inequality‘Well, you’ll work harder with a gun in your back 
For a bowl of rice a day’ 

Words get you elected, but your actions either see you re-elected or defeated. 

The forthcoming local elections on May 2nd are especially significant, Unlike mid-term elections, from which a defeated governing party can always hope to recover, these are nearly end-of-terms. The Tories are likely to lose more than half of their councillors, with possible defeats for prominent mayors, including Andy Street in the West Midlands and Ben Houchen in Tees Valley, and the rise of Richard Tice’s Reform party slicing into the 2019 Tory electorate. 

Taken together with recent polls from Survation and YouGov which predict a Labour majority, of either 286-seats, or 154 respectively, a bad night on May 2nd could well be the straw that breaks the camels’ back so far at the party’s leadership in concerned. 

There is, however a bigger picture; neither the current, blundering Conservative party nor the super-successful ideological one about which the rebels fantasise is a viable and stable centre-right party of government. A change of leader is purely cosmetic, and will not make the party electorally viable in even the medium-term. As the Tory journalist Danny Finkelstein pointed out this week, young Tory voters are almost extinct. 

‘young Tory voters are almost extinct’

There are parallels with the situation David Cameron found himself in 2005. Along with ‘hugging hoodies’, he used the A-list to uncover a new, broader set of MPs. In addition to winning back voters who had supported Blair’s New Labour, he aimed to win over first-timers by detoxifying the party brand among the young. 

It worked, too; 30% of those 18-24 voted Tory, with the balance split almost equally between Labour and the Lib Dems. The party also won 35% per cent of those aged between 25 and 35 

However, time moves on, the under-24s who voted Tory in 2010 were in their early 30s for the last election,  51% voted for Labour. In the previous 25-35s, a plurality backed Jeremy Corbyn over Johnson, despite having predominantly voted Tory in their youth.  It was only the votes of older people that carried Johnson to a majority, with C.66% of pensioners supporting the party.  

A poll in March showed that only 7% of 18-24 yr olds plan to vote Tory, and only14% of 25-49 yr old. 

The generation that swept Cameron to power has now almost entirely deserted the party as they reach middle age. At the next election, this will mean big wins for Labour in the inner cities, but it will also deliver them vital swing seats in the suburban and urban fringe, where young families form a key voting bloc. 

Quite how putting a few refugees on a plane bound for Rwanda will help the Tories woo these voters remains a mystery. Despite this the party is pinning its hopes on this and a showdown with judges in Strasbourg as a way forward, and it heads further and further to the political right. 

Part of this journey is linking up with their right-wing contemporaries from overseas. Suella Braverman who, you might remember told us that offshoring to Rwanda was her personal ‘dream’, is set to headline a  gathering in Belgium alongside the authoritarian Hungarian PM, Viktor Orbán. Not to be outdone, on a recent visit to the US, ‘loony’ Liz Truss looked-on as a fellow speaker lauded Tommy Robinson as a ‘hero‘. Liz, last week, also attended Nigel Farage’s 60th birthday party. 

‘on a recent visit to the US, ‘loony’ Liz Truss looked-on as a fellow speaker lauded Tommy Robinson as a ‘hero

This move to further to the right is being seen among party members, too. This weekend, the Sunday Telegraph reported that nearly half of Tory councillors think the government is ‘too leftwing‘. The activist website Conservative Post, linked to the Tory donor Peter Cruddas, is now urging party members to stop any remaining ‘liberal centrists‘ from standing as Tory candidates, and has published a helpful list of what it calls ‘the first 10‘ who should go. 

The former immigration minister Robert Jenrick is continuing his journey to full-on racism, proposing an amendment to the government’s criminal justice bill whereby annual crime figures would include ‘migrant crime league tables‘, based on the nationality and asylum status of every offender convicted in English and Welsh courts. If reports are to be believed the government’s main concern is about the plan’s practicality, ‘as ministers have no ideological objections to it‘.  

David Cameron, once the voice of modernism must wonder what happened in the years from 2016, where he resigned as leader and PM. 

Whatever majority labour wins, the concern is that we will have a hard-right official opposition. 

In addition, to this, we shouldn’t forget the pace of change in British politics. It is less that 5-yrs since Johnson won an 80-seat majority.  

‘ignorance, belligerence, and paranoia, supported by a reactionary activist base, supportive media outlets and the element personified by Farage’

It is likely that Braverman, Jenrick and Kemi Badenoch will survive all but an electoral wipeout, meaning, that no-matter who becomes party leader, post-Brexit Toryism will be based on ignorance, belligerence, and paranoia, supported by a reactionary activist base, supportive media outlets and the element personified by Farage. 

Should, for any reason Labour loose significant support a resurgent Tory party will not be an edifying thought. 

Underlying all of this are the long-term problems of living standards and immigration. 

Whilst Starmer and Co. have been relatively quiet regarding these issues, others, such as  Josh Simons, the director of the influential Labour thinktank ‘Labour Together’, has had plenty to say, and much of it chimes with right-wing Tories thoughts. The government, he said, ‘have not made the average working family better off, just increased our population‘. Migrants ‘should contribute to the pot before they take from it‘, and ‘homes should be built for British citizens before those who live here temporarily’. 

This coming together of left and right tell us two things. 

Firstly, there is the new political class of national socialists that I have referred to before, most recently in last weeks, ‘The End of an Era‘.   

Secondly, living standards and immigration seem to inextricably linked. I think there is a subtle nuance to this, which is, would people be so concerned about immigration if they felt their standard of living was better? I suspect it wouldn’t. History shows that immigrants became an issue in the 1930s as a result of the fall in living standard caused by Wall St crash and rampant inflation. In addition, this allows politicians to cast immigrants as the villain, giving them the scapegoat required for the masses to vent their frustration on.   

‘would people be so concerned about immigration if they felt their standard of living was better? I suspect it wouldn’t’

Falling living standards are not being helped by our week economic growth. It is expected that GDP for Q1 will be marginally positive, and sufficient for the UK to emerge from the shallow recession of H2, but it is unlikely many voters will notice. 

Interest rates, set by the BoE are unlikely to fall before the Bank sees more evidence that the battle against inflation has been decisively won. 

When the Bank announced the last of its 14 interest-rate increases in August last year, taking official borrowing costs to 5.25%, the annual inflation rate stood at 6.7%. That meant real interest rates – interest rates adjusted for inflation – were slightly negative. 

Since then the fall in inflation has meant real interest rates have turned positive and the Bank’s policy stance has become ever-more restrictive. Inflation currently stands at 3.4% and is expected to fall to about 3% when the March figures are released later this month, and to about 2% in April. In real terms, borrowing is getting more expensive month by month. 

‘In real terms, borrowing is getting more expensive month by month’

Myself, and other, more knowledgeable commentators, see this as less of a problem than others. Real interest rates set well above inflation will likely become the norm though the remainder of this long-term economic cycle. If there is a renewed inflation spike, then rates will rise to address it, but when they fall, they shouldn’t go below the current levels. The era of zero-interest rate policy ‘(ZIRP’) as the new normal is over, todays new normal is a return to the normal, think 4-5%. 

Market watchers expect the Fed to make three 25 bp cuts by year end to 4.5-4.75%, and other central banks to follow. 

Last week, Fed Head Jay Powell, said: ‘We do not expect it will be appropriate to lower our policy rate until we have greater confidence inflation is moving sustainably down towards 2%.’ This implies that we might expect to see inflation numbers consistently higher than expected, and the need for consistently falling price pressures before central banks act. 

What central bankers appear to have learnt is that ZIRP of the 2010s had dire consequences. They do not trigger investment into real assets, such as new plants, productivity enhancements, or infrastructure, but into financial assets, buying/selling stocks and bonds in the financial economy, and forgetting about the real one! 

Cutting interest rates back to 3% when inflation falls to 2% will simply trigger another cycle of financial investment rather than real asset investment. 

As we saw during COVID, ZIRP left central banks little, or no room to manoeuvre. Reverting back to old normal allows them to cut rates providing the necessary boost should it become necessary.   

Last Friday, the US economy posted yet another strong employment report: March jobs numbers on Friday beat expectations, and for the first time in months, the previous numbers were not revised downwards, but slightly higher. This serves only to confirm the fact that the Fed is unlikely to cut rates any time soon as the economy is clearly robust and resilient, and there is still the spectre of rising oil prices. 

Interest rates aside, and given the mess Chancellor Hunt inherited from Messrs Truss and Kwarteng, he has managed to stabilise the economy, taken steps to repair the public finances and found scope to cut taxes. 

‘Perhaps, even the cost of living crisis is coming to an end? Voters are becoming better off. Wages have been growing faster than prices for several months’

Perhaps, even the cost of living crisis is coming to an end? Voters are becoming better off. Wages have been growing faster than prices for several months. The average worker will be almost £1,000 a year better off as a result of the cuts in national insurance in the autumn statement and last month’s budget. 

Unfortunately for Hunt, while people might be better off than they were a year ago, they are poorer than they were at the time of the last election. Likewise, tax as a share of national income is still on course to be its highest since the late 1940s despite the cuts in NI. Food prices may now have started to fall slightly but they remain 25% higher than they were two years ago.  

During the life of this parliament, we have been hit by two black swan events; COVID followed by the war in Ukraine. It is hard to argue against the governments reactive policy of increasing public spending to fund the furlough scheme and energy price caps, which prevented mass unemployment due to the pandemic, while the energy price caps helped to temper the impact of the cost of living crisis. It is unlikely that a Labour government would have reacted differently. 

Unfortunately for the Tories their positive reaction has been undone. Firstly, by lack of follow-through to the Boris Johnson’s upbeat message at the 2019 election. Whilst lockdown didn’t help, only the few would argue it wasn’t necessary. The resultant political scandals, such as Partygate soured the mood. The real problem is inequality, people know they are poorer and think the government is to blame.  
The lesson for Starmer is clear; actions speak louder than words. 

‘Displaced from society Outcast we are 
We have nothing to live up to’ 

The local elections are likely to prove a tough gig for the Tories, with pollsters predicting they will either be pretty f*cked, or totally f*cked in the GE; for all of the ‘we have a plan, they have no plan’ and ‘its working, stick with the plan’ the reality is that many people have their buttocks hanging out after the cost of living crisis and ‘Loony’ Liz’s 42 days of madness.

The inequality Philip highlights in his preamble is just obscene; whilst it is tempting to think that a munificent benefactor might solve the world’s ills with the flourish of a quill, those in most need might wait a very long time – time the climate emergency is likely to deny them. So what’s Philip thinking?

This piece covers some familiar themes but without a somewhat different thought process.

To begin, a few things we know:

·       Young voters have deserted the Tories. As have those that supported them in 2010 who are now the 35+ age group.

·       The Tory party will get a nasty whack in the forthcoming election and lose some high-profile MPs

·       The Tories will continue to head further right

What we haven’t considered, or more accurately, I haven’t considered, is what happens if Labour disappoints the electorate? Could we have a resurgent hard-right Conservative government. The answer is almost certainly yes, unless Reform continues to eat into their electoral base.

I continue to believe that income inequality is the most important issue.

This isn’t helped when you read the Bloomberg billionaires index and the Forbes world’s billionaires list.

We now have a new elite; centibillionaires. Those who have personal assets of at least $100bn. There are now 14 of them in the world – up from six last year.

Ten of the 14 centibillionaires are American. One is French – Bernard Arnault, the world’s richest man. Mukesh Ambani, No 9, is Indian; Amancio Ortega, No 13, who owns the clothing chain Zara, is Spanish; and Carlos Slim Helú, No 14, is a Mexican telecom entrepreneur. None are from the UK, which has 55 mere billionaires, fewer than in previous years.

There are now 2,781 billionaires, 141 more than last year. Their collective wealth is C.$14.2tn, more than the GDP of any country except the US and China.

All have gotten exceptionally rich because the financial system operates to their advantage. They profit from a game most people cannot afford to play. This game involves large stakes in the stock market, private equity and hedge funds; cartels open only to the wealthy; and large property portfolios. Meanwhile, the rest of the world grapples with a cost of living crisis, with ever rising levels of homelessness.

The US has 10 centibillionaires and 755 billionaires who have more money than any of them can spend in their lifetime. It also has 37 million people living in poverty.

And therein lies the problem, capitalism no longer works for the people. As a result they are ripe for exploitation by right-wing populists. And, with immigration they have the fuel to light the fire.

A wealth tax is long overdue. How can anyone justify less than 3,000 people having more money than the vast majority of countries?

Lyrically, we start with the Dead Kennedys and “Holidays in Cambodia ”, and finish with the Pop Group and “We Are All Prostitutes’. Enjoy!



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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