‘Fairness isn’t just about who gets help from the state. The other part of the equation is who gives that help, through their taxes. Taking more money from the man who goes out to work long hours each single day so the family next door can go on living a life on benefits without working – is that fair? … If you can work, but refuse to work, we will not let you live off the hard work of others.’ 

The Welfare Reform Act of 2012 was the main piece of legislation that delivered the pain. A key part was Universal credit a catch-all monthly payment designed to replace six working-age benefits. This was championed by the work and pensions secretary Iain Duncan Smith, who said; ‘It is time to bring welfare into the 21st century. ‘We want a system which isn’t seen as a doorway to hopelessness and despair, but instead as a doorway to real aspiration and achievement.’ 

A report to a parliamentary committee in 2020, said that Universal Credit has failed to meet its original objectives, making people worse off, its effects were harsh, cruel and causing devastation. 

Source: https://committees.parliament.uk/writtenevidence/534/pdf/ 

As part of the introduction of universal credit, the government got rid of the severe disability premium, depriving disabled adults who live on their own, or with a young carer, of C. £58 a week. Now, C.30% of the 13 million people, 3.8 million adults and 300,000 children, with disabilities in the UK now live in poverty. In 2018, one study found that unemployed disabled people were up to 53% more likely to have their payments docked than non-disabled people. 
 

‘unemployed disabled people were up to 53% more likely to have their payments docked than non-disabled people’

 
In addition, there was an absolute limit on benefit payments, pegged to average individual earnings from work. Osborne, the chancellor at the time, summarised it bluntly as ‘money to families who need it – but not more money than families who go out to work. That is what the British people mean by fair – and we will be the first government in history to bring it about.’ 

The cap was introduced in 2013 and set at £500 a week (£26,000 a year). For single people, it was £350 a week. Three years later, the cap came down to £23,000 a year for families in Greater London and £15,410 for single people in the capital. Elsewhere in the country, the figures were £20,000 and £13,400. Duncan Smith said the changes would ‘re-emphasise the message that it’s not fair for someone on benefits to be receiving more than someone in work‘. 

Finally, in 2015 the re-elected Tory’s announced a 4-yrs benefit freeze which ended in April 2020, just after the start of the pandemic. It impacted C. 30m people, cutting the real-terms value of benefits by 6% since 2015, and leaving the average poor couple with children £580 a year worse off, pushing 400,000 people into poverty. 

Central bank policy post the GFC flooded economies with liquidity, which meant that for many wages didn’t increase. Between 1992 and 2008, real wages went up by 36%; for 2008 to 2024, the Office for Budget Responsibility expects a rise of just 2.4%. 

The 5.7 million public sector workers were further victimised by government policy. Recent figures show that the median public sector pay award was a mere 1.4% in the year to March 2022 (in the private sector, the figure was 2.2%). 

Returning to the Jubilee, there is little doubt that Britain has become a better country in which to live on almost every measure in the 70 years since the Queen succeeded to the throne.  
 

‘if we consider the Golden Jubilee of 2002, the mood now is depressingly different’

 
However, if we consider the Golden Jubilee of 2002, the mood now is depressingly different. Then we appeared to be on an upwards trajectory after the recession of the 1990s, fuelled by buoyant growth accompanied by reinvestment in public services, creative industries that exported British culture around the world and the establishment of the minimum wage and a more generous welfare settlement, especially for pensioners and for families with children. Peace was achieved in Northern Ireland and power devolved to Scotland and Wales. The chancellor, Gordon Brown, even declared the end of ‘boom and bust’. 

Since then the political response to crisis’s has fallen short of what the country deserves. 

The 2008 financial crisis led to more than a decade of stagnating living standards for young people and those on low incomes. The 2016 ‘Leave’ vote sucked in all political energy for 5-years. Covid claimed the lives of thousands of Britons and sent the national debt soaring to levels not seen since the 1960s. Global oil shocks and the war in Ukraine have sent inflation soaring to historic levels this year. 

As commented above, Conservative chancellors used the GFC as a justification for cutting back financial support for low-income families with children, whilst delivering expensive tax cuts that disproportionately benefited better-off families.  

Winning the Brexit referendum delivered more power to Tory’s ideologues. They successfully campaigned for a hard economic break with the EU. Along with leaving EU this jeopardised the political stability of Northern Ireland, and is increasing regional inequalities that were already some of the worst among wealthy nations.  

The PM made serious and deadly errors in his handling of the pandemic, while undermining public trust in democracy by breaking laws he himself introduced to protect lives during a national emergency. 

As a result the optimism of 2002 has been replaced with unhealthy levels of cynicism in our governing class, and an overall feeling of stagnation.  
 

‘the optimism of 2002 has been replaced with unhealthy levels of cynicism in our governing class, and an overall feeling of stagnation’

 
This is the first generation of young people who could be worse off than their parents, highlighted by a housing crisis which means that many people in their 30s will never own a home.  

A decade of underinvestment in public services means that waiting times in the NHS are at record levels, with those who can afford it resorting to going private in order to access timely care.  

Politicians have dodged the difficult questions about how to fund decent older care in a society with an ageing population. Older people are often kept in hospital wards unnecessarily because there is nowhere to discharge them to. 

Child poverty is increasing after a decade of welfare cuts have left parents reliant on food banks and charity in order to ensure their children are warm and well fed. 

Since 1979 Conservative policies have made it more difficult for those already struggling, whilst continuing to cut the taxes for the richest. Austerity aimed at the poorest was utterly disastrous and was estimated to have reduced GDP by £100 billion, leading to a feeling that ‘everything is coming crashing down’. The premise of austerity was to reduce the National Debt, instead it just continues to grow.  

All of these experiments had one common goal keeping the Conservatives in government whenever possible. To do so they ignored the majority and focussed on the minority. Johnson is just the last in a longline of failed experiments. 

The question is has Johnson reached the end of the line?   

41%, 140 of his own MPs think he has. Any decent person would see that the game is up. Unfortunately, Johnson doesn’t see it that way, he puts himself before everyone and everything and will seek to prolong the agony. Along with his praetorian guard, they resemble Hitlers last days in the bunker. Instead of imaginary army’s we have policies that are equally illusory. 

Perhaps the question we should be asking is, what is the point of the Conservative party?  

The immediate future offers little other than desperate promises such as selling  off housing association properties and axing civil servants. To this we can add the perennial favourites of picking fights with the EU, and the culture wars. In the real world we will see more U-turns as they continue to misread, and misunderstand the real problems. 

In his public letter calling for Johnson to go, the former Treasury minister Jesse Norman cited not just the prime minister’s ‘grotesque‘ attempt to claim that Sue Gray’s ‘Partygate’ report had vindicated him or his ‘ugly‘ plan to export refugees to Rwanda, but also the way Johnson had squandered ‘a large majority, but no long-term plan‘ for doing much with it. As the country bounces from crisis-to-crisis all Johnson could do was ‘to keep changing the subject and to create political and cultural dividing lines mainly for your advantage‘. 

Norman’s comments crystallises the thoughts of moderate Tories, who seek a return to briskly organised sanity after the anarchy of the Johnson years, creating economic conditions in which its traditional supporters (if not necessarily the nation as a whole) can prosper. But not every Tory wants to return to that status quo, and therein lies the challenge for Johnson’s wannabe successors. 

Whereas May’s demise was driven by her party’s dislike of her Brexit deal, Johnson’s is based on his personal behaviour. The objections isn’t to one specific policy so much as a chaotic absence of them, which is why those line-up against him are so diverse; from ‘remainers’ such as Caroline Nokes to the arch-Brexiter Steve Baker. The drivers are moral outrage, and fear of losing their seats. 

The upcoming byelections will see the electorate voice their opinion, just at they did in the May local elections. According to pollsters, the biggest hurdle to voters in Wakefield to voting Tory is that they consider Johnson a liar  

The second biggest complaint in Wakefield is that Johnson is out of touch, with his failure to tackle the everyday issues: soaring inflation, bloated NHS waiting lists, a broken housing market, and the general sense of chaotic neglect felt by people.  

The political in-fighting caused by Brexit has left the Tory’s short on talent. Too many people who could have been honing their leadership skills for the last three years have either left politics or declined to serve.  

The question is, is the party just a vehicle for increasingly angry culture warriors, or did the Queen’s wish for a ‘renewed sense of togetherness‘  make some stop and think about what they have become?  

We deserve better than a government that cares only about its own survival.1 
 

‘And now is the time to realize 
To have real eyes’ 

 
A welcome return for Philip after a thoroughly deserved break, and much to discuss as a long weekend of spectacular pageantry and unity is followed closely by a vote of confidence in Boris, and a return to the ugly politics of greed and division.

However buoyed you may feel after the pomp and circumstance – and I genuinely don’t think anybody does it better – it’s difficult not to recognise the picture that Philip paints as optimism has, even charitably, been replaced by stagnation over twenty years.

The stats he uses to confirm his narrative are compelling but serve mainly to confirm what is apparently the mood of the moment; as the £2-a-litre of unleaded threshold has been breached and countries around the world imposing export bans on food staples, it feels as though this could be a very long haul.

So what was Philip thinking?: ‘There are two obvious topics this week; the Jubilee, and Johnson’s no-confidence vote. Rather than blandly commenting on both I have tried to look back and consider Tory rule since 1979, which is only 2-years on from the Silver Jubilee.

The most apparent thing is that whilst we have moved forward in terms of technology, has peoples life actually improved. The answer in no. Monetarism was the beginning of the explosion in the wealth gap. In some ways it took away risk from reward; if you had capital you made money.

Central bank policy post the GFC exacerbated this as was a rentiers dream. In many ways, for those with assets, the last 40-years has seen markets rigged in their favour. It’s almost insider trading, profit with risk, phoney capitalism. If you then add in austerity, you had the imperfect storm, the poor just got screwed whilst those with assets made out like bandits.

As to Johnson, well he is just another example of the experiments the Tory party inflict upon us to ensure they stay in-power. Whilst Johnson is most things I dislike, I think the blame for the whole shit-show lies at the party’s door. He hasn’t displayed any behaviours that weren’t already known, they have just become more obvious. They closed their eyes because he is good at electioneering. Now they are panicking because the stench has become too much, ever for them.

His victory was a best a hollow one, as the papers acknowledged:

“A wounded victor”, says the Times; adding that it was a worse than expected result for Johnson and throws up another parallel with Thatcher by noting that the same proportion of MPs voted against her as against her current scandal-plagued successor. She resigned two days later.

The Daily Telegraph’s front page headline says “Hollow victory tears Tories apart” and carries a secondary headline saying Johnson’s authority has been “crushed” as rebels circle to finish him off.

A YouGov survey shows 60% of the lectorate think he should resign.

The vote was just another in a long line of public hand wringing by a party that is becoming irrelevant. The official angle that last night’s horror show allows the government to “draw a line” under leadership speculation, and to stop the Tory infighting, is rubbish. A reminder: things we’ve done fairly recently to stop Tory infighting include: having a referendum, having two general elections, and having no-confidence votes in both the past two leaders.

Johnson will now flail around throwing out populism; the threat of triggering article 16 of the Northern Ireland protocol has increased. Or, we could call it “getting Brexit undone”. As the Guardian said “It remains remarkable that some years into the experiment, we are no closer to discovering what, politically, Boris Johnson actually likes, other than being liked.”

The question is can he survive the tow forthcoming by-elections? Nero fiddled whilst Rome burnt!

Lyrically, we return to 1977. We start with the Clash and “London’s Burnin’, and finish with the Pistols “I Wanne be me “. Both seem appropriate, we had such hopes back then but, in reality, we didn’t change anything’ Wow, enjoy – if you can!

@coldwarsteve

 

Philip Gilbert 2Philip 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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